What we recommend the European Commission to do on IP rights to curb innovation and growth within Europe. The base for innovation is today much based on IC. The sustainable value creation is different on Europe compared to major regions like the US and China. We focus more on the resources for creation and care about a fare distribution of the outcome. The European Commission in Brussels should take this into consideration.

1. ©
Wissenskapital
ZFI/ECI
GmbH
2013
1
Reflections
on
how
to
curb
economic
growth,
social
prosperity
and
innovation
based
on
Intellectual
Capital
(IC)
and
Intellectual
Property
(IP).
In
2000
the
Lisbon
agenda
agreed
on
various
initiatives
to
stimulate
economic
growth
within
the
European
Union
member
states.
The
goals
were
in
2010
to
have
a
higher
GDP
per
capita
than
the
US
and
to
become
„the
most
innovating“
region
in
the
world.
Various
programs
were
created
to
help
SME1
getting
funding
for
growth
and
innovation
as
well
as
how
they
can
protect
their
outcome,
one
area
especially
in
focus
being
the
IP.
These
goals
have
not
been
reached.
Intellectual
Capital
Statement
(or
Intangible
Assets
based
Management)
Around
1.000
SME
have
made
an
IC
Statement
(German
“Wissensbilanz")
in
Germany2
as
of
today,
April
2013.
With
the
Fraunhofer
Academy
in
Munich,
moderators
or
consultants
are
being
educated
for
a
fee
and
some
of
them
are
today
successfully
working
as
coaches
and
IC
analysts.
With
the
“Intellectual
Capital
–
Made
in
Europe”
project,
the
German
„Wissensbilanz“
was
implemented
in
five
other
European
countries3
and
developed
a
„quick-­‐test
on
IC“
sponsored
by
the
Warsaw
Stock
Exchange
in
2008.
These
results
may
look
all
right
at
a
glance,
but
still
have
not
changed
the
behaviour
on
the
financial
markets
and
political
decisions.
Quantitative
factors
still
play
an
overwhelming
role
when
it
comes
to
analysing
companies
or
even
states.
Today
even
more
focus
is
placed
on
short-­‐term
gains
and
there
is
reluctance
for
longer
investment
horizons.
In
times
of
uncertainty,
the
financial
actors
are
not
prepared
to
take
more
risks
and
there
seems
to
be
a
fixed
concentration
on
existing
players4,
following
the
(contra
to
IC)
philosophy
of
shareholder
value.
In
politics,
savings
are
being
made
in
education
and
research,
not
to
mention
the
withdrawal
of
the
state
in
various
areas5.
This
means
that
local
competence
in
Europe
is
not
considered
as
a
competitive
advantage
since
most
of
the
investments
go
1
SME
–
Small
and
Midsized
companies.
Usually
defined
as
companies
having
up
to
250
employees
(EU).
In
Germany
up
to
400
employees.
2
www.akwissensbilanz.org
and
Fraunhofer
study
2010
3
www.incas-­‐europe.org
(Poland,
Spain,
France,
Slovenia
and
Germany)
4
Lead
by
US
Private
Equity
and
US
Venture
Capital
5
Since
the
fall
of
the
iron
curtain,
there
has
been
a
common
understanding
between
academia
and
politics
that
the
state
should
leave
as
much
as
possible
of
strategic
decisions
to
the
market.
It
is
also
believed,
that
the
markets
are
self-­‐regulating.
If
this
would
have
been
the
case,
there
would
be
no
banking
crisis
and
no
horse
meat
where
beef
is
on
the
package.

2. ©
Wissenskapital
ZFI/ECI
GmbH
2013
2
into
high-­‐tech
or
internet
ventures
copying,
rather
then
inventing
yourself,
ideas
from
the
US
rather
than
inventing
self-­‐made
innovation.
Also
the
funding
by
the
European
Commission
has
been
more
on
copying
ideas
from
outside
Europe
and
rather
then
investing
in
regional
core
competencies.
The
IC
Statement
finds
and
evaluates
the
key
success
factors
a
company
or
a
region
needs
to
stay
competitive
through
an
efficient
organisation
and
areas
where
to
grow.
Innovation
is
the
key
factor.
However,
most
of
European
SME’s
are
not
aware
of
the
risks
and
opportunities
IP
has
on
international
expansion
and
to
secure
the
existing
business.
On
IC
Statement
and
Management
Reporting
In
2009
the
German
Federal
Ministry
of
Economics
started
a
project
to
integrate
the
„Wissensbilanz“
into
the
Management
Report.6
As
a
useful
tool
for
auditors
they
made
SME
aware
of
operational
risks
covered
by
the
„Wissensbilanz“.
The
SME
in
Germany
are
sceptical
about
making
this
a
legal
request
for
external
reporting.
They
see
IC
as
the
basis
for
reaching
their
strategic
goals
and
do
not
want
to
report
this
to
their
competitors.
However,
as
a
report
to
improve
internal
efficiency
and
to
improve
communication
to
external
stakeholder
(on
a
voluntary
basis),
we
can
confirm
the
same
positive
response
as
mentioned
under
„Wissensbilanz“
in
general.
However,
these
checklists7
help
to
improve
the
communication
and
understanding
between
the
auditors,
companies
and
stakeholders.
It
may
be
a
base
for
financial
rating
more
adapted
to
how
we
create
value
in
Europe.
On
Intellectual
Property
Rights
The
German
SME’s
generally
do
not
see
the
protection
of
their
IP
as
crucial.
They
focus
more
on
delivering
quality
in
niches
and
are
reluctant
of
communicating
more
to
the
outside
world
than
necessary.
A
problem
occurs
to
be
with
patents
that
the
information
disclosed
becomes
a
public
document.
Since
the
punishment
of
breaking
international
IP
rights
is
low,
6
Wissensbilanz
als
Element
der
Lageberichterstattung
„Transferprojekt
zur
Umsetzung
für
KMUs“.
The
project
consists
of
expert
on
international
accounting
standards,
IC
and
leading
auditing
firms.
Deliveriers
end
of
2012
will
be
a
checklist
for
SME
and
auditors
focusing
on
financial
risks
and
how
IC
can
reduce
this
uncertainty.
The
„Lagebericht“
was
introduced
1931
in
Germany
in
the
Weimarer
Republik
on
order
to
show
the
public
how
state
money
was
invested
in
firms
in
the
realm
of
the
great
depression.
7
www.reporting-­‐immaterieller-­‐werte-­‐und-­‐wissensbilanz.de

3. ©
Wissenskapital
ZFI/ECI
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2013
3
some
SME
actually
strategically
do
not
try
to
protect
their
assets
via
IP
rights
in
order
to
protect
their
competitive
advantage.
German
SME’s
are
more
focused
on
using
their
know-­‐how
and
technical
skills
to
create
value
for
their
customers.
In
the
global
IP
business
however,
the
IP
brokers
or
traders
are
focusing
more
an
“asset
sweating”
than
on
the
creation
of
assets.
Whereas
focus
within
the
companies
is
more
on
the
processes,
the
global
trend
is
more
on
trading
existing
IP’s
to
make
a
short-­‐
term
profit.
Since
this
market
is
being
dominated
by
financially
strong
players,
the
European
SME
stands
a
very
small
chance
to
protect
their
interests
globally.
This
problem
has
been
evident
especially
in
Germany
since
China
began
its
export
oriented
industrial
boom
and
since
2010
has
removed
Germany
from
its
top
position
as
global
export
champion8.
In
a
global
economic
world,
the
countries
with
a
high
value
added
industry
or
service
sector
are
the
ones,
which
have
the
most
to
lose
if
there
is
no
efficient
protection
of
IP.
On
IC
of
Cities
and
Regions
Most
communities
in
Europe
are
heavily
indebted
and
perspectives
being
gloomy
due
to
negative
demographic
trends
and
the
economic
outlook.
Therefore
it
is
important
to
define
how
the
triple
helix
should
work.
Neither
communities,
academia
or
„Wirtschaft“
can
work
alone.
They
are
all
dependant
on
one
another
and
this
work
should
be
managed
and
coordinated.
Work
has
been
done
on
this
in
Germany9
and
within
the
realm
of
the
Atlantic
program10
and
it
appears
that
the
communities
should
assume
the
responsibility
to
coordinate
this
strategic
issue.
The
reason
is
that
academia
in
Europe
hast
the
reputation
of
being
too
far
away
from
SME
needs
and
have
„a
life
of
their
own“.
The
companies
are
struggling
with
an
economy
in
downturn
and
global
acting
ones
are
no
longer
in
the
hands
of
local
families
or
investors
but
usually
belong
to
international
funds
or
investors
with
few
connections
to
the
region.
A
more
active
state/municipal
seems
to
be
the
only
institution
available
to
funding
SME
since
the
volume
(or
ROI)
and
risk
of
investment
is
not
attractive
enough
to
the
global
players.
The
regional
knowledge
has
also
been
heavily
reduced
in
favour
of
greater
financial
centres
as
a
consequence
of
the
sub-­‐prime
crisis
and
dotcom
bubble.
8
Exportweltmeister.
Germany
has
a
close
run
with
US
being
second
to
China.
Japan
is
clearly
on
the
fourth
place.
9
Stadt
Kempten
and
the
project
under
note
five.
10
www.knowcities.eu

4. ©
Wissenskapital
ZFI/ECI
GmbH
2013
4
On
Economic
Policy
The
goals
of
the
European
Commission
in
2000
have
not
been
reached.
Europe’s
competitors
have
shown
how
important
the
role
of
state
policy
is
to
curb
industry
and
employment.
The
US
still
attracts
the
„brains“
and
is
leading
in
financial
services
and
trade,
giving
them
a
dominant
position
in
investment
allocation
and
funding.
China
dominates
production
and
has
a
clear
strategy
to
curb
domestic
industry
and
consumer
demand.
Together
with
Russia,
it
is
clear
that
the
US
and
China
have
a
clear
political
and
industrial
agenda
on
how
to
support
their
industry
to
gain
market
shares
and
therefore
creating
jobs
and
tax
income.
These
nations
very
well
understand
the
necessity
to
combine
research
(with
a
political
IP
protection
agenda),
„Wirtschaft“
and
politics
to
achieve
a
strong
position
on
the
global
markets.
For
Europe,
there
seems
to
be
no
clear
strategy11
on
how
to
protect
investments
in
IC,
although
it
is
necessary
if
Europe
wants
to
maintain
its
high
living
standard.
In
the
next
phase
of
European
funding
until
2020,
focus
should
not
only
be
on
how
to
support
innovation
but
also
consider
how
we
can
protect
the
outcome
and
the
consequences
IP
laws
have
on
sustainable
value
creation.
Conclusion
Europe
is
still
world
leader
when
it
comes
to
innovation
and
top
quality
services
and
products.
One
important
reason
behind
this
is
visualized
with
the
IC
Statement.
However,
these
assets
need
investments
and
the
outcome
should
be
protected
and
justly
distributed
between
entrepreneurs,
society
and
investors.
Today
the
investors
clearly
have
the
overhand
in
a
way,
where
it
is
not
clear
if
this
is
good
for
the
European
citizens
and
future.
Therefore
Europe
needs
to
lead
the
discussion
on
IC
and
IP
because
Europe
is
the
biggest
winner
(or
loser)
in
this
area.
Financial
capital
does
not
make
the
difference,
because
it
is
global
and
not
unique.
Thanks
to
the
Lisbon
agenda
these
matters
where
taken
seriously
and
a
lot
has
been
achieved.
Now
is
the
right
time
to
implement
these
findings
and
the
lead
should
be
initiated
from
the
EU
member
states
and
stimulate
SME
to
invest
in
IC,
protect
its
outcome
over
IP
and
make
sure
that
the
gains
are
distributed
also
to
those
who
take
risk
and
work
for
the
success
of
a
venture.
Oberreichenbach
April
2013/mk
11
Or
even
contrary,
regarding
the
open
up
of
EU
market
to
foreign
investors,
without
reciprocity
from
China,
Russia
or
the
US.