Actively managing IP

By developing innovative solutions for their clients’ benefit, corporations create value beyond marketable products & services in the form of technological knowledge as part of their intellectual capital. If the latter is legally protected it gains the status of intellectual property rights (IP), a valuable asset-class of its own.

Traditionally, IP served the function of an insurance option against imitation of products or services for its holder: If the protected intellectual domain, e.g. a patented technology or a trademark was infringed, there would be an option to enforce the intellectual property rights of the proprietor.

Notwithstanding the former statement, the economic value potential of IP extends to far more:

• IP serves the role of a valuable and ever more liquid asset-class thanks to the emergence of a worldwide IP-licensing market. Depending on corporate technology strategies, IP can be licensed or sold to third parties…

… beyond its current field of use to a new market-technology combination, i.e. to non-competitors, or

… within the original field to become the choice of an industry and turn into an essential building block of a technology standard.

• IP serves the role of an underlying asset for the financing of corporations.
• IP serves a signalling and image-driver function. Business partners, among them buyers, suppliers, service providers, and value chain stage partners may try to assess the technological strength of a company based on IP granted or applied for.

A growing number of companies adopt an extended view on IP. More often than desirable however, the traditional and narrower thinking related to the strategic functions potentially served by IP prevails. An active view of IP is more demanding and requires out of the box-thinking. It is important though to seamlessly harmonize corporate with IP-strategy – a complex and difficult endeavour and also sometimes an almost meaningless buzzword.

A consequence of the aforementioned trends is a fast growing global market for IP-licensing, especially for patent protected technology. The latter actually has grown to a volume of several hundred billions USD annually. A special feature of this market is its remarkably high profitability in particular when connected to the transfer of patent protected technology.