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Mainstreaming intangibles – not yet
Two stories in the past 24 hours are an interesting indication of how intangible assets are become part of mainstream economic activity (both macro and micro). One story in the New York Times (“With Smartphone Deals, Patents Become a New Asset Class“) looks at the business that has grown up around the monetization of patents: buying, selling, valuation services, and strategic advice. The second story in the Financial Times (“Intellectual property: A new world of royalties“) takes the macroeconomic view of how IP royalties are becoming more important in international trade (and trade agreements). However, both of those stories illustrate how far we are from having in place the economic and policy infrastructure needed for these assets to truly play a major role.
On the micro side, patents are still a volatile spot market with difficult valuations. While the Nortel patents commanded a high prices, Kodak seems unable to even come close to its asking price for its patent portfolio. And try getting a loan using your patents as collateral. As we point out in our reports Intangible Asset Monetization: The Promise and the Reality and Maximizing Intellectual Property and Intangible Assets: Case Studies in Intangible Asset Finance, much needs to be done before intangibles can be a regular part of the financial system. This includes regularizing both the trading process and the valuation standards.
On the macro side, royalties still play only a small part in our overall trade deficit. As we point out each month, our intangibles trade surplus is a fraction of our goods trade deficit (see previous posting). What will help the US economy is not simply more royalty income (although that would be a benefit). What will help is the utilization of our intangible assets to make our goods and services more competitive resulting in higher exports and lower imports. It is through embedding the knowledge and other intangible assets in goods and services that we will solve our trade problem. Pure intangibles trade cannot save the US economy; creating a more competitive economy using intangibles can.
So, while it is good to see stories in the New York Times and the Financial Times about the importance of intangibles, keep in mind that there is still much to be done before intangibles enter the mainstream.
2012-09-24 21:48:44
Source: http://www.athenaalliance.org/weblog/archives/2012/09/mainstreaming-intangibles.html
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