Intellectual property rights are known not only to enhance the brand value of an organization but also to increase market capitalization.
Technology, copyright, patent, trademarks and other IP are the building blocks of brand value of any organization. Having a sound knowledge of the value contribution of these resources and the linkages between them is essential for business strategy, IP management and IP valuation.
Value from an IP asset can be derived through sale and licensing. It can also be derived by reducing the negotiating power of customers, offsetting supplier power, mitigating rivalry, raising barriers to entry by competitors, reducing the threat of substitutes, etc.
Organizations with strong intellectual property assets have increased likelihood of success by way of greater investment, lower probability of bankruptcy and better chances of successful exit through initial public offerings.
The top five valuable companies of the world, that is, Apple, Microsoft, Amazon, Alphabet (Google), and Facebook, are mainly intangible asset dominated companies, with a market valuation of ₹150.8 trillion (USD 2,051 billion), ₹130.7 trillion (USD 1,778 billion), ₹114.5 trillion (USD 1,558 billion), ₹102.4 trillion (USD 1,393 billion), and ₹61.7 trillion (USD 839 billion), respectively as on 31 March 2021.
As per the Global Intangible Finance Tracker 2020, physical assets account for only 4% of Amazon’s net worth, while the corresponding numbers were 6% for Apple, 7% for Microsoft, 16% for Facebook, and 26% for Alphabet.
The world economy is now more of a knowledge economy, where knowledge/intangible assets remain the predominant form of economic assets, more valuable than tangible assets.
© Copyright 2022. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
