THE VALUE of many companies’ intellectual property (IP) assets is growing in importance globally and, increasingly, IP outweighs physical assets such as real estate, plant and equipment and inventory, according to Brisbane law firm McCullough Robertson.
McCullough Robertson IP partner Malcolm McBratney said that today, intellectual property in the form of patents, trademarks, copyrights, know-how, trade secrets and domain names accounted for between 70 and 85 per cent of some corporations’ value.
In the United States, the Patents and Trademark Office has estimated the nation’s IP rights are now worth $US5 trillion ($5.38 trillion), which is twice the amount of the US federal budget.
“The value and importance of intellectual property assets are playing a greater role than ever before in terms of assets received through mergers, acquisitions and collaboration,” McBratney said.
“Many companies spend millions of dollars managing tangible assets such as property, inventory and computers that generally account for less than a fifth of their corporate value.
“However, it is often more important to manage intangible assets such as intellectual property, which may make up the vast majority of a corporation’s value,” McBratney said.
“If IP assets are not managed effectively, the company cannot do an effective job of monetising its IP. Its value can languish unrealised or — in a worst-case scenario — be lost altogether.”
McBratney said that, in his experience, Australian companies had been slower than their overseas counterparts to recognise the value of IP, resulting in underestimations of some corporations’ true value.
“This is now changing because Australian companies are seeing the success of international companies that value and manage IP such as Microsoft and Google and Australian-based success stories such as Resmed and CSL.”
McCullough Robertson’s latest IP appointments are partner David Downie and senior associate, Emma Weedon.
Downie, 33, said intellectual assets were increasingly recognised as key business assets and should be a core part of a corporate strategy, with PriceWaterhouseCoopers estimating that intellectual property makes up about 90 per cent of the value of the world’s top 2000 businesses.
He said mergers and acquisitions could fail and shareholder value could be lost if an intellectual property portfolio were mismanaged.
“In a recent example, one acquiring company backed out of a takeover because the target company’s intellectual property portfolio lacked the patents and other intellectual property the acquirer thought it had, effectively excluding the company from a number of international markets,” Downie said.
See IP Opinion: page 12