Executive Summary
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Intellectual capital is recognized as the most important asset of many of the world’s largest and most powerful companies.
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It is the foundation for the market dominance and continuing profitability of leading corporations.
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It is often the key objective in mergers and acquisitions, and knowledgeable companies are increasingly using licensing routes to transfer these assets to low-tax jurisdictions.
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Accounting standards have traditionally not been helpful in representing the worth of intellectual property rights (IPR) and intangible assets in company accounts.
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Future winners will be those who own and effectively manage intellectual capital, which asset—such as a brand, patent portfolio, etc.—has become possibly the most critical success factor. No sector has been untouched by IPR.
Introduction
The role of IPR in business is insufficiently understood. It is probably undervalued, undermanaged or underexploited, and there is little coordination between the different professionals dealing with an organization’s IPR. You probably need to have a better understanding about intellectual capital and its ownership, acquisition, and use. You probably need a practical source of knowledge and guidance about intellectual property and other intellectual capital in a commercial context. You might be a chief executive of an intellectual capital company, or a brand-based business, or both. You might be a manager of such a business, or a research director, or academic. Maybe you are a student on a management program, or an accountant, a corporate finance professional, an investor, or a venture capitalist. In your studies intellectual capital will not have been a core subject. Whatever the reason, you need to understand intellectual capital, especially IPRs, to do your job better or to be more successful in your career. IPRs are both important and complex. Therefore the questions to be addressed are often:
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What are the IPRs used in the business?
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What are their value (and hence level of risk)?
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Who owns it (could I sue or could someone sue me)?
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How may it be better exploited (e.g. licensing in or out of technology)?
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At what level do I need to insure the IPR risk?
The Benefits of IPR Management
You cannot “manage” without having some understanding of value, and the benefits of good IPR management include:
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Increased returns on capital invested in the business, particularly capital tied up in intellectual property.
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Increased shareholder value.
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A thorough understanding of the alignment of intellectual property development or acquisitions and business strategic objectives.
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The ability to make informed decisions about intellectual property development or acquisition.
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The creation of new and diverse revenue streams from intellectual capital, and especially from underused intellectual capital.
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The ability to distinguish between valuable intellectual capital (perhaps within a large portfolio) and so protect it fully, and intellectual capital of no significant value, which might be sold or abandoned.
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Achieving lower overall costs associated with intellectual capital development or acquisition, protection, and utilization.
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Creating internal awareness of the importance of intellectual capital to success.
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