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Martin Schoeller
at the High-level policy meeting (organised by Microsoft and Science Business Publishing)
Paris, December 8, 2006:

European Patent System reform can favour innovation
We may not only delegate the subject of innovation to intangible issues like entrepreneurial culture etc. We need tangible measures that create incentives for innovators regardless if there are inventors or small or medium companies. The fact that one patent in all European countries costs 150.000 € (due to all the translations etc.) and the fact that in order to defend it one needs to litigate if necessary in 25 countries, makes it almost impossible for individuals or smaller companies to protect their developments and consequently exploit them economically or get royalties for them. The financial hurdle is too high and the reward is too small and seems almost not realisable. In the US you are protected with less than 1/20 of the cost (ca. 5000 US$) and the legal system helps you to earn millions if your concept becomes successful or is being used by others. A small hurdle and a higher reward create much more innovative activity in the US than in Europe where we seem to have a high hurdle and a low reward. Europe is lacking behind in important areas like bioscience, digital equipment, software and IT etc. When money can be made and the entry hurdles are not too high, a lot of energy can be mobilized also in Europe which we had seen during the bubble of the New Economy. The New Economy had exagerated but it proved that a lot of energy is availabe in Europe when monetary incentives are visible for entrepreneurial innovation. The European Union should therefore also shift the norms for litigation on patents in favour of the inventors. We want to become a know-how and knowlegde based society that means the creators of know-how and knowledge have to get priority over protecting the economic interest of the producers. This also forces the producers to become more innovative. The European patent system reform has been discussed since many years, but it is paralysed by the multi-interest groups. The European Union wants to show strength in decisions for progress so it should become politically clear that this is a measure that clearly supports the goal to become the leading knowlegde based society. And thereby show the courage of giving priority to this aspect.

Growth Financing for mid-cap companies can favour implementation of innovation
Apart from creating a framework that provides incentives for innovation (such as a European patent system reform) we believe that more instruments are needed for the growth financing and innovation financing of mid-cap companies. Innovation only helps if the implementation from the idea to market can be funded. Europe's 500 suggests a credit insurance system to support growth financing based on rating information that is publically available about almost all companies through the credit agencies such as Creditreform or Dun & Bradstreet. This initiative needs some regulatory support from the EU but will be self-funding and will not cost anything to the EU budget. As there are more of research results and new technologies available than applied into products, a lot of innovation can happen by simply combining new, existing technologies into new product applications. Such combinations (example a mobile phone which can also be used as a key or credit card etc.) need financing more than research. Venture capital as it had been mentioned is much more difficult than private equity and apart from this risk loans to fund growth are not available for companies that are too small for the mezzanine market. The Microsoft idea of creating a tax free zone in the middle of Europe for highly innovative companies, I think is an excellent idea and can create something like a Silicon Valley in Europe.

European Standards can favour growth in emerging markets
Mr. Esko Aho has explained how for example standards can drive demand and thereby create growth. I am personally convinced that the EU has the chance and the task to use this tool also to stimulate growth outside Europe by setting ecological and social standards and reward countries that adopt these standards with easier access to the European markets. This does create additional internal growth in these countries, fights poverty, protects environment and also creates additional export opportunities for the EU as the purchase power in emerging markets will be accelerated by such measures. We can already see positive results on the national demand that the EU has caused to the new EU member states.



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