COMMENTARY: Strengthening Your Intellectual Property Portfolio During (And After) The Recession May Yield Significant Gains.

It’s no secret: U.S. and international markets are in deep turmoil. Massive layoffs, historic stock market declines, and institutional failures remind us this no ordinary time. Even while companies look for ways to cut back and streamline institutional costs, now may be the best time to strengthen your intellectual property (IP) portfolio.

Although frequently overlooked, a company’s IP, including its trademarks, copyrights, and patents, is often its most valuable asset. There are several reasons why strengthening an IP portfolio now, even during the recession, not only makes good business sense but may be the key to a company’s future economic growth and recovery:

1. IP Assets May Be A Significant Source Of Revenue During (And After) The Recession.

Licensing or selling of IP assets has always been a way for companies to generate additional revenue. For example, during 2006 Neo-Magic recorded a $3.5 million gain on the sale of its unused patents, representing over 37% of the company’s total yearly revenue. A recent article in the Chicago Tribune reports “amid the recession, a growing number [of companies] are looking to generate cash by selling or licensing their dormant trademarks and patents.” If protected and maintained properly, your IP assets can offer significant revenue now and into the future. In fact, many lending organizations look to a company’s trademark portfolio as a means for determining the foundational strength of the organization.

2. IP Assets Are The Building Blocks To A Flexible Business.

The recession has brought significant restructuring and reorganizing of businesses. Mergers, acquisition, spin-offs, and new business units are a sign of the times, and strong IP portfolios are the building blocks for new business opportunities as companies transform their products and market positions. Perhaps this is why, historically, certain IP filings and litigation tends to increase during times of recessions (click here and here for historical figures). As a business continue to change, adapt and grow, so too must its IP assets.

3. IP Assets Will Set Companies Apart From The Competition.

Brand recognition by consumers not only increases product and service sales, but creates a significant barrier to entry for new competitors. Thus, the strengthening of a brand position in a downturn (through both IP filings and consumer marketing), provides an opportunity for companies to stand out when there is a smaller competitive market. Strong IP assets, such as trademarks, will help ensure brand recognition and differentiate companies from their competition.

4. IP Assets Have A Lifetime That Will Extend Well Beyond The Recession.

Perhaps the only thing we know about this recession is that it will end. Innovation, creation and entrepreneurism will continue to drive our economy forward, and as we emerge into the next profitable market cycle, IP assets will remain one of most valuable company assets. Failure to protect them now may have severe consequences for the future.

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