Publication
title
Important Assets: Owning & Maximizing Value
DATE
June 2, 2004
EXPERTISE
Do You Own Your Most Important Assets? If so, are you maximizing their value?
In 1982, 65% of the market value of S&P companies in the U.S. was made up of tangible assets. However, in 1998, tangible assets accounted for only 15% of the market value whereas 85% of the market value was assigned to intangible assets. Even in a bear market, intangible assets often represent more than half of the company's market value.
Intangible assets include all of your company's intellectual property (patents, industrial designs, trade marks and copyrights), trade secrets, and generally the creative and innovative structures, processes and resources on which your business is built, also referred to as intellectual capital.
Whether your company is a start-up or well established in the business world, chances are you hold assets you don't know you have or whose value you underestimate.
WHICH OF YOUR ASSETS ARE INTELLECTUAL CAPITAL ASSETS? HOW CAN YOU IDENTIFY THEM? HOW CAN YOU MANAGE THEM? HOW CAN YOU MAXIMIZE THEIR POTENTIAL?
The answer to your questions? The Intellectual property (IP) audit and valuation.
NATURE AND PURPOSE OF AN IP AUDIT
An IP audit allows one to determine who owns the IP assets of a company and, more generally, its intellectual capital. The purpose of such an audit is to confirm the ownership of the assets, determine their legal value and contingent legal liabilities, and choose the best way to exploit the company's intellectual capital.
WHEN SHOULD YOU CONDUCT AN IP AUDIT?
Contexts
- legal
o due diligence and asset protection
o legislative amendments
o preparation for litigation - management
o IP portfolio management and budgeting
o managing a company's intellectual capital - transactional
o mergers and acquisitions, asset sales and financing
o partnership, R&D or licensing agreement - valuation and value maximization
o assessment of IP value, in whole or in part
o assessment of opportunities for marketing or use by the company or an outside party
DISPELLING THE MYTH: A SIMPLE AND COST-EFFECTIVE PROCESS
First of all, you will need an action plan, in which you set out the goals you wish to achieve, a schedule and a budget as well as the partners who will ensure that the plan is properly implemented, namely, the company's in house counsel, executives and technical or R&D managers on the one hand and professional advisers (lawyers, patent and trade-mark agents) on the other hand.
WHERE SHOULD YOU LOOK FOR IP ASSETS?
An IP audit generally takes one or more of the following aspects into account:
- Patents and industrial designs: generally, a company's inventions, more specifically, laboratory reports, inventors' research notes and technical research data, patents, industrial designs, infringement and validity opinions, as well as licensing, employment and consulting agreements;
- Trade-marks: registered and unregistered trade-marks, consistency between registration and use of trade-marks, registration and renewals, continuous use of trade-marks, infringement opinions, licensing agreements, the company's promotional material;
- Copyright: registered and unregistered copyrights, copyright notices, employment and consulting agreements, and use by third parties;
- Domain names: reserved or available domain names and Internet addresses, cybersquatting;
- Trade secrets, know-how and confidential information : confidentiality and non-disclosure agreements, employment and other agreements, internal confidentiality policies.
TANGIBLE BENEFITS AND ADVANTAGES
The main purpose of an IP audit is to enhance the value of all of the intellectual capital available within a company, by reviewing licensing opportunities or opportunities to market new products; another purpose is to implement appropriate management policies to increase the protection and enhance the value of intellectual capital assets and, lastly, to set a fair value on the company's intellectual capital.
CONCLUSION
Are you looking for financing? Are you getting ready to assign some of your assets? Are you concerned that your competitors are stealing your ideas? Would you like to maximize the value of your company? You probably have assets of which you are not aware. Do not neglect your intellectual capital assets. Protect them. Intellectual property audit and valuation are key to successfully resolving these issues.
The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault or any member of the Firm on the points of law discussed.
©OGILVY RENAULT 2004 - All Rights Reserved
