Simon Crossley and Ben Jones explain how companies can make the most of their IP credentials

Intellectual property is a valuable asset for many businesses, but often this value is not recognised. Businesses should actively manage their IP to maximise its value and should consider a number of common areas as part of the management process.

IP rights are essential to developing and protecting market share and existing profits, as well as to prevent or restrict competition. But this is a passive role that does not directly generate measurable profit or value for a business. 

Consequently, much IP, particularly where generated internally, is not fully recognised on companies' balance sheets and is not considered to be a profit centre for a business, even though it is essential to such business.

However, through a proper understanding of the value of IP and active management of such IP, this otherwise passive asset can be made to work harder, generating profit and other additional value while still performing its primary role. In this economic environment, using existing and valuable assets of a business to their fullest extent is essential – and IP assets are no different.

Set out below are a number of areas on which businesses should focus when seeking to maximise the value of their IP.

Clearly identify IP assets

Identifying the full value of IP to a business requires a detailed understanding of the nature and scope of the relevant IP rights and the protection available for such rights. Only with this information can an accurate value be attributed to such IP. Accurately valuing IP is vital to:

• demonstrate the full value of a business to a potential purchaser;
• attract investment or raise finance; and
• focus strategic direction and appropriate allocation of resources.

Maximise tax incentives

Many jurisdictions have specific tax incentives targeted at IP and the development of IP, such as research and development tax credit systems and low-tax regimes for IP-generated profits (for example, profits derived from patents). 

This is a fast developing area, with new incentives being introduced and the benefits of existing incentives increasing as part of the international competition between jurisdictions seeking to attract high-tech and IP-reliant businesses.

Consequently, now more than ever, IP-related tax incentives can have real value. But this constant development also means businesses are often unaware of new incentives or do not fully maximise the benefits of available incentives. Businesses should ensure that they are making the most of any such available tax incentives.

Centralise IP