How IP Assets Help Economic Growth

 

Intellectual property refers to the property of everything human created, such as education, research, culture, art, technology, etc., that is, intangible knowledge, deviating from the existing tangible property. Like any other type of property, it is protected by rights because it can be developed, owned, managed and commercialized to generate economic returns. This time, we’re going to look at the economic value of IP assets.

What are IP assets?

IP assets are a collection of intellectual property, such as patents, trademarks, copyrighted works, industrial designs, geographical indications, trade secrets, etc. strategically selected for business value. It has economic value because of its ability to enhance the value and financial returns of technology, products and services. Businessmen and policy makers define IP as adding the word “assets” to give both legal rights as well as the economic interests of the owner.

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IP assets are outputs produced through human capital. Without human capital, intellectual property cannot be created and economic development is impossible, so human capital is very important for economic growth. However, human capital itself is difficult to impart economic value because there is no way to own it or its legal status. That is why it recognizes its legal status and economic value by giving the character of an asset to the IP produced through the human capital.

In particular, today, the combination of human capital and IP assets is the most important driving force for economic development in a knowledge-based economy.

Reasons to develop and manage IP assets,

In the 1990s, the development and management of IP became a major concern in the rapidly growing technological and cultural industries. Intellectual Asset Management (IAM) was taught in the Graduate School of Business and has established itself as a specialized field provided as a service in accounting, consulting, and law firms. IP assets are becoming increasingly valuable and important economic assets through active and strategic policies. Even at the macroeconomic level, IP assets, including human capital and IP, are recognized as the most valuable factors. Therefore, policy makers are trying to use IP assets as a key tool for economic policy, and insist that just as companies strengthen their technology through IP portfolios, the country should also strengthen its IP portfolio.

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The U.S. National Knowledge and Intellectual Property Task Force explains IP assets as follows:

- In the IP economy, a company's value is determined by its ability to seize new market opportunities by converting “KNOWLEDGE” to net worth in a timely manner.

- In addition, as product cycles are shortening and competitors shorten time-to-market, companies must continually verify and improve the process to develop and commercialize new ideas.

- In other words, revising the company's strategy and leading the market in line with the rapid growth of intellectual property is the core of IP asset management.

How can IP assets help economic growth?

IP assets affect economic growth in several ways. One of the most important ways is to generate royalty revenue through licensing. Revenues from patent licensing worldwide increased from $15 billion in 1990 to $100 billion in 2000.

IP licenses can help companies lower costs or access to products, which will steadily increase profitability. IBM raised more than $1.7 billion in licensing royalties in 2000 alone. Universities also used IP assets to support their budgets and for continuing education and research. Universities and research institutions in Canada and the United States reported $1.36 billion in revenue from licensing for fiscal year 2004. SMEs in developing countries have also selected IP assets as a key area that can help them participate in technology transfer agreements, attract joint ventures, and expand into new regional markets. IP assets also increase the value of the company in mergers and acquisitions. IP assets, such as patents, trademarks, and copyrights, can be valued higher than their actual value depending on which company they are merged with.

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Why IP assets have economic value,

If IP assets are properly managed, the following effects can be expected. Motivate and support to monetize product sales and licensing royalties.

- Increase in high value-added exports

- Attracting high value-added foreign direct investment (FDI) and joint ventures

- Support to retain and motivate technical staff

- R&D-based industry activation and job creation

- Support for educational and research institutions

- Strengthen corporate value evaluation

- Promote funding for R&D to provide and improve necessary technologies and products

- Provides bargaining power in technology transfer negotiations

- Support to access goods and technology through license agreement

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What should policy makers do to promote the development and management of national IP assets?

Policy makers are responsible for IP auditing, target setting and measurement, group identification for IP asset development, funding for research and development, IP policy planning and coordinating education and economic policies, IP strategic planning including financial support for tax and other IP development. Developed. In addition, a plan was introduced to enable SMEs and non-profit research institutes such as public-private ventures and patent application funds to realistically handle IP ownership.

IP asset development and management consists of four elements: IP evaluation, IP infrastructure construction, IP training, and IP assets. All of these factors are interrelated and should be viewed in the context of a holistic system.

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This is a partial excerpt from 

'IP Asset Development and Management: A Key Strategy for Economic Growth (WIPO, 2004)'