We all wish to make money from our assets. This can be from our tangible assets or our intangible assets
Monetising of intangible assets
A company’s intangible assets can take many forms. Most commonly, they exist in the form of patents, trade marks, designs and copyrights – however, this list is not exhaustive.
Traditionally, there are four main ways of extracting value from intangible assets:
- Distributing a product that is protected by a patent, allowing for premiums to be added to the sale price of the product.
- Licensing a patent or patent portfolio using development agreements, where a third party develops and distributes a product under license agreement.
- Selling a patent to potential purchasers, such as institutional aggregators or private investors. This can usually be arranged by market makers such as patent brokers, licensing specialists and/or auction houses.
- Initiating patent enforcement procedures and litigation for royalty and/or damage payments in the event of infringements.
New monetising opportunity for holders of intellectual property (IP)
IP development is growing exponentially around the world, as businesses and government authorities recognise the importance of an innovation-driven economy.
Various initiatives and schemes have been introduced by government authorities, to assist businesses in identifying, capturing and monetising new opportunities for their innovations, and to support market expansion with well-planned company structures.
One of the world’s leaders in this regard, the Singapore government, has made a remarkable step in supporting IP-rich companies, by implementing million of funds under the Intellectual Property Financing Scheme (IPFS) for local incorporated companies in Singapore.
Under the IPFS, companies may now use their IP as collateral for financing, and/or business growth and expansion.
The IPFS is only available for business entities incorporated in Singapore before 31 March 2018.
The government has partnered with four participating financial institutions and a panel of seven private valuation firms in supporting the IPFS. Applicants under the scheme may apply for a term loan of up to SGD $5,000,000, for up to six years, with interest rates between four and eight per cent – subject to valuations and approvals, and the requirements of participating financial institutions.
The valuation of the IP will be based on the income approach, where the value of the asset is based on the future revenue stream or benefits expected to be derived from the asset.
Forms of IP that will be accepted as collateral include patents, trade marks and copyrights.
Tangiblising the intangibles
IP has now developed beyond being merely a legal instrument, to providing significant financial leverage. In light of this exciting development, it is crucial that IP owners keep informed of possible opportunities, markets and uses for their IP.
At Baxter IP Patent Attorneys, we pride ourselves in providing not only the best legal approach but also with the industry specialist knowledge to capture the crux of your intellectual property and then to guide you through the process of obtaining IP rights, building and strengthening your IP portfolios, and more importantly assisting you to “tangiblize” the intangibles.