An Answer to the Whats and Whys of Intellectual Property
Intellectual Property. We’ve heard these two words thrown around in legal disputes surrounding music, companies and the entertainment industry, but what do these two words really mean? How can blockchain technology transform the IP industry? Why do figures like Toni Nijm, the Chief Product & Strategy Officer of CPA Global believe that the impact of blockchain technology on IP is greater than that on traditional finances? Let’s dive in deeper to find out.
Firstly, What Is Intellectual Property?
Intellectual Property (IP) refers to a form of property that is typically associated with the intangible designs and creations of the human mind. These can include inventions, literary and artistic works, designs, symbols, names or even images used in commerce. Protected by law, IPs allow inventors and investors to earn monetary benefits alongside visual recognition.
Why are Intellectual Property Valuable Investments?
1. Registered Trademarks Have Unlimited Growth In Value.
Unlike most traditional assets, there is no limit to the growth of value when it comes to intellectual property. A common form of IP is a trademark that protects the brand and value of a company regardless of its size. As the company continues to gain in popularity, the value of the trademark increases. For instance, statistics provided by Forbes has shown that the brand value of Apple has experienced a sharp spike in the past decade, attaining a value of 150 billion euro in 2018. Not only can registered trademarks guard the brand’s present value, it can also in turn influence its future successes as well by becoming an appealing source of investment.
2. Patent Licensing Is Independent of Company’s Performance.
Due to the multiple forms that IP encompasses, value is derived through various means, and its resulting revenue is not wholly governed by the performance of the product. For instance, while the value of registered trademarks are largely dependant on the company’s performance, patents of product designs may not necessarily be so.
Through patent licensing, companies and enterprises can lease out their brand, technology or even their business models to earn some quick profits without the backing of a huge reputation or capital. For instance, although the popularity of the game Angry Birds has decreased over the years, the creator of Angry Birds, Rovio, still manages to earn 20% of the company’s revenue through patent licensing. This means that investors who place their bets on patents can earn some profits even if the company has taken a downturn in the market. It is also significant to note that intellectual property, like other kinds of property, can be traded for cashback.
3. The World is Your Oyster.
Unlike some other traditional assets, there is no limit to the number of investment opportunities present in the market. Imagine this, every company in the country has to register for an IP to protect their brand, their value and their equity rights. Multiply that with the number of countries present in the world, and the opportunities for investment are infinite.
In 2015, according to a research done by Ocean Tomo, a United States based advisory firm, 87 percent of 500 corporate firms’ market value was discovered to lie in intangible assets. That is a drastic increase compared to the mere 17 percent recorded in 1975 when investments in tangible assets such as factories and machinery were made.
IPs form a huge part of intangible assets that rolls in the profits. With multiple IPs available for investment, the world has literally become an IP investor’s oyster.
Conclusion?
Intellectual Properties are great assets for long-term investors. Although it is not without its risks, the sheer multitude and diversity it possesses makes it certainly worth considering as an addition to your current portfolio.
In this article, we have covered the broad context of why intellectual property is an esteemed value for investment, but we have yet to tell you how you can invest in one yourself. Interested to find out more? Stay tuned to Part 2 of this article where we dive deeper into how your investment journey in intellectual property can begin with blockchain technology.
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