Intellectual Property: does your business have it and what is it worth?


What is IP?

Intellectual property (or “IP”) is a type of intangible, non-physical asset that can add tremendous value to your business. It’s the secret sauce that sets you apart from your competition. Whether your IP consists of trademarks, patents, copyrights, trade secrets, designs or ideas, your company’s legal protection of this IP is critical to staying on the cutting edge (and protecting its use by outside competitors). For some businesses, intellectual property is as simple as safety training materials for company procedures. For another, IP is their built-to-spec proprietary chemical compound used as a protective coating in high-clearance aerospace components.

How do you commercialize your IP?

Even if your company has significant intellectual property, it won’t provide financial gain until you sell it to consumers. Apple, Inc. commercializes their IP by both creating and selling their iPhone, giving them a competitive advantage over other tech companies that is pivotal to their success. Businesses with a large IP focus must both administer and manage their IP effectively in order to reap its benefits. IP Administration involves the continual creation of new ideas through innovation and research and then turning those ideas into IP through application and problem-solving. Once new ideas are developed, IP Management maximizes its value and effectiveness by integrating it into business strategy.

How does IP increase the value of my company?

It's difficult to assign a one-size-fits-all approach to valuing intellectual property, as every company applies it differently. One way to value an intangible asset like IP is to determine how much it would cost another business to replicate the asset. Another method is to analyze the market and see how much other businesses with similar IP have recently sold for. A third valuation technique is to calculate how much money the asset will either generate or save when owned by the buyer. While there is no cut-and-dry formula to tell you what your IP is worth, buyers pay up for true intellectual property that creates a competitive edge.

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