Last updated June 2006

Small and medium-sized enterprises (SMEs) may take part in different types of projects under the Sixth Framework Programme (FP6), either in general instruments (such as IP, NoE or STREP) or in SME specific actions, i.e. cooperative research projects (CRAFT) and collective research projects1.

SMEs' participation in any of the above types of actions may imply several types of difficulties, both regarding the management of the project and intellectual property rights (IPR) issues. The paperwork necessary for starting a project and, afterwards, carrying out a proper follow-up of the consortium's and participants' performance may have a deterrent effect on newcomers. On the other hand, SMEs may be, generally speaking, a bit reluctant to deal with IP-related questions, which may wrongly be seen as a burden instead of a necessity.

As far as the project execution is concerned, the following critical issues can be identified:

On the one hand, managing these projects may be troublesome (the intrinsic difficulties of any project multiply as the consortium's size increases.)

There are key IP-related issues that require an early settlement of options (e.g. exclusion of pre-existing know-how, by a written agreement before the EC contract is signed or before a new participant joins the project; establishment of royalties for participants' access rights, where possible, also needs to be decided before the EC contract is signed.)

Negotiation of licences for contractors' affiliates may be another important point, as the interests of some participants may differ from those of other participants (specifically, SMEs/public research organisations may not feel at ease 'generously' licensing other parties' affiliates, while for big companies, this is generally a 'must'.2)

As far as the post-contractual phase is concerned, the outcome of the work carried out in these projects may not take form straightaway. Tangible outputs may be reached in the medium/long term, which may be difficult to reconcile with the idea of 'immediacy' and concrete objectives SMEs may be pursuing.

On the other hand, SMEs may lack in-house assistance to adequately deal with exploitation issues (decisions such as how, when and where to protect and exploit the research results obtained require additional effort and analysis.) Many SMEs may not even know where to turn for assistance throughout this process.

Although SMEs' participation in the actions specifically addressed to them is more straightforward, there are also important issues to consider, such as joint ownership or the SMEs/RTD Performers relationship.

Agreeing on and managing the joint ownership regime is crucial.

According to the FP6 rules, SME contractors jointly own any result obtained in a CRAFT project (even if generated by other participants)3.

Generally speaking, joint ownership is ruled by the agreement of the parties concerned, and where no agreement exists or in aspects not provided for, the applicable law (national IP laws/Civil law) may come into play.

On the one hand, agreeing upon the joint ownership regime may not be easy, especially as participants come from different countries and have different legal backgrounds. Assignment of shares i.a. may be difficult and may require specific knowledge of IP valuation; the individual exploitation and licensing of the commonly owned knowledge to third parties are other important decisions that co-owners have to take.

On the other hand, in absence of agreement, not all issues may be solved by the applicable law, and it may not provide the answer preferred by the joint owners.

Finally, managing joint ownership for the benefit of all co-owners is also a demanding task, and the parties involved must pay careful attention.

Attention should also be paid to the negotiation/regulation of the SMEs-RTD Performers relationship, as regards IPR-related issues.

Even though RTD Performers are contracted to carry out the RTD activities (usually the biggest part of it), at some point they may wish to own (or obtain a licence for) the results they generate (which, according to the EC contract, as mentioned, belong to the SMEs). Negotiation of this issue is very important. SMEs may license or even assign part or all of their results if they want; they are free to decide on this issue.

The same is applicable when there are ‘strong' SMEs and ‘weaker' SMEs. The latter should know their rights under the EC contract in order to correctly negotiate their CA and other agreements (e.g. they cannot be compelled by other participants to waive their rights to the results.)

Knowing the obligations, options and rights acknowledged by the EC contract beforehand (i.e. prior to embarking on a EU-funded project) is a key starting point for negotiating efficiently and overcoming the potential difficulties pointed out. Being aware of one's own position in the project is crucial in order to succeed not only individually but also as an integrated consortium.

Establishing coherent internal mechanisms for smooth management is also necessary for the success of the project (it may be useful to agree on representative boards or committees that are able to represent the interests of everyone involved in the project, for instance.)

Awareness of one's own role and opportunities is important. SMEs, like any other potential participant in a project, need to evaluate the potential of the project they plan to join. Sometimes, it is not tangible or ambitious results that make us join a project but the chance of networking with other actors; in other instances, there are promising results that compel us to make the move. In any case, a realistic approach is essential.

Finally, SMEs and other participants should remember that the assistance they need is available to them. There are many services at their disposal to provide information and help on IPR-related issues and technology transfer options; assist in the search for commercial contacts and in the conclusion of proper agreements in order to exploit the results obtained4.