Over the last few decades, companies have learned that less of their value comes from physical assets than from intellectual property assets. Intellectual property assets usually consist of trademarks or brands used to build goodwill in the products and services of the company, copyrights related to creative works like photos, jingles, software and graphic designs used by the company in providing its services, patents on unique inventions and trade secrets. Often, the value of such intellectual property assets far exceeds the value of the company’s physical assets.
Because of the value of these assets, attorneys often advise their clients to separate the ownership of these assets from the operating company. Instead, a holding or licensing company is created to insulate the intellectual property from the risks and liabilities inherent in a company that buys and sells goods, provides public services and employs people. The “holding” company then licenses the intellectual property to the “operating” company or to third-party licensees.
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