Ten Reasons to Protect Your Intellectual Property
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Revenue Streams

Increase Cash Flow

Licensing is a tried and true business model that makes companies billions of dollars every year, typically with only minor upkeep and expenses. In licensing, the Licensor allows the Licensee to use the Licensor’s intellectual property in exchange for payments, royalties, etc. The foundation of this agreement is the intellectual property owned by the Licensor. The more valuable and better protected it is, the more lucrative the arrangement for both parties. If you are interested in building a business around a licensing model, it is critical to obtain strategic protection for your intellectual property.

The licensing model can be an important revenue generation tool for any business. No company can take advantage of every opportunity they have. Identify the opportunities that you are leaving on the table. These opportunities are chances to build a licensing revenue stream for your company. Once you have identified these opportunities, build a strategic portfolio of protection around them so that when you find your licensing partner, they have a reason to keep sending you checks.

Other ways to increase your cash flow through intellectual property (IP) include monopoly pricing, joint ventures where you bring the IP to the table, using your IP to service your competitors, and leveraging IP to gain market share. Most of these strategies have low associated costs. This means the benefit accumulates directly to your bottom line.

Increase Net Worth

Intellectual property can have a Return on Investment (ROI) of 10x, 100x, 1000x, 10,000x or more. Some intellectual property (especially trademark registrations) have inflating values over time. If you want to increase the net worth of your company, especially the all-important exit valuation, be sure to load up on the right intellectual property. For most companies, the majority of the net worth is not in the hard assets like equipment and buildings, but in the intangible assets like their branding and goodwill, contracts and relationships, and technology and content. Without protection, your intangible assets are worth only a small fraction of their potential. Companies interested in becoming acquired do well to position themselves to be attractive. But, if they do not protect their intellectual property, they might only be attracting competitors.

Many companies are undervalued because they are under protected. Protecting your intellectual property will increase your value and it will also provide registrations, contracts, and other forms of ownership rights that can be leveraged in many ways, including being used to secure loans or access to lines of credit. It also reflects on your leadership by showing that you take care of your property and can be trusted. Look around your business – there is more value than you imagined.

Decrease Expenses

Every business has operating expenses. On top of that, certain expensive events are considered to be the “cost of doing business.” These include lawsuits, theft, and competitive market pressure. The worst part of these expenses is that they are usually impossible to predict and therefore not “in the budget.” They rob you of opportunities by stealing resources you planned to use elsewhere. However, well-protected intellectual property keeps many of these events at bay, therefore decreasing your expenses.

Most companies respect intellectual property. That means that they will make decisions and behave differently in the face of your intellectual property. Your intellectual property acts like a shield of respect around your business. People are less likely to sue you for things like trademark infringement or patent infringement because they are less likely to win. Even if you are engaged in a lawsuit, the cost of the suit will be less expensive if you have strong intellectual property. You will also suffer from less theft of your intellectual property because the penalties for taking are so severe. Intellectual property certainly fits the saying, “An ounce of prevention is worth a pound of cure.”

 

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