The Value of Intellectual Property – Klinck LLC

The Value of Intellectual Property

It is important not to overlook or minimize the importance of your intellectual property (“IP”). IP is not just for mature companies. For any business, especially startups, it is a very significant asset. You should be very familiar with your IP and its value at the start of your business.

Intellectual property comes in the form of patents, copyrights, trademarks, and trade secrets. It may be found in many areas of your business, from your products and services to your employment agreements and marketing campaigns. As your business grows, the importance of certain IP assets may shift, and developing a strategy on how to identify, protect, and manage your IP will benefit your business in the long-term.

The Business Case For IP Management

All businesses should invest in strong and effective IP management.   IP management is not just a legal issue; it is a business issue. Not only does IP management allow you to organize your IP assets and protect them from potential and current infringers, it also provides notable advantages in terms of consumers and investors.

For consumers, trademarks and service marks provide information regarding the source of goods and services. Effective use of these marks builds brand recognition and quality assurance.   These marks signal to consumers what goods and services they’re getting. Consumers who like a certain product by a certain company are more likely to trust or, at minimum, be open to other products by the same company. Effectively developing and managing trademarks can therefore help build a loyal customer base.

For investors, patents and other IP provide certainty that their investments are protected against infringers and competitors. A patent, for example, provides a business the exclusive right to use, make, sell, and import into the U.S. a certain invention for 20 years. This is essentially undisturbed profit-making. If a competitor infringes on the patent, then the business can enforce its rights and potentially obtain monetary damages or a court order demanding the infringement to stop. Additional money-making opportunities are available through licensing fees or even asset sales. Overall, effectively managing your IP gives investors a sense of security as to the business opportunities involved.

Another business case for managing IP is the potential use of intellectual property as collateral for loans. This is a significant opportunity for cash-strapped companies or those who need some breathing room in between funding rounds. Depending on the value of their IP, companies who are looking for alternate means of financing can treat their IP as any other asset, borrow a certain amount of money based upon the value of their IP, and grant the lender a security interest in their IP. Other funding options include selling future IP royalties for a certain amount of payment. There are specific companies and some banks that specialize in IP collateral. With a well-managed IP portfolio, you have more financing options from which to choose.

Competitive Advantage

Intellectual property is essentially a tool to gain a competitive advantage in the marketplace. When effectively identified, protected, and managed, IP can be used to keep competitors and infringers at bay, develop a customer base, gain confidence among investors, and open up funding opportunities.

Your IP is a valuable, multi-functional asset. Make it part of your business strategy.

About the Author

I’m a lawyer and entrepreneur based in Washington, DC. My legal practice focuses on helping innovators, entrepreneurs, and startups navigate intellectual property issues. My books about IP Law are available for sale on Amazon.

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