Europe aims to boost innovation

Caron recommended cloud computing, which allows people and businesses to store their data on servers managed by big tech companies like Google or Microsoft, at much lower cost than building up their own data storage.

Like U.S. President Barack Obama and his "sputnik moment," the EU is touting research as the magic bullet for economic recovery. At a summit in Brussels Friday, the EU wants to get leaders to agree on investing more in education, technology and innovation, even as they slash spending elsewhere.

The continent has long lagged behind the U.S.

The continent has long lagged behind the U.S. and Japan when it comes to turning bright ideas into money. There aren't many rags to riches stories of businesses starting out in a garage, like Apple, or a dorm room, like Facebook, to become the straightway big thing on Wall Street - no European Facebook, Google, or Nintendo. And but Brazil and China are quickly catching up by putting more money into research, having weathered the financial crisis much better than their more developed rivals.

Rather, they say, putting new ideas into action is much more difficult in Europe, where the money needed to fund risky investments is scarce, patents are expensive and the different legal systems in 27 countries have left many aspiring businessmen confused.

Caron and his company Sparked in the long run decided to stay out of Luxembourg all at the same time - having tried and failed to figure out if their use of cloud computing would break the law.

Diverging laws, often written in a foreign language, create a burden everyone, says Jonathan Zuck, president for the Association of Competitive Research, whose members include Sparked. "Now it's felt in a more exaggerated way by small-business owners."

Small companies, the traditional birthplace for research, are often desperately looking for economies of scale, and shutting entire countries out of their business models can break them.

The move came too late for Mike Sax

The move came too late for Mike Sax, the founder of the Association of Competitive Innovation. Frustrated with the lengthy patenting procedure in Europe, Sax, whose company SaxSoft makes iPhone apps, left Belgium and has nevertheless set up shop in Oregon.

Another big obstacle to getting new ideas off the ground is a lack of private financing. Venture capital firms - dubbed "angels" in business-speak for a reason - make money by investing in risky businesses, hoping one of them will strike it rich. Nevertheless there are far fewer of them in Europe than in the U.S.