IP
assets are intangible assets that are difficult to obtain financially unless
they are made in a form. In order to obtain a profit, it is necessary to
strategically prepare specific and practical methods according to the situation
of the company holding IP assets.
1.
Product improvement
IP
assets are the result of investment on innovation and lead to improved
performance of new or existing products. One of the main commercial advantages
of IP, in particular, is that competitors can produce better products through
the right that their IP assets cannot be violated. Improving the quality of a
product can help you sell a larger volume of product, achieve more profits, and
retain customer interest over time. Therefore, IP assets must be dealt with in
a plan with the product strategy in the enterprise.
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2.
License
The most active way to use IP assets is the license. Licensing is the sharing of IP by a legally binding contract specifying certain terms with another company in exchange for paying royalties. This approach is attractive to companies which buy IP assets. This is because the product can be improved with new features and technologies. Because licenses can also access new markets, sellers also are attracted this way. For example, you cannot reach other markets without distribution channels or manufacturing capabilities, but you can experience new markets indirectly through licensing. Some companies make money by using only licenses professionally. These businesses are effectively engaged in research and product development, and when the technology is sufficiently developed, it is handed over to other companies with expertise in marketing and distribution.
Not
only private companies but also universities and research institutes are
actively using IP licenses. According to a study by the University Technology
Managers Association, in 2004, IP license revenues from universities and
research institutes in Canada and the United States amounted to $1.36 billion.
Columbia University in New York founded the Columbia Innovation Enterprise
(CIE), which manages the university's IP assets. Since its establishment in
1982, CIE has developed more than 400 patents and signed more than 1000 license
agreements from until 2004, with annual sales of $130 million in 2004 alone.
IP
Industry also creates partnerships that share IP assets with each other's IP
asset licenses. Through the IP asset partnership, members can conduct joint
research projects on related technologies without fear of infringement. In
addition, in order to increase the strength of the partnership, they create and
promote “standard” or “platform” of IP assets. A good example of a platform
strategy is Microsoft Windows. Several companies develop and sell products that
work on Windows, and the IP called Windows occupies a key position in the
platform.
3.
Joint venture and strategic alliance
Companies
often choose business-to-business alliances to solve difficult issues that are
unable to be achieved on their own. The legal form varies, but cross-licensing
is one of the methods. Cross-licensing allows parties to collaborate without
risks of financial transactions or litigation. Thus, the two companies share
intellectual property in order to make or manufacture better products. IP
licenses often also affect to agreements of development collaboration in which
the parties share responsibility and IP ownership with respect to the research
and development of an agreed technology or product. You may also receive
licenses for copyrighted manufacturing documents, specifications and
instructions, industrial designs and trade secrets.
Strategic
alliances are networks of companies or research centers that agree to share and
use resources. Members of the association develop products or proceed marketing
together by sharing the association's advertising costs or IP assets. As the
association's position rises, it can be used to certify the quality of its
members.
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4.
IP evaluation and financing
The
IP evaluation specifically evaluates the monetary value of an IP asset or
portfolio. Being evaluated for IP is essential for business planning and joint
ventures, and is used everywhere related to monetary transactions such as
licensing, mergers and acquisitions, investments, joint ventures and loans.
Loan
transactions or investments in IP assets were not active in the past, but as
the importance of IP increases, they are getting more and more attention. In
recent years, the financial industry considers the number and quality of IP
assets as well as the financial assets the company has to make the decision for
investment. The company's IP asset portfolio, which has been carried out step
by step from the plan, is convincing to investors because it demonstrates the
potential revenue generated by IP, technological innovation, and willingness to
improve products. Therefore, in the due diligence, which investigates and
monitors the company's assets when investment or M&A is in progress, it is
thoroughly checked whether IP assets have been progressed from the planning
stage, are properly used according to the plan, and are properly managed.
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5.
Use as a marketing tool
IP
is a key marketing tool. A strong trademark or brand can be the cornerstone of
a company's marketing strategy. It can also be used as a “national brand,” a
method of projecting images for the country and promoting its products.
National
(geographic) marketing campaigns are one of the ways to effectively use IP. A
product can be evaluated positively by a national image, which can stimulate
demand by conveying confidence in the product to potential buyers. An example
of an effective use of geographic indications is tequila, a Mexican drink
protected by geographic indications since 1977. Mexico has had tremendous
marketing effects in the liquor industry by protecting tequila's trademark,
which has generated tremendous profits.
This is a partial excerpt from
'IP Asset Development and Management: A Key Strategy for Economic Growth (WIPO, 2004)'
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