Tuesday, May 13, 2008

What is Intellectual Property Worth?

Here is an article I wrote on the value of Intellectual Property (IP):

A business’ intellectual property (IP) is always seen as hugely valuable as IP represents 7% of the national economy, approximately £60 billion. It can certainly give you the competitive edge to stand out in an ever crowded market place.

IP rights are now coming to the forefront of the Government’s economic strategy with Alistair Darling mentioning the creative industries twice in the first 5 minutes of his recent budget speech.

There is even a Minister for Intellectual Property, Baroness Morgan of Drefelin who said recently “The government is committed to safeguarding the intellectual property rights of those who make a living from their creativity, ensuring the long term economic viability of our creative enterprises”

Creative industries rely heavily on IP rights to protect their output and allow commercial exploitation of their endeavours. They appreciate the importance of IP rights, especially the protection of trade marks in a global market.

I think the United Kingdom Intellectual Property Office which oversees registration of IP rights in the UK sum up IP nicely as the “ingredient that turns knowledge into assets”.

Adding IP assets “Can account for as much as 80 per cent of the value” of a business.

IP rights are mainly national and range from trade marks and patents to know-how and design rights.

It is critical for any business to identify their main commercial markets, and if practicable, apply for protection in these areas.

I see IP in three stages:
  1. creation and development,
  2. exploitation and
  3. enforcement

But IP is more than just an asset for the balance sheet. It can:

  • attract investment or suitors
  • provide something tangible in commercial agreements
  • recoup money spent on R&D
  • create and maintain brand identity
  • and secure and preserve market share.

However the value of any IP is determined by who owns it and your ability to enforce your rights. There are various types of legal ownership, with many grey areas and importantly joint owners have restricted rights.

However, enforcement is critical otherwise word will spread to competitors that you are a soft touch.

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