27 January 2014
Over the past decade, the valuation and monetisation of intellectual property have become ever more important. In the past, the approach to these matters was mainly defensive, when liquidity problems led companies to look for things they could readily sell, including immaterial assets. Latterly, however, the management of patent portfolios has become increasingly dynamic, with the use of licensing and mortgages, as IP owners come to realise the dormant potential of patented technology.
A recent conference gave me the opportunity to present the main features of the patent system to an audience of fund managers and bank representatives wanting to know more about IP in general and patents in particular. The topic attracted a great deal of interest. While patents are not a guarantee of economic success, they can be a very useful indicator of a company’s potential value. This applies in particular to SMEs, and all the more so to start-ups, which often lack tangible assets to secure a loan request. A recent study commissioned by the UK IP Office (“Banking on IP? The role of intellectual property and intangible assets in facilitating business finance”, December 2013) draws some very interesting conclusions about the huge benefits that remain untapped in this field, mainly because of the lack of information and understanding between the worlds of IP and finance.
A patent office has no role in assessing the economic potential of a patent or patent application, which in my view requires specific skills and experience better found among practitioners in the private sector. Economic appraisal could also interfere in the examination process and affect the equal treatment of users of the patent system. However, by improving the quality of the granted patent, a patent office can certainly help right-holders to build trust in the soundness of their intellectual property and thereby to obtain financing. The EPO also provides access to a vast stock of data that can be used for valuation or for macroeconomic research, as in the study recently conducted with OHIM on the economic impact of IP in the EU.
In recent years, European governments have repeatedly insisted on the importance of building an innovation-friendly environment in our knowledge-based economy. To this end, IP valuation is an area offering scope for real progress.