Intellectual Property Value in Secondary Patent Markets
Join us on the 12th of February 2024 | 15.00 GMT
Intellectual property assets are a key element of value in many businesses. Some estimates suggest that 80% of a company’s value is in intangible assets, including IP. As such, the accumulation and commercialisation of IP is a crucial feature of effective company management within the modern knowledge economy.
Recent research undertaken by the USPTO and presented in an OxFirst webinar demonstrates that IP remains a store of value, even during periods of uncertainty, such as economic recessions or the COVID pandemic. Because IP rights disaggregate knowledge from the individual and render them tradeable, IP owners are able to sell or license IP and thereby recoup costs. As such, those industries that are IP-intensive are better insulated against macroeconomic shocks than non IP-intensive industries. Key to this insulation is access to secondary patent markets that enable the business to trade or license IP assets. Some IP-intensive industries have better access to these than others, such as digital or health industries.
This research therefore demonstrates that patents remain a source of value in spite of macroeconomic shocks like recessions. Where companies remain confident of a market for their IP assets, they are likely to continue to file for patents, and this confidence can be subject to considerable variation by industry according to the accessibility of secondary markets.
Our takeaways centre around the complexity of patents as economic instruments. Patents are more than a means to exclude other market participants; they can be extremely valuable articles of trade when successfully employed through a well thought out patent strategy. The principles of Open Innovation, which hold that companies should avoid siloing knowledge and should instead engage in knowledge exchange, therefore apply here and may be utilised to protect the company against economic stressors. A further takeaway is that, despite being so widespread and constituting such a significant portion of company value, the impact of the market upon a firm’s patent strategy still has room to be better understood. This illustrates the requirement to integrate economic expertise when forming patent strategies. This process must be driven by an appreciation of the economic value of patents, a task that can only be accomplished through an expert understanding of where this value is drawn from and how it varies throughout the marketplace.
OxFirst has expertise in IP valuation for a range of corporate activities, including the formation of effective IP strategies. For over a decade we have assisted companies of all sizes, from scale-ups to large multinationals, fully appreciate the value of their IP through our bespoke, rigorous IP valuation approaches which enable effective communication of this value to senior decisionmakers. We are thought leaders in the valuation of IP and our research is regularly published in leading journals.
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The talk provides further understanding of patent value with beneficial lessons for effective patent commercialization. The presentation looks at the behavior of patenting under uncertainty – in particular the resilience of investments in innovation during periods of uncertainty and business fluctuations. It establishes that a firm’s patenting decreases the uncertainty of sales. However sufficiently high levels of exposure to secondary patent markets mitigates the effects of uncertainty shocks and may even induce a positive association between uncertainty and patenting. Through the secondary market for patents, firms are able to use patent protection to store value and recoup investments in R&D.
About the Speakers
Gerard Torres | Senior Research Economist | United States Patent and Trademark Office (USPTO)
Gerard Torres is a Senior Research Economist at the United States Patent and Trademark Office (USPTO). Since joining the USPTO, he has forecast the agency’s revenue and helped shape its financial policies. He led efforts on financial policy changes for the America Invents Act and implemented regulatory changes, including setting and adjusting user fees. The study he presents was undertaken jointly with other scholars under the auspices of the USPTO.
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