The creation and adoption of new ideas helps determine the progress of modern economies. Economists believe that up to 40 percent of all gains in productivity and growth over the course of the last century directly relate to innovation. It has also been calculated that 70% of the value of America's largest businesses can be traced directly to their intellectual property (IP) of patents, copyright, and trade marks - most often called intangible assets. In some cases, some companies have realised that their IP assets are worth more than their physical assets.

It is through ideas and innovation that economies move forward. Innovation can take the form of new efficiencies, for instance, doing something quicker with less man power or through completely new technologies that creates new markets and supply of goods or services (think IPOD).

The legal protection of intellectual property turns these intangible assets s into exclusive property rights for a limited period of time. It enables your business to claim ownership over these intangibles and exploit them to their maximum potential.

If the innovative ideas, creative designs and powerful brands of your business are not legally protected by IP rights, then these may be freely and legally used by any other businesses without limitation. However, when your IP is protected, they acquire concrete value for your enterprise as they become property rights which cannot be commercialized or used without your authorisation.

Increasingly, investors, stock market brokers and financial advisors are becoming aware of this reality and have begun to value IP assets highly. Enterprises worldwide are also more and more acknowledging the value of their IP assets, and, on occasions, have included them in their balance sheets. Many companies, have begun to undertake regular IP audits. In a number of cases, some companies have realized that their IP assets are actually worth more than their physical assets. This is often the case for companies operating in knowledge-intensive and highly innovative sectors, or companies with a well-known brand name. Unlocking the value of this IP within these businesses could well be the lifeline they need to prosper in these times.

In the current climate more should be done to protect, value, and manage IP within a business to extract its full potential and to link the IP to the goals of the business. This may mean working with third parties or in some instances competitors to extract the full value of the IP created. Until recently a lot of companies have kept their IP hidden without realising its full value.

The value of IP

Until quite recently most company valuations were calculated using tangible assets such as plant and equipment. Today intangible assets now account for more than half the market value of the average company around the world. Intellectual property is now one of the most crucial components for companies around the world. A recent report by PricewaterHouseCoopers has estimated that up to US$1 trillion dollars is wasted every year from companies failing to extract the full value of the IP it owns. The real value in some companies is tied to its ideas, the knowledge, and potential of its IP. Therefore, IP management is one of the most neglected of all management issues facing companies.

Some key questions that companies face include:

1. What is the value of the IP we create and the IP we currently own?
2. How can we exploit the value of our IP?
3. How do we protect IP?
4. How do we create better synergies between IP creation, protection and business strategy?

Not enough attention is being paid to intellectual property. Uncertainly is often created because companies don't know what IP they have, its value or the ways to effectively protect that IP. In addition, a number of companies are cautious about expanding its knowledge base beyond its direct markets for fear of exploitation and piracy. Uncertainty is often created because the creation and protection of IP is not aligned to the business strategies of the business. But because IP is becoming the main driver of value of a business, processes and management tools are still being developed to best harness that potential. It maybe that the value of some IP goes beyond that direct business but maybe more valuable to another business thereby creating synergies between companies or creating additional revenue streams through royalties and licensing models. According to recent business reports, alliances and partnerships through IP mining and IP convergence will be a primary source of growth for a number of businesses in the next three years. But this has some pitfalls for business that do not have sufficient Ip management structures in place that values the IP, maintains an Ip databse, that protects the IP sufficiently and IP

Blair is an experienced intellectual property lawyer and a Partner at Jirsch Sutherland IP. Jirsch Sutherland IP is a new and exciting boutique intellectual property firm. Jirsch Sutherland IP specialises in the protection, exploitation, enforcement and management of intellectual property in Australia and overseas. If we can assist with protecting your IP, please give us a call on [+61 2] 9236 8361 or email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .