How Intellectual Property Makes a Business More Profitable

How Intellectual Property Makes a Business More Profitable

All entrepreneurs would like to increase the total revenue of their businesses. Although there are many ways to achieve such an outcome, one method which is often overlooked but is nevertheless a very feasible option is that of using intellectual property to generate income. Copyrights, trademarks, patents, and trade secrets can bring a business a substantial amount of money.

A business’s initial expense on intellectual property may initially appear somewhat costly. However, it is important to note that this expense is a crucial business investment. The amount of money spent on obtaining and protecting intellectual property pales in comparison to the amount which would be received through the use and enforcement of intellectual property rights.

Intellectual Property and Direct Competition

A business can use intellectual property protection to ward off direct competition and avoid the undercutting of its product prices. For example, a business owner might choose to obtain an industrial design registration for its product packaging. If it does not do so, a competitor might sell a similar product in packaging which resembles the original. There would then be no way for the business to deny the competitor the right to do so if the business did not register an industrial design.

Copyrights can also be used to deter potential competition. This is the case when a company receives a copyright for its logo. Should a different company selling similar products choose to use a similar logo, customers might be drawn to that company instead if its prices, quality, or products’ visual appeal is deemed sufficiently appealing. Thus, the lack of protection via a copyright could severely cut into a business’s overall revenue.

Intellectual Property and Venture Capital

If a business owner plans to generate revenue by attracting venture capital financing, it is critical that the business makes proper use of intellectual property. Venture capital firms place a great deal of importance on the proper use of intellectual property. This is because if a company may have legal issues in the future due to a lack of copyright, patent, or trademark protection, venture capitalists will understand that the company’s long-term competitive advantage will either be limited or non-existent.

Although copyrights and trademarks can attract venture capital, by far the most important form of intellectual property protection for the drawing of venture capital investors is the patent. When investors analyze the future prospects of potential beneficiaries, they often use patents as indicators of the company’s business success. The higher the quality of the patents in question, the more likely venture capital investors are to place a substantial investment in the company. This is particularly true of newer and smaller companies.

Passive Income Through Intellectual Property

Additional revenue generated through intellectual property does not have to be directly generated by way of business activities. A business owner might choose to supplement the business’s profits by using intellectual property as a passive income stream, then investing the money obtained into the business. By adeptly and wisely applying copyright, patent, or trademark regulations, entrepreneurs’ “side hustles” can be used to add financial value to their primary business activities.

Many passive income streams involve the use and distribution of words, images, and sounds which can all be copyrighted. After obtaining a copyright, the business owner may provide customers with access to these copyrighted materials. Software, designs, and translations can be examples of such materials. In this way, the copyright brings a significant amount of passive income. Additionally, if customers of this passive income stream seek to generate sales via the use of copyrighted or trademarked material, royalties can be charged. These royalties can then be invested into the entrepreneur’s main business.

The Intellectual Property Coordinator’s Role in Increasing Profitability

An intellectual property coordinator can do much to reduce a business’s expenses on intellectual property matters. It is the intellectual property coordinator’s responsibility to inform a business owner if obtaining a copyright or trademark for a specific product feature is a worthwhile financial investment. An intellectual property coordinator can also provide insight about whether obtaining patent or copyright registration in a certain country would generate much business revenue.

An intellectual property coordinator does not take the place of a trademark agent, patent agent, or corporate lawyer. These agents and lawyers’ expertise in copyright, patent, and trademark issues allow them to address individual cases as they come as well as registration matters. Conversely, an intellectual property coordinator makes a business more profitable through the use of intellectual property.

This article is brought to you by Exy Intellectual Property Malaysia and Singapore.