Companies undervalue their intellectual property

Research says half of companies do not make the most of their information assets

Pace of change in R&D makes it difficult to keep track of intellectual property

Companies are not extracting maximum value from their intellectual property (IP), despite being aware of the increasing importance of owning research and ideas, a survey by PricewaterhouseCoopers has found.

Over half of all technology companies do not extract the full value from their IP, but 85 per cent of technology executives believe IP will increase in importance for their organisations over the next three to five years.

'Over the last five years, we've performed more than 1,000 royalty examinations,' said Melanie Butler, european licensing management leader, PricewaterhouseCoopers. 'In 90 per cent of those examinations we have identified misreported royalties.'

The survey says research and development moves at such a fast speed that identification and exploitation of intellectual property is sometimes difficult.

Over two thirds (69 per cent) of executives believe their IP management is too often treated as a legal issue rather than a business one, with companies unaware of who should have responsibility for the property.

As demands for transparency around corporate reporting increase, 35 per cent of executives believe they will add intellectual property-related information to their reporting within the next three to five years, making it more obvious who is responsible for intellectual property. Currently 16 per cent provide supplementary reporting to financial data.

Historically, company valuations have been determined by capital assets, but in technology companies today, intangible assets such as intellectual property often account for more than half the market value of the company.

'As well as performing royalty examinations and reviewing their intellectual property arrangements with partners, companies also need to create tighter links between their own research, technology acquisition and business objectives in order to maximise and exploit all revenues. This is the currency of tomorrow for technology companies,' said Butler.