How should intellectual property be managed in a recession?

ip valuation

The recent collapse of Silicon Valley Bank and Credit Suisse’s troubles on top of longer-term post pandemic economic issues has many concerned about a coming recession.  Given intellectual property (IP) is such an integral part of most businesses’ value – upwards of 80% being in intangible assets, in some cases – proper management during a recessionary period is essential to preserving a business’ well-being during tough times.

It is worth noting why IP is valuable in the first place, and why this differs to other assets on the books. Unlike tangible assets, such as machinery or real estate, IP might be expected to hold its value better during an economic downturn.

IP protects key differentiating technologies in a company’s product portfolio through patents, and ensures brands remain distinctive through trademark protection. Together, these can help maintain consumer brand loyalty and preserve business in tough times. IP can also be valuable when seeking to raise capital. As we have previously discussed, knowing crucial assets are protected will reassure potential investors at all stages of a business’ lifecycle that the business has firm foundations. New revenue streams obtained through effective utilisation of a company’s IP, for example by licensing patents, could be vital to preserving cashflow during a recession.

Despite this, some strategic decisions are required by companies facing a downturn. The most obvious is to consider reducing costs. IP filing and maintenance fees can be substantial, and it is likely that companies’ will want to economise on their portfolio to preserve the maximum value whilst reducing costs. Crucial to this is understanding what the company has, and what is most valuable in that portfolio. OxFirst is well-experienced with such analysis and the actionable insights provided can be utilised to more efficiently maintain the company’s portfolio.

Companies may also benefit from understanding the wider IP landscape in their field, particularly in reference to patents. We have already mentioned the value patents have for their potential licensing revenues, and a landscape report can help companies identify potential partners. Such analysis can also help a business understand who are the most important IP owners in the field, and what they hold. With an economic downturn, some businesses in the industry will fail. Those seeking to enhance their portfolios could acquire the IP of those who go under. Before doing so, though, it is crucial to understand what competitors have and what is most valuable.

Innovative companies should feel reassured that they tend to survive economic hardships better than those who are not. Amazon, for instance, maintained its focus on innovation and developed its Prime, Kindle and AWS products between 2007 and 2009. By 2009, profits were up 68% and Amazon founder Jeff Bezos was hailing Kindle as a “mainstay” of its strategy. Innovating with purpose and ensuring those innovations are properly protected can be an important element of surviving tough times and thriving when they end. Knowledge, again, can be invaluable for achieving this. OxFirst is accustomed to performing detailed economic analysis to provide actionable insights to business decision-makers.

Yet businesses should also be aware that the number of disputes tends to rise in a recession. A more protective approach tends to be adopted by IP-owners and, with the means for innovation curtailed, imitation might be the path that some competitors pursue. Businesses should be aware of both possibilities and ensure they are monitoring the landscape. In the event of litigation, OxFirst is accustomed to supporting clients with intellectual property valuation and holds accreditation as an expert witness to the Court of England and Wales.

Prudent and well-informed management of a company’s IP assets can ensure it survives and even thrives in tough economic times. OxFirst’s valuations and assessments have a proven track record of success in helping decision-makers get to grips with the economic value of IP incorporated actionable insights into their business strategies.