It is universally acknowledged that an IP portfolio contributes significantly to the value of a company, with estimates suggesting that up to four fifths of corporate value can be based on intangible assets such as patents and trademarks.My recent visit to the International Trademark Association annual meeting in Barcelona got me thinking about the true worth of trademarks, especially as they can sometimes be perceived as less important than patents.
A recent article in World Trademark Review, showcasing a study from George Washington University, caught my interest. The study concluded that a company’s trademark portfolio is a more consistent indicator of innovation than patent count or R&D expenditure.
Whereas the value of patents represents innovation that has already been developed, trademarks represent a combination of recognition and what customers anticipate the firm will develop in the future. The benefits of a recognisable name or outstanding reputation can obviously boost a brand’s value, but the trademark link to innovation can generate customer loyalty through anticipation of upcoming innovation.
This all comes down to brand value in the end. Many of the companies at the top end of the Interbrand and Forbes brand value charts are holders of extensive portfolios of patents and trademarks. In some industries - for example fashion, retail or entertainment - the value of trademarks can significantly exceed that of a patent portfolio. The challenge for brands is to secure the relevant global protection quickly enough to ensure that value is maximised.
Being aware of the real and potential value of ideas, and securing protection, is no longer only an issue for organisations; it is an important consideration for all value creators. JK Rowling is estimated to be worth £650 million according to The Sunday Times Rich List 2016, with a significant part of that wealth coming from movies and a theme park. The characters that Rowling created have become immensely valuable, forming the basis of sequels, series and merchandise, all secured by both copyright and trademark protection.
Trademarks not only increase security and protection for brands; the trademark becomes a mark of quality, reliability or perceived value. With increasing diversification and globalisation – such as Caterpillar into clothing or Tag Heuer into smartphones - trademarks offer brands a secure way to exploit new markets and regions effectively.