The biggest asset you weren’t 100% sure you owned…
…until you started to leverage it.
Polymath & Boffin recognises the indispensable role that intellectual property (IP) plays in shaping the success and growth trajectory of a company. IP, encompassing patents, trademarks, copyrights, and trade secrets, serves as a critical asset that can yield significant advantages across diverse industries. We will look at three companies leveraging IP assets before we reveal how IP can help transform your business vision.
Spotify, the renowned music streaming platform, demonstrated the strategic importance of IP by protecting its unique technology and enhancing the user experience. Through its IP portfolio, Spotify secured patents for personalised music recommendation algorithms that revolutionised music discovery for users. These algorithms analyse listening patterns, user preferences, and collaborative filtering techniques to deliver tailored music recommendations. By leveraging their IP assets, Spotify achieved a competitive advantage by offering users a personalised and engaging music experience, leading to increased user retention and market share growth. Spotify's IP protection led to licensing agreements with record labels and artists, solidifying their position as a major player in the music streaming industry.
LEGO, signed licensing agreements with other brands to create LEGO sets based on popular movies, TV shows, and franchises. This gave the Danish company access to their intellectual property, such as characters, settings, and storylines, which they then translated into themed LEGO building sets. These licensed sets, such as LEGO Star Wars, LEGO Marvel Super Heroes, or LEGO Harry Potter, have become extremely popular among fans of both LEGO and the respective franchises. LEGO was able to increase sales and revenue, reach a wider (yet very relevant) audience and fans of the licensed property purchased LEGO sets to recreate their favourite scenes or collect themed LEGO minifigures. Its brand expanded with the associations and marketing could easily generate excitement and buzz, especially among fans of the licensed property. LEGO also capitalised on promotional efforts of the brand partners, benefiting from the increased visibility and interest.
IBM is known for its vast patent portfolio and has strategically utilised its IP assets to generate significant revenue and establish strong market positioning. In the early 1990s, IBM faced financial challenges and recognised the potential value of its patent portfolio. The multinational made a bold decision to shift their IP strategy from primarily using patents defensively to actively licensing their patents to other companies. This move allowed IBM to generate substantial income from licensing fees and royalties, which helped contribute to their financial recovery and subsequent success. The patent licensing strategy was unique in the sense that they held a wide range of patents across various industries. They were able to identify technologies that were essential to many companies and offered licenses for these valuable patents. This transformative approach not only generated substantial revenue for IBM but also provided other companies with access to crucial technologies, sharing innovation and collaboration.
Through strategic IP management, companies can gain tangible advantages, including differentiation, market share growth, innovation leadership, and collaborations. IP holds the power to attract investment and nurture partnerships. Well protected IP assets enable licensing agreements and facilitate knowledge exchange, resource sharing, and expanded market access. Companies with an IP foundation to work from tend to invest more in R&D and sequence new products or enhancements with better planning and market knowledge.
IP assets strengthen a company's negotiating power, deterring potential infringers and safeguarding market position, share, and competitive advantage. The presence of strong IP assets acts as a deterrent against legal disputes, encouraging competitors to think twice before engaging in costly litigation. This positions companies to protect their innovations, maintain market dominance, and seize commercial opportunities. Additionally, a robust IP portfolio can create barriers to entry for competitors, as patents can provide exclusive rights to an invention, preventing others from manufacturing or selling similar products or technologies.
Strong IP assets can make a company more attractive to investors and lenders. Intellectual property can be perceived as valuable collateral, enhancing a company's creditworthiness and reducing the perceived risk for potential investors or lenders. This increased “pull” can facilitate funding for expansion initiatives at home or abroad.
Leveraging IP assets drives business expansion and diversification, allowing companies to enter new markets, expand product lines, or venture into related industries. Trademark portfolios extend brand recognition to new products, accelerating market acceptance and reducing marketing costs. Patents can be licensed or sold to generate revenue streams or fund research and development efforts.
Effective monetisation of IP assets through licensing or partnerships unlocks growth avenues and enhances value in mergers and acquisitions (M&A). IP assets contribute to valuation and inform due diligence, enabling acquirers to assess IP-related risks. Strategic advantages, including market exclusivity and revenue generation potential, make IP an essential consideration in successful M&A transactions. Leveraging IP drives value creation and supports M&A success.
Contact us for a compelling and potentially revealing IP consultation. Your business vision may be closer to realisation than you think. We will leave you with this:
"Intellectual property is the oil of the 21st century. Look at the richest men a hundred years ago; they all made their money extracting natural resources or moving them around. All today's richest people have made their money out of intellectual property."
Source: Mark Getty, Co-founder of Getty Images.
Polymath & Boffin is a knowledge equity investor, a visionary, and a creator of bespoke commercial solutions. Our mission is to connect investor capital with innovative product and commercial opportunity, establishing an ecosystem of commerce for both investee and investor, one which thrives on an alignment of interest between all development partners.
Let us apply financial acumen, science and creativity to the growth of your business.
