KfW Research: just under 400,000 small and medium-sized enterprises in Germany possess trademark rights or patents

• Nine per cent of businesses have trademark rights, 3 per cent have patents
• Businesses with own research and development activities and SMEs that operate internationally, in particular, have patents
• Such intangible assets could gain in importance in loan negotiations

A moderate share of SMEs in Germany has patents or registered trademark rights. Nine per cent possess trademark rights and a mere 3 per cent have patents, that is 350,000 and 100,000 businesses, respectively. As there are overlaps in some cases, just under 400,000 of the 3.84 million small and medium-sized enterprises are able to make use of trademarks or patents.

However, according to the KfW SME Panel, a representative survey of small and medium-sized enterprises, patent applications are heavily concentrated in large SMEs with 50 and more employees, businesses with own research and development (R&D) activities and manufacturing enterprises. Furthermore, businesses that operate in international markets are more than three times as likely to possess patents as those that are focused on Germany.

"International markets are particularly competitive. Businesses with global operations must therefore take particular steps to protect their innovations,”

said Dr Dirk Schumacher, Chief Economist of KfW.

Trademark rights are distributed somewhat more broadly across SMEs. Large SMEs as well as R&D-intensive manufacturing enterprises dominate here as well, to be sure. Nonetheless, 7 per cent of small businesses with fewer than five employees also have trademarks, while only 2 per cent have patents.

Businesses that have only a regional focus are less likely to focus on trademarks than those that operate across Germany. This may be due to the fact that building a brand reputation (with the aid of registered trademarks) is important primarily when direct personal interactions between the supplier and the customer are not possible.

"It is easier for larger businesses to shoulder the costs incurred in legal disputes to assert patent claims and the costs of building a brand reputation than it is for smaller businesses. Larger enterprises also have more resources such as specialised employees who are able to work in this area,”

added Dr Dirk Schumacher.

In countries such as France, Sweden and the Netherlands, intangible assets such as patents and trademark rights are already being successfully used by enterprises as credit collateral with banks and are having positive effects on the borrowing operations of businesses that use them. In Germany, this is not yet very common. But investments in intangible assets are gaining in importance in the SME sector as well. Even so, 23 per cent of SMEs in Germany also admit that their inability to provide the required loan collateral is the reason for the failure of loan negotiations.

"It is a good idea to continue investigating whether collateralising bank loans with patents and trademark rights can also be established in Germany in the medium to long term",

said Dr Dirk Schumacher.

The study can be found at Focus on Economics | KfW

KfW supports small and mid-sized companies with various promotional programmes on behalf of the German Federal Government. For more information see Strengthening the SME sector (German only).