Explosion in the value of Intellectual Property
July 2007
Figures released by the Georgetown University Graduate School of Business have shown that the value of Intellectual Property to companies has grown hugely in recent years. The new research, carried out by Professor James J. Angel, an expert on the history of markets and financial markets, has calculated that total intellectual property worldwide has a value of $5.5 trillion. This figure includes patents from pharmaceuticals, technology, energy extraction and manufacturing as well as movies, books and internet properties.
Increase in market capitalisation
An analysis of Standards & Poor's 500 has shown that 79.7% of the market capitalisation of companies is from intangible assets representing a huge increase in just a few years. In 1975 the figure was just 16.8%, and even in 1995 it had only risen to 79.7%. There has also been a large increase in the number and value of patents being purchased. At a recent auction the world record price for a patent was broken, with a patent covering "various methods of communicating, managing and storing data being sold for $2.6 million. At the same auction another patent covering "matching first and second mobile communications devices" was sold for $2.6 million.
Increased demand for insurance
This increase in value is expected to continue the upward trend in demand for products to protect these assets from the potential cost of litigation. Ian Lewis, Chief Executive of SAMIAN Underwriting Agencies, a market leading Intangible Assets protection solutions provider, commented that he was not surprised at the increase and felt that this would continue for foreseeable future. He said "If a company is investing $2 million into a patent, then protecting this patent from potentially ruinous legal costs is just common sense. After all, you wouldn't pay $2 million for a car or a painting, and then omit to insure it, so why would you treat an intangible asset any differently?"
