Today’s marketplace demonstrates a marked shift from an industrial to an information economy. Competitive advantage and profit does not simply come from material assets. Instead, ideas are king.
There is increased pressure on companies to generate new and original ideas that can be capitalized on in order to remain competitive. What’s unusual about this shift is that a company’s value has moved from an emphasis on material assets to intangible assets.
But when assets are intangible, how do we measure their value? That is precisely where intellectual property rights come into play.
Hidden Wealth
IP turns intangible assets into exclusive property rights, which can then be exploited to their maximum potential. When your company’s ideas are protected by IP law, they acquire concrete value, as they become property rights which cannot be commercialized or used without your authorization.
Intellectual property rights themselves are not inherently valuable. Rather, their value comes from the strategic advantage afforded by their exclusivity. Simply put, IP makes intangible assets a bit more tangible by transforming them into valuable, exclusive assets that can be leveraged.
The Real Value of Intellectual Property
So how valuable is IP? In some industries like telecom, pharma and software, intellectual capital represents at least 50% of a company’s market value. For some companies, IP assets are actually worth significantly more than their physical assets.
According to a U.S. Department of Commerce report from March 2012, U.S. intellectual property today is worth approximately $5.06 trillion—equivalent to 35% of the GDP. A more recent and comprehensive Sonecon report suggests that the total value of patents, copyrights, and the R&D that produces them is a staggering $9.2 trillion.
These figures demonstrate just how valuable a company’s competitive advantage can be. Whether your products offer unique functionality, improved efficiency or more desirable aesthetics, IP can help them achieve a marketable value, helping you surpass competitors and building equity in your brand as the exclusive provider of these offerings.
Conversely, when your ideas are not legally protected by IP rights, they may be freely and legally used by any other enterprise without limitation. That means that the concrete value and competitive advantage that comes with exclusivity is lost. Now that a company’s balance sheet is no longer limited to material goods, this loss is simply not an option.
In today’s information economy, it is more critical than ever to safeguard your company’s intangible assets. Since IP now constitutes a significant part of your company’s value, it is an essential tool for preserving your market position and ensuring your long-term competitive viability.
What is your company doing to protect its intellectual property? And how large a role does IP play in your long-term growth strategy? Let us know in the comments below.
Great inventors are, by nature, problem solvers. When their talents are put toward ideas for good, the possibilities are truly endless. Which of these technologies is most exciting to you? Let us know in the comments below and stay tuned for more articles from our Ideas for Good series.
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