This morning the results of perhaps the largest survey in the area of immaterial property rights, conducted in Finland, were released. The findings are based on a sample size of 709 companies, so it can be said to be a notable population. In total, the questionnaire was sent to about 17 000 companies founded after the year 2000. In short, the study suggests that only a third of the companies have understanding of IPR-issues while others have not protected nor even understood to cover their work in any way.

To understand and go about something, the first step is usually the understanding of the different terms related to an issue. With regard to IPR-issues, most companies understood terms such as domain names, patents and copyrights and how these are related to your business. However, the umbrella term immaterial property rights (IPR) was only known by 20% of the companies and how it affects their business.

Companies are currently somewhat covered in terms of IPR. Most companies have their basic rights protected, meaning their domain names and copyright. Strong protection, meaning patents, trademarks and the like, are used in only 30% of the companies taking part in the survey. About 40% of the companies say they have no need for strong protection at all in their business.

When starting companies, entrepreneurs have varying ways going about protecting their rights. About 20% said they completely neglected these. Also, another 20% of the respondents said they had enough knowledge themselves to go about protecting their rights with different mechanisms. About 30% talked to professional agencies in the field to get the optimal protection for their business.

The study also noted that clearly the best way to go about these is to talk to a professional agency even before founding your company. At least in Finland, many of the governmental funding mechanisms enable you to pay the IPR bills with their support.

But most importantly – what is the value of IPR issues for your business? When such a large number of respondents do not understand the term IPR, it is very unlikely they understand the upside of having your work protected. The study also found out that, which we all should know anyhow, that many investors rank IPR issues highly when evaluating and doing due diligence with potential portfolio companies.

It amazes me how illiterate companies truly are when it comes to IPR issues. Legal firms have worked with startups in the recent years to raise their understanding of the legal issues and cover against problems in those fields. It seems that IPR agencies will be the next wave of agencies that ought to work with startups to help them better protect their work.

You can read the summary of the study in English from Papula-Nevinpat’s website.

Disclosure: Papula-Nevinpat, an IPR agency is our sponsor for this month and has also participated in the survey as an external advisor and professional.

Update: The survey was conducted by Aalto University Small Business Center.

Image by aaron_anderer