Light Years IP

Poverty-Alleviating IP Solutions

Intangible Value: The Main Source of Income in Global Markets

Intangible value has rapidly become the central means to create income in almost all industries. No longer do the terms “capital assets” and “income-generation” bring to mind pictures of ever-expanding manufacturing plants and processing facilities. Today, the income of companies worldwide is dominated by the intangible value in IP assets such as technological know-how, patents, trademarks, copyrights, brand names, trade secrets and other IP. The Brookings Institution reports that in 1982, 62% of the market value of Fortune 500 companies could be attributed to tangible assets and 38% to intangibles. By 1998, only 15% of assets were tangible and 85% were intangible. This reflects the income generating power of Intellectual Property.

Intangible value greatly impacts income. For a common product such as a natural cosmetics item or a pound of coffee, 40 years ago about 60% of the retail price would reflect the costs of production, with little, or nothing, going for the brand name, design, or uniqueness. Today, 90-95% of product value is taken by the distribution chain which is managing the design, brand and other intangible value. Just a few producers in the developing world have gained ownership of the intangible value associated with their product. The value of a brand or a manufacturing license is now far more important than a product’s physical production. Also, income from creative products (such as designs, writings or inventions) is entirely due to intangible value.

Lacking IP business analysis capability, developing country producers, exporters and governments are leaving most of their export product value - up to 90% -- on the table for others to own and control.

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