understanding the need to protect & develop ip

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Understanding the need to protect and develop IP

Presented by: Jim Asher, Head of Valuation, Coller IP

Outline• Key elements of IP strategy for business and how to

develop a strong commercial position • Understanding the IP competition minefield• How IP is helping small business to finance growth and

the role of IP valuation

Intangible Assets and company value

Intangible Assets may be larger part of company value thanBalance Sheet assets

BS Asset value

Intangible Assets

Company value

Intangible assetsLegal

underpinningPeople-based

assetsRoutes to

market

Key questions for business…

• What Intangible Assets do you own?• Are they significant to your business?• Does your business own them?• How well are they protected?

– international protection?• What is their value?

Competition

• Who are your competitors?• Do you know what they are doing?

– What IP do they have?– Where is it protected?

• Freedom to Operate– …in the light of 3rd party IP

• Understand the risks you are exposed to!

IP Myths

• USA and Europe lead the world!– The picture is changing rapidly– USA patent environment is in chaos– China is a leading player in patent filings– Other Asian companies are rapidly adopting IP

strategies

IP Myths

• You can’t enforce IP in China!– China is changing rapidly – Patents can be enforced in China– You need to understand the system and work

within its rules

IP Myths

• There is no point filing for a patent if you cannot afford litigation!– Litigation is expensive and uncertain…but– IP should be used primarily to underpin

commercial negotiations– If you don’t have IP, you may increase your risk of

being litigated against– If you have a good case, IP insurance can be

obtained

$£€IP: routes to Finance

• R&D tax credits can help finance SME’s at the development stage

• Asset finance with pension funds• Software asset financing • Investors look for IP in targets for investment…in a successful company, intangibles determine value

R&D Tax Credits

Do these apply to your business?• Limited company, liable for corporation tax• Invested in innovation or development activity that

requires significant expertise and solves an industry or sector wide problem

• Invested in staffing (employees and contractors), software, consumable items, prototypes and materials

R&D Tax Credits

• The average claim for SMEs is £46,000• They encourage innovation in business• You could get up to 26% of qualifying costs back• Unlike other tax reliefs, UK government actively

wants you to claim them…• …only 4% of qualifying business currently claim!

Asset Financing

• Banks don’t normally lend against intangible assets

• There are some specialist intangible asset finance products– e.g. Lombard Asset Financing of Software

Pension fund financing

• Owner/director businesses– SIPP or SSAS pension scheme

• IP can be used as security for a loan or in a purchase/leaseback arrangement– Registered trade marks– Patents– Software

• IP is independently valuedwww.pensionledfunding.com

What value does IP have?

• IP provides exclusive rights– Maintains a premium price– Supports a market share

• Value of IP is in the additional profit it can protect

Similar to property valuation…

• Property can be bought, sold or leased– IP can be bought, sold or licensed

• Value of property is demand led– value may be hidden– if no-one wants to buy, value drops

• Cost to build ≠ Value

Valuation methods

• Cost-based – What would it cost to replace the future

capability of an asset?• Market-based

– Are there similar transactions in the market to provide comparators?

• Future income– What additional profits/cash will the IP

generate in the future?

…plus experience and independence

• Businesses• Investors• Lenders• Lawyers & Accountants• Insolvency Practitioners• HMRC

– Taxable events– Transfer pricing

Who wants to know…?

Summary• IP strategy is a key part of developing a strong

commercial position – identifying key intangible assets, securing ownership and protection.

• IP is a lever to stay ahead of the competition, but do you know who is competing where and what they have?

• IP can help small business to finance growth• IP valuation is used to secure finance, in commercial

negotiations, M&A, restructuring and litigation

Contact details:

Jim Asher

jim.asher@collerip.com

www.collerip.com

…making the intangible valuable

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