The Value of Intellectual Property

By Louis-Pierre Gravelle (Link) and Cliff Pavlovic, Ph.D. (Link)

With the growth of the knowledge-based economy, the value of a company will be increasingly formed by its intangible assets, such as intellectual property (IP) and know-how. It is estimated that, currently, 70% of the valuation of companies is comprised of these type of assets (The Telegraph, January 2017), and that trend is not likely to stop.

There is also a push for open-innovation and using open-source tools, allowing for easier research and development, and being accessible at a much lower cost than using proprietary solutions. This in turn leads to the creation of even more intellectual property and know-how, which can be provided via very accessible licensing terms (such as the use of Creative Commons Licensing) or by hiring the right people (as showcased by the generous salary conditions of Twitter’s head engineer, at over $10 million USD a few years back; Link).

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