#ProfitIP – Generate revenues through patents

As already mentioned, the IP strategy is a significant tool for developing businesses and increasing their market share through legal and commercial means.

Given the relatively high cost of acquiring intellectual property rights, compensation systems for these rights should be considered. At SOERYAH IP, we recommend going as far as possible to the widest possible protection. As a result, intellectual property rights cover a wide range of objects.

Though such a strategy can generate greater procedural costs, It can also generate significant revenue. In particular, if the protection covers objects which are not marketed, it may be advisable in this case to propose that a Third party operates these objects by means of a license agreement.

In this configuration, the licensee thus benefits from a legal monopoly on these objects, which allows him to fix the price without being bothered by a competitor, and to maintain its market shares and margins. In addition, the licensee receives license fees, usually as a percentage of the licensee’s turnover, which is additional income. Rates are negotiated and averages are established based on technical areas.

This type of situation may arise when an invention relates to several different objects A, B, C, in the same inventive concept or having been the subject of divisional applications. Even if object A is the only one actually operated, and the easiest to defend from a patentability point of view, it may be wise to maintain protection for objects B and C. Indeed, it is possible that the products proposed by the holder move to object B, and a third party might be interested in having a monopoly on object C which is in its core business. In this case, the holder could benefit for example from 5% of the turnover of the licensee on the relevant products.

The situation is even more interesting in the case of an individual inventor, despite probable financial limitations. Protecting objects A, B and C allows to offer them to 2 or 3 licensed companies and possibly to other companies abroad. However the costs of filing and extension abroad are significant for a qualitative drafting.

Companies and other IP portfolio firm have an interest in financing the research and patent procedures of isolated inventors, with the objecctive of recovering their investments on the international revenues from the patent. Several interesting patent projects fall into the public domain due to lack of financial means, whereas they could have been a source of significant revenue.

We remain at your disposal for any further information adapted to your situation.

SOPERYAH IP

#ProfitIP – The values of French and English brands

The previous publication reports the Forbes 2018 of brand ranking according to the values ofthe marks. The ranking can be viewed on this link.

The ranking shows the backwardness of French and English companies in the technological fields, or consumer products. The first brand of the ranking is Apple with a value of 182 billion dollars. The first European brand is Mercedes at 34.4 billion (13th in the ranking).
The first French brand is Louis Vuitton at 33.6 billion (15th of the ranking), then L’Oreal at 17.2 billion dollars (30th of the ranking).
The first English brand is Accenture at 14.8 billion (38th of the ranking), then HSBC at 11.9 billion dollars (52nd of the ranking).

The gap is considerable, so to French and English companies: ON YOUR MARKS !!!

The question of the method of estimating brand values ​​may arise, in order to get such results.

Several methods for estimating the value of intellectual property rights are proposed and throughoutly discussed. The methods range from the most objective to the as much subjective as possible, taking into account scores on several criteria. The consensus is towards ISO 10668 standard. The same is obtained after national commissions of experts in marketing, tax, IP attorneys and accounting experts, from several countries of the European Union, and of Australia, Japan, Korea and China.

The standard is methodological and based in substance on three valuation approaches:
The income approach
The market approach
The approach by the costs.

In the income approach, the value of the IP right depends on the income it is likely to bring over its remaining life. Six methods are listed in the ISO 10668 standard, including the cash flows, the surplus profits specifically related to the IP right in question.

The market approach aims at estimating the value of a mark on the basis of the market price, usually by referring to comparable brands whose transaction prices have been made public.

The cost approach aims at estimating the value of an IP right on the basis of the costs incurred for its creation.

Other more complex methods, such as that of Interbrand, take into account brand-specific gains and a variety of “brand strength” parameters, namely, its positioning, the environment, competition, past performance and future plans. The parameters are weighted and the set of scores is used to determine the brand value.

the parameters are as follows:
– leadership: (25%) (ie: influence of the brand on the market / market shares);
– stability (15%) (brand sustainability allowing good customer loyalty);
– the trend: (10%) (ability to stay modern and sought after);
– the market: (10%) (business environment, growth rate, customer volatility, barriers to entry …);
– geographical scope: (25%) (frontiers of the protected territory);
– Marketing support: (10%) (generating marketing and communication expenses for the IP right in question);
– protection: (5%) (other IP deeds related to the one in question).

All these parameters are used to determine the value of the IP right in a relatively objective way.

 

This was only a sample of methods for estimating the value of industrial property rights.

 

All that remains is doing more and developping your intellectual property rights portfolio, and increase its value through communication campaigns and marketing actions increasing your reputation, and therefore your market share.

SOPERYAH IP

#ProfitIP – The value of intellectual property rights – the case of trademarks

 

Rank Brand Brand Value 1-Yr Value Change Brand Revenue Company Advertising Industry
US #1 Apple $182.8 B 8% $228.6 B Technology
US #2 Google $132.1 B 30% $97.2 B $5.1 B Technology
US #3 Microsoft $104.9 B 21% $98.4 B $1.5 B Technology
US #4 Facebook $94.8 B 29% $35.7 B $324 M Technology
US #5 Amazon $70.9 B 31% $169.3 B $6.3 B Technology
US #6 Coca-Cola $57.3 B 2% $23.4 B $4 B Beverages
KR #7 Samsung $47.6 B 25% $203.4 B $4.5 B Technology
US #8 Disney $47.5 B 8% $30.4 B $2.6 B Leisure
JP #9 Toyota $44.7 B 9% $176.4 B $3.8 B Automotive
US #10 AT&T $41.9 B 14% $160.5 B $3.8 B Telecom
DE #13 Mercedes-Benz $34.4 B 18% $116.9 B Automotive
FR #15 Louis Vuitton $33.6 B 17% $12.9 B $5.4 B Luxury
DE #20 BMW $31.4 B 9% $86.8 B Automotive
DE #23 SAP $26.2 B 10% $25.4 B Technology
FR #30 L’Oréal $17.2 B 10% $10.1 B $8 B Consumer Packaged Goods
CH #31 Nescafe $17.1 B 2% $9.1 B Beverages
FR #35 Hermès $15.3 B 17% $6 B $298 M Luxury
IT #36 Gucci $14.9 B 18% $6.7 B Luxury
DE #37 Audi $14.8 B 5% $59.1 B Automotive
IE #38 Accenture $14.8 B 5% $39.1 B $80 M Business Services
NL #40 IKEA $14.5 B 7% $39.3 B Retail
ES #46 Zara $13 B 16% $18.9 B Retail
SE #47 H&M $13 B -8% $22.5 B Retail
DE #48 Siemens $12.8 B 11% $90 B Diversified
UK #52 HSBC $11.9 B 4% $76.6 B Financial Services
CH #53 Nestle $11.7 B 5% $8.6 B Consumer Packaged Goods
DE #58 Porsche $11 B 14% $25.5 B Automotive
FR #59 Cartier $10.6 B 14% $6.3 B Luxury
AT #61 Red Bull $10.4 B 19% $6.8 B Beverages
FR #67 Danone $10 B -2% $10.6 B Consumer Packaged Goods
DE #68 Adidas $9.5 B 20% $20.6 B $2.3 B Apparel
CH #71 Rolex $9.3 B 7% $4.6 B Luxury
DE #72 T-Mobile $9 B 18% $38.7 B $1.8 B Telecom
ES #76 Santander $8.7 B 5% $49.5 B $820 M Financial Services
DE #77 BASF $8.6 B 9% $69.9 B Diversified
DE #82 Heineken $8.2 B 7% $5.6 B Alcohol
FR #87 Chanel $8 B 10% $5.6 B Luxury
FR #88 Lancome $8 B 13% $5.3 B $8 B Consumer Packaged Goods
DE #89 Nivea $7.9 B 14% $4.7 B $1.6 B Consumer Packaged Goods
DE #90 Volkswagen $7.9 B 16% $99.6 B Automotive
DK #91 LEGO $8.6 B -1% $5.1 B Leisure
NL #93 Philips $7.7 B 6% $26.8 B $1 B Diversified
DE #95 Allianz $7.6 B 11% $118.7 B Financial Services

Source: Forbes.com

SOPERYAH IP

#ProfitIP – Profitability of Industrial Property (YIC)

As for the RTC and the ITC already presented, the ” Young Innovative Company” legal system is an interesting tax tool to limit IP expenses and to exploit the commercial and legal advantages inherent to the related rights (without neglecting the communication and marketing efforts needed to make substantial profits from these rights).

Young Innovative Company (YIC)

Beneficiaries:
cumulatively
-SME (less than 250 employees whose turnover is less than 50M € or whose balance sheet total is less than 43M €);
-with an activity of less 8 years;
– owned at more than 50% by individuals, a single SME, financing companies or the like, research organizations, YIC;
– of which at least 15% of expenses correspond to R&D expenses.

The request must be made to the tax authorities and evaluated at the end of the financial year.

Legal system:
Exemptions up to € 200,000
-100% of corporate tax on the first exercise;
-50% of corporate tax on the second year;
-100% of employers’ social contributions (salaries of CEOs, researchers, technicians …);
– (depending on the City) 100% property tax and corporate city tax (CFE).

In comparison, the YIC is more restrictive, but more financially attractive than the ITC (potentially € 80,000).
The most interesting is the RTC (potentially more than 30 000 000 €).

The request must be made in the form of a sworn declaration to be submitted to the regional or departmental directorate of public finances. No declaration is to be made to Urssaf. The company applies the exemption on the summary statement of contributions.

SOPERYAH IP

#ProfitIP – Profitability of IP (ITC)

As with the research tax credit (RTC) already presented in a previous post, the innovation tax credit is another tax tool that can offset the high costs that patent expenses can represent for a good return on the patent portfolio (combined with communication and marketing efforts).

Innovation Tax Credit (ITC)

Beneficiaries:
SMEs with less than 250 employees whose turnover is less than 50M € or whose balance sheet total is less than 43M €.

Eligible expenditure:
Costs related to the design or construction of prototype (s), including personnel costs and capital assets.
Costs of acquiring patents and models, and depreciation relating thereto.

Note: the maximum base is 400 k €.

Rate:
20%, a maximum of 80 k €.

For the record, the RTC rate is 30% up to 100 million euros 5% beyond.

It is therefore necessary to cumulate the ITC with other tools, in particular the RTC.

SOPERYAH IP

#ProfitIP – Profitability of IP (RTC)

In view of the high costs that patent expenses can represent, in addition to marketing efforts, it is important to use tax tools in order to have a good profitability of the patent portfolio.

Research tax credit (RTC)

Beneficiaries:
Companies of any status subject to companies tax (IS) or income tax (IR).

Elligible expenses:
Expenses related directly or indirectly to R&D, including patent and watch fees, salaries, depreciation allowances of immobilisation and of patents,… and even expenses related to the creation of new collections in the textiles-clothing-and-leather field.

NB: Expenses of experimental agricutural stations and farms are doubled.

Rate:
30%, up to 100 million euros; 5% beyond.
(For DOMs 50%, up to 100 million euros, 5% beyond).

SOPERYAH IP