Intellectual property: Unlocking the value of intangible assets

THE current trying times may provide public listed companies (PLCs) with the best reason to leverage their intellectual property (IP) to gain new stream of revenue. After all, IP does serve as a form of intangible assets for PLCs as well as businesses of all sizes and shapes.

Granting licenses to business partners to use their trademarks, copyrights or patents by imposing a licensing fees or royalty fees based on a fixed amount or a certain percentage of sales or profit can be a ‘lucrative’ income amid the current climate of COVID-19 ravaged economy.

However, such licenses shall be regulated by a comprehensive licensing agreement, setting forth the rights and obligations of both parties, according to IP Gennesis Intellectual Property founder & managing director Lawrence Tan. “The IP owners should have control on the use of IP by the licensees.”

Lawrence Tan

To safeguard the reputation of the IP owners, the licensees should use the IP according to the standards and requirements of the IP owners, failing which this can lead to termination of the licensing agreement.

“Moreover, IP owners may consider capitalising their IPs by using them as a capital to form a joint venture with others,” suggested Tan.

“Further, it is also possible to use IP as collateral to secure financing or loan from financing institute or even private funds.

Last but not least, IPs can be sold as an asset for one-off gain, especially trademarks that have been use for long period of time and have attained good level of reputation, according to Tan.

Tan’s comment on unlocking the value of trademarks, patents and brand names is timely given they are often overlooked by the IP owners.

In an article entitled “Unlocking the Value of Intangible Assets” published in Focus Malaysia in January 2019 (print version), Christine Ng, director (IP Valuation & Strategic  IP) at Adastra, an IP  firm, explained that the Government recognised intangible asset (IA) and IP as critical elements in the growth of small medium enterprises (SMEs) as early as 2010.

“Realising that SMEs are asset light, hence face difficulties in obtaining loans for growth, they see the need for a pool of valuers who will be able to capture the value of IPs and other intangibles,” she explained. “This can then be used as collateral for loans.”

She said that over the years, there are in place various types of funds by government-based agencies to enable companies to monetise their IP. These include the International Property Guarantee Scheme (IPGS) mooted under Budget 2018 which was believed to be untouched.

Apart from obtaining loans, intangibles play a crucial role when a smaller tech-based company or SME has an acquisition or joint venture opportunity on the cards.

“Larger corporations with an established customer base are often on the prowl for new technology, platforms or applications. Rather than face the hassle of developing it from scratch they seek to acquire smaller companies who have it,” added Ng. – July 29, 2021

 

Photo credit: The Balance Small Business

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