Knowing and valuing your intellectual property rights

Knowing and valuing your intellectual property rights

Intellectual property rights (IPR) are one of the most important assets a business has. Claire Howell, Senior Lecturer in Law at Aston Business School, explains why.

Intellectual or intangible assets are today recognised by many companies as their most important resource. Without intellectual property rights [IPR] many innovative ventures have nothing to sell or licence.

In contemporary knowledge-intensive economies, from the world’s largest and most powerful companies to the smallest SMEs, the exploitation of intellectual assets - copyright, patents, trademarks, trade dress (the characteristics of the visual appearance of a product), designs and know-how are essential to business. Producing intellectual assets has in the past few years been the fastest growing field of economic activity showing significant development in creating value for businesses.

In the 19th and 20th centuries, land, labour and capital were the crucial factors in wealth creation. Today it is intellectual property [IP]. In this digital age a company’s intellectual property portfolio represents on average 60 to 70 per cent of its business value. US companies now invest more than $1.1 trillion per year in intangibles. There is good evidence that companies with large well-managed IP portfolios are more profitable than those that are IP passive.

A recent joint project between the European Patent Office [EPO] and the Office for Harmonization in the Internal Market [OHIM] found that about 50 per cent of EU industries are IPR intensive. IPR-intensive industries account directly for 26 per cent of all jobs in the EU – around 56 million direct jobs. With the addition of 20 million indirect jobs, 1 in 3 of all EU jobs relies on IPR intensive industries. These industries generated almost 39% of total economic activity (GDP) in the EU, worth €4.7 trillion. IPR-intensive industries pay higher remuneration than non-IPR intensive industries, with a wage premium of more than 40%.

The average weekly remuneration in IPR-intensive industries is €715, compared with €507 in non-IPR intensive industries. IPR-intensive industries account for 90% of the EU’s trade with the rest of the world.

Intellectual property rights are intended to reward innovators and if they are not being used to promote commercial success they are not being used effectively. The aim of any innovative organisation should be to turn knowledge into value. How well you capture and use this knowledge is crucial to your business success. In this time of dramatically increased global communication it is not the company with the best product, but the company with the best strategy that becomes the market leader.

Whether an SME, start-up or international organisation, all firms need an IP strategy in line with their business strategy. Managing the IP strategy effectively allows an organisation to increase asset value, assess risk, reduce liabilities, improve its competitive position and substantially increase return to shareholders.

It is the route to financial success.

Claire will be giving a talk at Aston Business School on 24 September.  She will be joined by Alison Brimelow CBE, former chief executive of the UK Patent Office and fifth President of the European Patent Office. To book a free place at this event go to