Why should I care about intellectual property?


Put simply, because it can bring huge value to you and your business.

Boost the value of your business

When Google bought Motorola for $12.5 billion in 2012 the value of Motorola was 63% higher than its previous closing price. Why? Motorola’s nearly 25,000 patents and patent applications were of such a high value to Google in its fight against the likes of Microsoft and Apple it was willing to pay a premium for the company to get its hands on the intellectual property (IP). Hence, understanding and valuing IP can boost the value of your business.

Kodak was for decades the market leader in the photographic film industry. Digital photography then came along and wiped Kodak out. However, who actually developed much of the core technology behind digital photography? Yes, you guessed it – Kodak. That’s why Kodak managed to sell its patent portfolio for around $525 million. While this shows that protecting IP can bring value to a business. It also provides a cautionary tale – simply protecting your IP is not enough.

A huge business asset

When Microsoft bought Nokia’s mobile business for $4 billion, there was one notable asset that Nokia held onto – its patents. The $4 billion covered the purchase of many IP rights such as brand names and its know-how. However, Microsoft agreed an additional $1.6 billion to licence Nokia’s patents for a period of just 10 years. Nokia could not only see the value in their IP, but they also understood how to maximise the value for their benefit.

How can you benefit?

These examples are all of big business and big money. Let’s get back to reality and consider how you can use IP to benefit your business.

Even at the early stages of a business, IP can bring value to your business. Being able to show that you understand and value your IP, even if you don’t yet invest in it, can provide potential investors with some comfort.

Registered IP rights such as patents, trade marks and registered designs provide you with exclusivity to the idea, name or design that they protect. This can help provide you with exclusivity to a certain market place, or at the very least enable you to clearly differentiate yourself from the competition.

If you build an IP portfolio, a collection of patents, trade marks and designs, to protect different aspects of your business, this may help attract investors’ attention because it can show that you have strength and exclusivity in the market.

When you come to looking to exit, perhaps via an IPO or sale, IP will undoubtedly help to add value to the balance sheet.

Like any asset, IP is something you can make money from. Whether you sell it, or collect royalties from other companies licensing the use of it, it can be a very valuable asset. So much so, there are companies that solely buy, sell and exploit IP rights just as a property tycoon may buy, sell and rent a property portfolio.

It is also worth remembering that even if you’re not thinking about IP yet, some of your competitors probably are.

Having some IP rights in place could provide a very useful negotiating tool in the event that you step on the toes of a competitor and their IP. In addition, if you don’t protect your latest ideas, or new brand name, then someone else could and you could be pushed out of a certain area for your business, or left trailing your competitors.

Answer last updated: 17 Jan 2018