A History of IP Monetization

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When you hear the term IP monetization what comes to mind? For many people, even those who work in the intellectual property industry, this term may sound foreign. While most everyone has heard the term intellectual property, or IP, most people aren’t aware of the many different ways IP owners can monetize (make money from) their IP assets. However, the companies that have lead the way in IP monetization have discovered that capitalizing on the full value of their IP rights can produce practically endless streams of additional revenue for their businesses. As the business world continues to change and as industries and companies shift their assets away from tangible property, and more towards intangible property, the value of IP monetization will only increase.

The Value of IP Monetization

While it may seem like a brand new approach to making money, and it might still lack the recognition of other successful business strategies, IP monetization has actually been around for many years. In fact, some of the world’s largest companies have capitalized on monetizing their intellectual property to the tune of billions of dollars in increased annual revenue. In some instances, this additional revenue from IP monetization was the only reason some of these companies stayed in business.

IBM Among Early Examples

Just about everyone in the world has heard of IBM, the American multinational technology company, which makes and sells computer software and hardware, among other things. IBM has been around for more than 100 years and has generated untold billions of dollars in revenue since its inception. While the company is worth billions today, back in the 1990s it started a focused effort to capitalize on its intellectual property assets by monetizing them through litigation and licensing. They now count more than $1 billion in annual revenue from IP monetization alone.

IP Assets Give Texas Instruments Huge Boost

However, IBM wasn’t the first large U.S. company to capitalize on this strategy. Texas Instruments (TI) is believed to be the first major corporation in America to take advantage of IP monetization. In the early 1990s, when the company was loosing a lot of ground to its competitors, it reset its financial course by focusing on the IP assets it already had, which included more than 38,000 patents. By going after other companies who were infringing on its patents and essentially forcing them to sign licensing deals, Texas Instruments was able to generate billions of dollars in extra revenue. This strategy has been so effective that since that time TI has had some years in which revenue from monetizing their IP has been greater than revenue from sales.

Nokia Is Having its Cake and Eating it Too

Nokia is another example of how a company took its IP assets and leveraged them to create a large windfall of additional revenue. By selling its underperforming handset business to Microsoft in 2013, Nokia was able to capitalize on an asset that was doing very little for the company’s bottom line. In addition, Nokia was able to hold onto its patent portfolio, considered to be very lucrative, and still profit from it at the same time. How did the company pull that off? Nokia agreed to provide Microsoft access to its patents for a 10-year period in exchange for $2.2 billion. In other words, you might say that Nokia is having its cake and eating it, too.

Successful Past Implies Bright Future

It is true that in relative terms IP monetization is somewhat new. However, it does have a rich history of success among some of the world’s largest and most innovative companies. So while it may not have been a common business strategy for countless decades, there are many examples of how valuable IP monetization has been and of how valuable it can be going forward. In any case, if it’s brief history is any indication, then IP monetization is here to stay and the future looks bright.