Intellectual property (IP) includes intangible assets, such as patent portfolios, brands, designs or copyrighted works, and also human capital or know-how. All those assets are of increasing importance in the knowledge-based economy, so owners of IP should identify it carefully and thoroughly and consider the ways in which they can benefit from it.

For companies, IP is likely to be used to develop and safeguard a strong market position.

On the one hand, the benefits of a competitive advantage might arise for IP owners when using IP internally, e.g. for improving internal processes or keeping certain sources of information secret to make exclusive use of them1.

On the other hand, an IP owner might also want to use its IP externally in order to:

* commercialise an invention for additional income by licensing or selling it;

* prevent others from using it by exercising the (monopoly) rights granted to owners of IPR, e.g. to control competitors;

* strengthen its negotiation power by disposing of IP as exchangeable trade assets;

* attract investors or business partners, share- or stakeholders by demonstrating innovativeness and technical capability and leadership;

* develop a good reputation among consumers by using trade marks/designs in order to make them recognise their own products/services in the market.

The decision certainly depends to a great extent on the business objective and strategy of the IP owner which will be determined by the potential of the technology in question, the market, potential licensee/s and his particular business circumstances. IP owners are required to have a clear view of their situation and might use sources, such as trade information, exhibitions, ministries or agencies, business associations, innovation centres and patent information services etc. to examine their position and options in the market.

Taking patents as an example, the following general issues should be considered when evaluating the potential of IP:

First of all, an IP owner should make sure that the technology in question is owned by him to guarantee that he is the one entitled to exploit it2.

He should then check whether the technology is – at all and still – protected (or dealt with under confidentiality) and where – it is obvious that it will otherwise lose value as it is freely available to third parties in the business area or territory of interest.

The patent owner then needs to determine the strength of his patent, which depends on:

• the scope of the claims
  
  (Which use of the technology is exactly covered and made off limits to third parties by the legal title?)
  
  
• territorial scope of the patent
  
  (Where does the owner enjoy exclusive rights territorially?)
  
  
• its legal lifetime
  
  (For how long will these rights exist, i.e. is there still the potential to extend its protection by renewal or will the technology be licensed shortly before the maximum period of protection elapses so the information will soon become freely available?)
  
  
• its economic significance
  
  (For how long will the patent be able to generate income or save costs? Are there alternative technologies available: Is the technology unique or do licensees have the chance to select similar technologies so they do not rely on licensing-in one’s technology? Does the area of technology face quick changes so the significance of the patented technology will become obsolete/out-dated quickly and is thus of less interest for others? Is the patent so close to others or in the focus of further developments so there is a danger of infringement procedures?)
  
  

Subsequently, the determination of a concrete monetary value of the IP assets will become important, in particular when this first analysis encourages an IP owner to become engaged in license or assignment agreements. There are various methods for determining the financial value of a patent (such as the costs approach, the market approach or the income approach) which can e.g. serve to develop a concept of payments to remunerate IPR (such as lump-sum payment, royalties, cross-licensing, extra fees for technical services/assistance etc.)3.

Generally speaking, IP is a major asset for most companies. Taking best advantage of it can be a complex issue as it is not only a legal decision of whether and how to use the IP regime. A decision, especially for SMEs with limited resources and expertise, needs careful evaluation of benefits and disadvantages. Experts will likely be required to get involved in the decision-making process.