The world’s rich list is now full of people whose success has been built on IP. Business luminaries such as: Jeff Bezos, Bill Gates and James Dyson share this with celebrities in sports and entertainment such as Ed Sheeran and Anthony Joshua.
In each case the unique experiences these people have brought to the world are based on big ideas protected by intellectual property rights in the business context.
Whether it’s products, services, creative outputs, “image rights” or brands – intellectual property is the cornerstone of modern economies. But still – many do not know how to value IP in their business or mobilise it to achieve further success.
To start, it’s important to understand what intellectual property or “IP” is.
Intellectual property is a broad term used to characterize intangible assets (non-physical) that a business or individual owns. In many cases this intellectual property can be protected via a host of different intellectual property rights.
The principle intellectual Property rights include:
A patent is a governing authority to protect an invention for a set period, they allow the creator of the invention to protect and take legal action against anyone who tries to copy the invention.
A trade mark is a type of registered Intellectual Property right that protects a recognizable sign, design or expression which identifies products or services of a particular service.
A “design” can commonly refer to a plan or drawing produced to show the look and function or workings of a building, garment, or other object before it is made.
Copyright is an unregistered right which protects original creative works. Copyright comes into existence at the point where an original creative work is made. Copyright protects the original characteristics of the work.
Despite this, there is other IP within a business that doesn’t always fall under the principle IP rights, including things like:
Data is a key IP asset as it often helps inform a business’ decision-making processes or drives research and development of innovation.
Contemporary businesses increasingly make use of bespoke configurations of software to deliver unique experiences to their clients and customers.
Ultimately, businesses are made up of people who all bring their unique knowledge and experience to the equation. If not protected, this can walk out of the business as people come and go.
And much more
In many cases such as the above, various agreements can be put into place between parties to ensure non-disclosure or confidentiality of key business information.
Because of the value of all of the above to businesses, it is important that they have a proactive approach to protecting, valuing and growing the value of IP in their business.
But then the question arises – how does a business owner put a number on the value of an intangible asset?
It is rarely straight-forward and much depends on key criteria:
Some valuers use reference points such as existing and potential income streams. Others go much deeper into potential value, especially pre-revenue.
At the end of the day, this can be guesswork and values are derived using the concept of a willing buyer and seller. Here it can be beneficial to seek a valuation from intellectual property experts.
IP can be bought cheaply from insolvent businesses, but this has dozens of potential problems, for example:
Again, it is very important to ensure that should you be seeking to acquire some IP assets, that correct due diligence is undertaken to ensure that the asset will perform alongside your business expectations.
In many cases cheap assets will be “too good to be true”. Although the extent to which many under appreciate the value of IP means that there are some good opportunities out there for the discerning eye.
All businesses have IP within them. What many do not know is that they can develop this IP and increase both its value within the business but furthermore benefits can be obtained by doing so.
Such benefits of a comprehensive approach to IP can include:
In conclusion, there remains a fascinating dichotomy in the value of intellectual property within businesses, and the extent to which many have not yet actively mobilised this value for business aims.
This “gap” represents an incredible opportunity for businesses, both to take a proactive stance amongst their competitors, but moreover establish a unique foothold in their respective marketplace.
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