Hidden Assets: Helping your clients UNLOCK THE VALUE OF THE INTELLECTUAL PROPERTY

Hidden Assets: Helping your clients UNLOCK THE VALUE OF THE INTELLECTUAL PROPERTY

The value of intellectual property in the modern marketplace can be very significant – it is estimated that Microsoft’s intellectual property including the trade-mark in its brand, copyright in its software, and its patent portfolio is responsible for 99.5% of its $263-billion value, and that Coca-Cola’s combined brands alone are worth an astounding $67-billion, more than half of its $133-billion value. IBM receives an annual revenue stream of approximately $1-billion from the 40,000 patents it owns worldwide. Intellectual property no longer merely protects the assets such as the brand or patented products, but holds tremendous value and can be leveraged to produce considerable revenues.

Intellectual property can be described as covering many of the intangible assets of a business, and includes trade-marks, patents, industrial designs and copyright. Briefly, a trade-mark gives the owner exclusive rights (which can be extended into a permanent monopoly) in a name or sign which identifies the source of a particular product or service. A patent gives an exclusive government-granted monopoly on the production and sale of an invention in exchange for disclosure of its operation to the public. Industrial designs protect the aesthetic features of a product from imitation by others. Lastly, copyright protects creative literary, dramatic, musical and artistic works from being copied for an extended period of time after their creation, and includes computer programs.

A trade-mark is an integral part of a branding strategy, and consists of a name or sign which is used by a company to uniquely identify the source of its wares or services, and distinguish them from those of other companies. Because trade-marks can come to represent not only certain goods and services, but the reputation of the producer, if properly used and protected they can become very valuable. A trade-mark’s value can be measured, at a minimum, by a company’s repeat business, and it may also be responsible for new business resulting from advertising. A trade-mark can also be licensed to allow others here or abroad to produce a company’s wares under its supervision, in exchange for additional revenues in the form of royalties. This is the equivalent of a highly cost-effective, paid-for advertising/branding initiative for the trade-mark owner.

A patent protects new inventions, and new and useful improvements of an existing invention, and allows the patent holder to stop others from exploiting its technology for 20 years. A patent can be valued, at a minimum, as the net sales of the patented item. A patent can also be licensed to others in exchange for royalties, or may be sold as an asset. Patents can be very valuable, for example, the patent for the Pfizer drug Lipitor protects $12.2-billion in annual sales.

Industrial design protects aesthetic features, such as the shape, pattern or ornament of a product that is manufactured by hand, tool or machine from being copied for ten years, and like a patent, it can be licensed or sold, and can also be very valuable. The shape of the iPod helps it to control upwards of 80% of the portable MP3 player market, and this is protected by an industrial design registration.

Copyright applies to all original literary (text and computer programs), dramatic (films, television and theatre), musical and artistic (painting, sculpture and architecture) works, and allows only the copyright owner to reproduce the work, and to prevent others from doing the same. Copyright in Canada endures for the life of the creator plus fifty years after his or her death. Copyright includes software and is a large part of the intellectual property protection of software companies. Design trade-marks and advertising can be protected by copyright in certain circumstances as well. Copyright can be assigned or licensed, and license revenues form a significant stream of income for Hollywood and music producers, like Sony music, for example. The Star Wars franchise was recently estimated to be worth $20-billion by Forbes magazine.

Trade-marks, patents, industrial designs and copyrights are recognized and legitimate property rights that can be exploited, assigned or licensed to another entity to produce a revenue stream. Intellectual property also holds tremendous value as an asset, and can be used for financing, or be sold with the company. Properly implemented, an effective intellectual property strategy can leverage the intellectual property to produce profits in the form of income, royalties and capital gains rather than merely costs, while protecting the company’s brands or patented products from imitation or theft.