4 Ways to Create Value from Your Intellectual Property
In the 21st century, competitive advantage for business organizations depends on several factors. While some organizations seek to undercut their competition with similar but lower-priced products and services, others develop unique products that are protected by patents. With increased digitalization in the past two decades, there has been a massive leap in the ownership of intangible assets by modern organizations. According to the statistics, S&P 500 companies in 1975 had only about 17% intangible assets while in 2020 these assets increased to 90%. This depicts the growing emphasis of companies on intangible assets such as intellectual property (IP) in recent years.
In the following article, we will discuss the four ways in which businesses can create value from their IP.
Expert Advice from Hanns Hallesius
Independent Advisor, Hallesius Consulting and Former Head of IP at Electrolux
Economic Value Creation
Intangible assets such as IP have been known to generate great value for organizations by providing them additional revenue streams and the opportunity to employ more specialized labour. IP has also had a profound impact on the economy by creating employment opportunities. USPTO data from 2014 has shown that IP-intensive companies have generated close to 30 million jobs in the US alone. Given below is a visual to help you understand the positive value IP has created for the economy in terms of boosting employment opportunities.
Value Creation for Businesses
As companies go down the road of innovation, be it technical, design, or process-based, they begin to develop substantial IP portfolios that they can use to not only open a new revenue stream but also emerge as leaders in a particular market.
To understand what IP means for your business specifically, let’s take a look at the following four ways in which IP assets can create value for your organization:
Exclusivity is a familiar concept for all organizations seeking protection for their IP as those who hold IP rights have the power to exclude others from using, manufacturing, or selling their inventions without their permission. By ensuring exclusivity for a product or innovation, organizations such as yours can successfully commercialize the product and gain complete freedom to operate (FTO) within a specific jurisdiction. This method of creating value from IP is known as practicing intellectual property rights and it enables your organization to generate a new revenue stream through the exclusive sale of your patented product.
One of the most common methods in which IP assets can create enormous value for your organization is licensing. By licensing out your patented product, design, service, or even process to the appropriate licensees you can obtain a steady and new revenue stream as the licensees that use your patented innovation for developing and selling their products or services regularly pay you royalties. The revenue generated by your organization is directly related to the sales of the product.
Litigation is often considered an unethical business practice as some organizations such as non-practicing entities (NPEs), also known as patent trolls, litigate other organizations with just one goal in mind – generating revenue. A rightful owner does not engage in such patent trolling and is merely interested in protecting the value generated by commercialization of his/her patents. If you are looking to generate value from your rightfully-owned IP assets, then you can legally do this by litigating your patent infringers.
The year 2020 has seen a significant rise in pure design patent litigation and this is evidence of the fact that both practising/operating companies as well as NPEs are filing a greater number of patent litigations. This can be attributed partly to the increased accessibility to external IP service providers and IP law firms that provide highly affordable infringement analysis services that are either manual or automated or both. For this reason, deterrence can be a useful method of getting more value out of your IP assets. Filing for a defensive patent ensures that the operating company (rightful owner) can use its invention without the risk of a competitor patenting the same idea and enforcing the patent upon them later. It serves as an indication to competitors that the cost of infringement litigation would be high for them.
Ever since the emphasis on intangible assets such as IP has increased, organizations with sizable IP portfolios have begun to effectively manage their IP assets to identify the ones that are capable of generating revenue or creating business value for them. While the business value that is created helps in an organization’s long-term success and growth, the generated revenue allows them to reinvest the money in furthering their R&D activities for creating more valuable IP in the future. Sagacious IP’s Patent Monetization and Licensing services provide comprehensive solutions, from ranking a patent portfolio to identifying the potential licenses, thereby enabling companies to transform their IP into a revenue generation unit. Click here to know more about the service.
– ICT Licensing and the Editorial Team