Posts Tagged: "IP Assets"

Intellectual property rights continue to be the Rodney Dangerfield of assets – they “can’t get no respect.” The reasons are complex, but not terribly surprising, given the increased speed and importance of technology in recent years. Compounding the disconnect are many individuals and businesses who prefer to view IP rights as impediments, not assets that can be licensed or otherwise monetized. In their mind, pilfering content, using someone else’s invention or borrowing a name or image is akin to a “white” lie that does no real harm. This myth has been perpetuated over time in different ways by other IP holders and consumers who would prefer not to pay for what they need. The result is a strangely inhospitable environment for IP that dissuades innovation and depresses value.

During periods of economic instability, intellectual property (IP) can be a surprisingly attractive investment vehicle. Product innovation through patent investment can facilitate additional revenue generation through immediate lower-yield returns, as well as longer-term, higher-yield returns. When viewing IP as a true asset, the question for businesses is how to assess and maximize these advantages, particularly in challenging economic times. In-house legal departments are well-positioned to bring value to the business, particularly during an economic downturn, to create new and innovative opportunities and sources of revenue.

Technology and intellectual property (IP) have become vital components to virtually every business in all industries as they often drive the value and efficiencies of a business and enable companies to monetize their products and services. In order to capitalize on this trend, private equity (PE) investors are making significant investments in companies focused on developing and commercializing IP. In 2017, a record number of PE deals were IP and technology focused, ranging from consumer-facing companies with valuations driven by trademark portfolios and brand awareness, to cloud platform and biotech companies with significant patent portfolios and research and development efforts. According to analysts of PE deal-trends, this wave of IP-centric PE transactions has continued and will continue to grow during 2018.

Intellectual property (IP) often represents one of the largest asset classes that a company holds, and unlocking its value is a key element in any business sale. The value of intellectual property such as patents, trademarks, brands, databases, and trade secrets, can be valued using a number of methodologies. But what makes these intangible assets so valuable to a business?

Over the next few years, the most interesting intellectual property trend to watch will be what happens with new patent applications. The number of utility patent applications filed in the United States declined in 2015 (compared with 2014) and again in 2017 (compared with 2016). If the downward slide continues, will this be due to smarter filing strategies, or will it be because less emphasis is being put on patents? Will it be because more emphasis is being placed on trade secrets? Is it because of an unfavorable climate in the United States for certain types of inventions? Filings in other parts of the world are on the rise at a time when U.S. utility applications are either stagnant or in decline. Could it be because patent applicants are moving elsewhere?

How big of a role does IP play in Silicon Valley deals? “In almost any size transaction involving a technology company, our client asks us to look carefully at the company’s IP and the agreements the company has entered into with third parties to secure rights in IP and to permit others to use that IP,” said John Brockland, a technology and IP transactions partner at Hogan Lovells. “Depending on how a transaction is structured, the terms on which IP is assigned or licensed between the parties in a deal can also be a critical area of focus for our client.”

Instead of following the same IP plan year after year, IP managers should focus their strategy on aligning their IP with their business, including developing a more concise IP plan, and switch to using smarter and modern analytics… IP managers must: (1) Start with the end in mind: IP is the business; (2) Build a plan, measure and manage and continuous improvement; and (3) Create an environment where your IP and business execs have access to timely actionable intelligence to support their decisions and strategies.