IP Monetization
Intellectual property is a catch-all name for patents, copyright, trademarks, and various other types of intangible property that are recognised by national or international laws. Each of these IP types is different — different subject matter, different duration, different protection. The same type of IP (e.g. patents) may have subtly different protection in different countries.
IP monetization refers to the act of using intellectual property (IP) to generate revenue. IP is being monetized in many different industries, ranging from media to healthcare. There are a number of ways to derive revenue from IP, each of which requires a special set of skills and abilities. With the introduction of new laws and growing competition in the IP market, monetizing IP is becoming an increasingly challenging task.
Different Forms of IP
Examples of IP or intangible assets include:
- Patents, which are technical inventions
- Trademarks, such as brand logos, slogans, words, and jingles
- Copyrighted materials, such as written materials, computer codes, and drawings
- Designs, such as industrial design of products
- Trade secrets, which are methods of doing something known only to certain individuals or organizations
- Domain names, which are website addresses
- Others, such as a company’s goodwill
Monetization of IP
IP is the product of a unique combination of know-how and human thought process that confers some benefits to its owner. The development of IP assets is vital to the competitiveness, growth, and innovation of an entity. Since it is typically proprietary technology, IP is worth protecting in the same ways as other valuable corporate assets. It can be used to generate another source of revenue to strengthen overall profits and diversify risks.
IP and other intangible assets are often developed as part of the overall productivity and growth of a company. Although these assets contribute to the company’s main economic asset, supplementary monetization means may be implemented to generate other means of revenue.
For instance, it is common for ancillary intangible assets to become by-products of a company’s main business activity. Instead of being pushed to the sideline, such assets may nonetheless be used to generate revenue. In another example, the monetization of main intangible assets may generate multiple revenue streams instead of the traditional single revenue stream. In the past, patents were only regarded as tools that provide rights for exclusion and prohibition. However, they are now increasingly gaining significance as intangible assets.
IP monetization means deriving monetary value from IP development. While it was historically focused on e-commerce, high-tech, and pharmaceutical, and brand royalties, it is gaining importance in more industries, including:
- Media
- Automotive
- Financial services
- Medical devices
- Biopharmaceutical
- Other industries that rely significantly on technology
IP monetisation can be a high-risk, long-term activity, particularly with unproven technologies. It also has the potential for large rewards. For example, life science companies spend large amounts of money on patent protection, but only a small proportion of their patented inventions reach the market in the form of products or processes. In the hands of well-informed, astute business people, and in support of a sound business strategy, investment in IP can produce good returns.
