Prioritizing Intellectual property (IP) protection is critical to succeeding in today’s competitive market. The importance of IP assets cannot be overstated. However, companies often do not know how to use them effectively. This article discusses 5 reasons why IP protection is a key to continuous business development.
IP assets increase your business valuation
84 percent of the value of firms on the S&P 500 Index in 2015 was attributable to intangible assets and it grew to 90% in 2022. Most valuation methods calculate intangible assets like brand value, trademarks, patents, etc. while establishing the valuation of any company. In 2018, S&P companies had a valuation of their intangibles at $21 trillion, a record value. It’s pretty clear that Intellectual Property, especially patents, has become the most important assets companies have. However, many companies do not know how to use them effectively.
Your IP asset can also secure funding for your company. This is especially beneficial when you are a new business
Products with IP behind them secured good funding. A good example is Tara Brown’s Sleep Styler, which secured $75,000 for 25% equity after receiving IP protection for its product. After the episode aired, the demand for her product sky-rocketed, and their sales increased to 3 million dollars from $70000. While that’s mostly for businesses yet to establish their position in the market, industry giants also need IP protection.
Navigate Through a Minefield of litigations
According to a statistic, there are an average of 5000 patent case filings in the US with an average cost of litigations going up to $4 million. The increasing number of patent trolls that solely exist to earn by suing businesses for legal rights has also increased by 500% in the last decade. IP protection offers you a mine-free market field to navigate through, launch, and protect your products that generate brand value.
Apple was awarded $533.3 million for Samsung’s violation of its design patents. The case would have turned upside down if Apple had no IP protection for the design. On the other hand, Apple had to pay $60 million to get the iPad trademarked in China because another entity had registered it first. Had they protected it first, that’s a huge capital it could have saved.
Protecting your business with IP is thus important for a business.
IP assets can help you generate secondary revenue by signing licensing deals
figures point out that the royalty revenues from licensing deals rose 10.6% to 17.4 billion, and the weighted average wholesale royalty rate increased to 8.47% in 2021, up from 8.31% in 2019. Generating revenue from IP licensing is a common practice for a lot of companies, including technology giants. This can especially help in the time of distress, companies can generate revenue from their IP assets and further use it for business development.
IP protection fosters innovation in your organization and boosts sales
Protecting your ideas and innovations encourages your employees to develop new and unique solutions. A National Bureau of Economic Research study found that firms with more patents are more innovative, leading to increased success and profitability. Further, IP protection can also help protect your business’s competitive advantage and ensure that your organization continues to develop new and unique solutions.
In conclusion, IP protection is essential for business development. It increases your business’s valuation and secures funding, protects it from costly legal battles, generates secondary revenue, and fosters innovation and creativity. By protecting your IP assets, you can ensure that your business stands out from the competition and continues to achieve success.