The Benefits of Patent Protection in a Very Competitive Market - Helmed S.A.
Firm: HELMED SPINE IMPLANTS S.A.
Business sector: Medical materials/Spine implants
Activities: Spine implants & neurosurgical items distribution
Number of employees: 7 persons
Annual turnover: 2.500.000 €
Helmed S.A. was founded in 1992 by two scientists in Thessaloniki, Hellas. The firm’s mission was to meet the future needs of the growing market in spinal implants, a high technology business sector. At that time in Greece, this business move was quite innovative as Helmed was the first Greek firm in this rather unknown and risky sector. However, due to several scientific breakthroughs in the area of new materials and the continuous increase in R&D spending, the market potential brought many companies both from Greece and abroad into the spinal implants sector.
Helmed has developed several implant types, most of them protected by patents but its main current activities are still in third party product distribution rather than in -house mass-production of its own patented implants. However, this latter area is one of the company’s main strategic aims.
During the last three years, the financial statements of Helmed S.A have shown a good business performance with a yearly average increase in total turnover of more than 15%.
One key issue that should be taken into serious consideration is the overall dependency of the firm on the spinal implants area as it represents more than 90% of the total turnover.
The firm employs 7 people, 4 of whom are University degree holders and 1 is responsible for R&D activities. Helmed does not use any predefined IP management procedure such as a standard IP strategy. Neither does it have special contracts with its personnel, or require that any special laboratory protocols should be followed during the product development process. Furthermore, the firm’s executives to date have not used any business tools to evaluate the strategic or economic value of the firm’s patents or any other protection tools while developing new products. As with most SMEs, Helmed faces great difficulties in marketing their products, and in implementing a market survey before launching new products, due to budgetary constraints.
One key characteristic of the spinal implants sector in Greece is the big differences in size of the companies involved. This has created a strong competitive environment and moreover, places Helmed S.A. among the weaker firms, although its market share which is almost 10%, amounts to more than €350.000. Copying a competitor’s product is one of the common practices in this business sector and Helmed is aware that its products have been copied at least four times by both Greek and international firms (Germany, France, USA). Helmed executives do believe that the patent system alone can provide the technology owner with the necessary protection. Sometimes more financial resources and an integrated business strategy must be used in order to fully benefit from the protection that can be obtained from patents.
Helmed S.A has recently won a legal dispute with a German company who copied one of the firm’s patents and this company’s Greek commercial representative has already stopped selling the copied product. However, Helmed managers have realized that in the situation where many other companies from abroad might copy Helmed patents, the company would not be able to afford the necessary amount of money to take legal action against infringers.
During the patenting procedure, and in order to draft the patent claims, the firm has had very good cooperation with the Hellenic Industrial Property Organisation, although it would prefer shorter procedures as, in its opinion, time delays are an inborn weakness of all patent systems.
Helmed executives believe that one of the most difficult tasks in managing its IP is the monitoring of all the critical deadlines during the whole patenting procedure as well as the deadlines for the payment of annual patent renewal fees for all of its patents. Therefore, Helmed has assigned this task to patent attorneys in Europe, which has also increased its annual R&D costs.
In order to increase its potential for know-how and technology transfer, Helmed was recently chosen to actively participate in the Thessaly Technology Park business incubator as a tenant. Apart from that, Helmed continuously tries to reduce the R&D cost by participating in both national and international R&D projects and by developing collaboration with several consultancy firms.
Although Helmed is an innovative company it seems that so far it hasn’t fully benefited, in terms of financial profits, from its intellectual property by just using classic IP protection methods such as patents and non-disclosure agreements. It is obvious that the necessary integration of its IP policy with its innovation strategy is missing. Helmed lacks the potential of undertaking market research, evaluating the potential for patenting its products or even developing a business plan for a new product.
Copying a competitor’s product is one of the common practices in the medical implant sector. In order to get its product to market quickly and to save money, the firm’s executives have changed its IP policy and decided to keep its new product development activities secret and to proceed with patent protection just before the stage of releasing the product on the market.
The main conclusion is that a strong competitive environment between competitors who are characterized by big differences in size is a very difficult field even for SMEs with products which have IP protection. SMEs operating in such fields could improve their business by integrating their IP policy with their innovation strategy and by carefully selecting and using the available tools and financial resources. Some of these tools are provided in this guide.
Case study compiled by the LIIP Project.