Intellectual property is the 'currency of tomorrow'

Over half of all technology companies do not extract the full value from their inventions despite the growing importance of intellectual property, research has warned.

A new survey by PricewaterhouseCoopers (PwC) looked at the challenges facing technology companies and the identification and exploitation of their intellectual property assets. 

Some 85 per cent of technology executives said that intellectual property would increase in importance for their organisations over the next three to five years.

Over two-thirds believe that their intellectual property management is too often treated as a legal issue, a view particularly prevalent among North American and Asian respondents.

Others view this approach as out of date and unlikely to work in today's technology markets.

Forty-seven per cent of the executives also suggested that a large majority of intellectual property related lawsuits are spurious and intended simply to harass the competition.

The survey also found a lack of clarity about where the responsibility for intellectual property sits within an organisation.

In 38 per cent of companies, responsibility sits with C-suite executives and only 21 per cent have dedicated specialist intellectual property management units.

As demands for corporate reporting transparency increase, 35 per cent of executives will add intellectual property related information to reporting within the next three to five years. Only 16 per cent provide supplementary reporting to financial data.

Historically, company valuations were determined by capital assets, such as plant and equipment, but today intangibles often account for more than half of market value for the average company listed worldwide.

One of the ways in which companies can manage risk and reduce revenue leakage is to conduct a 'royalty examination', a forensic investigation to verify royalty yields and highlight any misreporting.

Melanie Butler, European licensing management leader at PwC LLP, said: "Over the past five years, we have performed more than 1,000 royalty examinations. In 90 per cent we have identified misreported royalties.

"Companies also need to create tighter links between their own research, technology acquisition and business objectives in order to maximise and exploit all intellectual property revenues."

Nearly half of respondents confirmed that a significant amount of intellectual property is being created in emerging markets, and that protection of these assets in some of these territories is perceived as inadequate.

Respondents also expect the frequency and degree of worldwide patent infringement to increase considerably and not just in emerging markets.

However, the tide will turn as countries in Latin America, Eastern Europe and Asia begin to acquire their own portfolios of legitimate intellectual property and therefore increase the need to protect it.

"Companies have little choice but to develop a fully fledged intellectual property strategy in order to stay competitive. Intellectual property is the currency of tomorrow for technology companies," added Butler.

The report concluded that technology companies need to treat intellectual property as a portfolio and to create closer links between business units and research and development.

• PwC Report: Technology Executive Connections: Exploiting intellectual property in a complex world (PDF)

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