Intellectual property investments have become more widespread as investors seek ways to generate returns. Startups and SMEs must understand how to value and monetize their IP assets to attract investor interest.
One way of monetizing intellectual property (IP) is transferring it to a wholly owned entity for securitization. This applies both to informal IP like know-how and formal IP such as patents.
Licensing can be an attractive market entry strategy for companies with valuable intellectual property. Licensing allows one company (known as the licensor) to license its intellectual property to another ( the licensee), in exchange for periodic royalty payments from them.
Intellectual property encompasses inventions, industrial designs and literary and artistic works protected by patents, trademarks and copyright. Intellectual property laws aim to encourage innovation through protection for inventions, industrial designs and literary and artistic works as well as providing financial incentives for authors, inventors and industrial designers to bring forth their creations.
Utilitarians contend that intellectual property rights promote social welfare by providing innovators with sufficient returns on their investment of resources, encouraging further investment into innovations, as well as an incentive for sharing their work with others and licensing it quickly and cost effectively.
Patents provide their owners with exclusive rights to make, use, or sell the patented product or idea in the country where it was issued for up to 20 years from filing date. They serve as an essential step toward commercializing an innovation while giving companies credibility and access to investments such as bank loans through use as collateral for secured patents.
Patents do not guarantee success; some inventors will have to pay licensing fees in order to practice their invention – often calculated based on product sales figures – providing another form of passive income.
Companies without an effective IP strategy are more liable to lose revenues as a result of claims by other parties for patent infringement, as seen with Research in Motion’s recent travails. Losing patent battles can have enormous costs attached.
Trademarks can be an effective way to monetize intellectual property and generate recurring revenues, providing royalty financing streams that have become an important source of funding for various businesses. Qualcomm earns royalty revenues from every smartphone that uses their chipset. Their success stands as evidence that strong intellectual property can add significant monetary value for a business; even those experiencing financial difficulty can turn it into cash through licensing deals. Nonetheless, it is critical to establish the value of your IP portfolio with an accurate Intellectual Property Valuation process.
Copyright is designed to safeguard the creative work of authors like writers, musicians and artists whose artistic endeavours require substantial time and financial investments – thus they should be compensated accordingly. Hence it is vital that any copyright duration does not impede content production. But the popular belief that longer copyrights lead to higher earnings for authors is inaccurate in many respects. First, low bargaining power of authors due to private contracts and principal-agent dilemma causes publishers to underperform. Therefore, this paper proposes shorter copyright durations as a solution that would increase earnings of authors, improve distribution of their works more widely, and ultimately help to promote cultural diversity for society at large.