Monetizing Intellectual Property To Improve Financial Performance

EXECUTIVE SUMMARY

Companies can improve their financial performance by monetizing patents and other intellectual property (IP). The goal is to increase the assets and revenues that derive from technology and innovation, while decreasing liabilities and expenses. A good beginning is to prepare an IP financial report, adapted from conventional financial statements. Such a report includes:

1. an IP balance sheet listing IP assets such as patents and trademarks, and liabilities such as infringement liability, and
2. an IP income statement quantifying the amount of income from IP, and its cost.

Managers can use an IP financial report to track return on IP investments and to improve performance over time. They can find practical strategies for increasing assets and income and reducing liability and costs by placing a value on each asset. For operational purposes, IP assets should be valued along two axes: