Why Should Your Company Protect Its Intellectual Property?

Research shows that small- and medium-sized enterprises (SMEs) do not adequately assess the value of their firm's Intellectual Property even though many understand that IP is very important to the success of their business.

A 2015 survey published by the UK Intellectual Property Office showed that more than 92 percent of SMEs believed that understanding how to protect IP was either "quite important" or "essential." However, the survey showed that more than one-third of SMEs choose not to protect IP that they own and that 96 percent of all respondents, including large companies, hadn't valued their IP at all.

Such findings are unfortunate given the positive impact that IP has on businesses trying to scale up their operations and add value to the company. A 2017 working paper released by the National Bureau for Economic Research indicates that startups obtaining a patent since 2001 experienced 55 percent employment growth and 80 percent sales growth within five years. Of course, ownership of IP rights is not a ticket to business success, but the proper management of IP rights is often part of a healthy business plan.

Attracting investment is a significant reason why a business, especially smaller companies looking to increase the reach of their operations, should consider protecting their IP. Unlike many other types of property, such as facilities or capital equipment, the value of IP does not depreciate over time and can increase dramatically over time. Consider the golden arches of McDonald's. Originally a part of the architecture of the company's restaurants opened in the early 1950s, they were incorporated into the logo during the 1960s. Five decades later, those arches are so iconic that a consumer instantly knows that any building emblazoned with them will have a drive-thru where you can order fries and a Big Mac. The rights to use that trademarked logo is a big reason why McDonald's can charge a $45,000 fee to business owners who want to open a new franchise location.

Revenue streams created through IP licensing are another reason to obtain IP rights, and the Walt Disney Company is one of the undisputed masters of this practice. In 2016, Disney was listed as the world's leading licensor by License Global magazine having raked in $56.6 billion in sales of licensed merchandise. Disney is well known for owning some of the world's most recognizable characters including old stalwarts like Mickey Mouse and Winnie the Pooh as well as newer...

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