World Intellectual Property Day

Today is World Intellectual Property Day! Held every year since 2000 on April 26, World Intellectual Property Day celebrates the contribution of inventors and creators to the development of societies around the world. The day commemorates the entry into force of the Founding Convention of the World Intellectual Property Organization on April 26, 1970, and this year's theme is "Women and Intellectual Property: Accelerating Innovation and Creativity". We celebrate all inventors and creators who move us forward with their ideas and innovations.

But what makes patents and intellectual property so special that they deserve their own "World Day"?

[picture generated with Midjourney]

On the occasion of World Intellectual Property Day, the growing importance of patents and intellectual property rights in general is becoming increasingly clear: they are not only a means of protecting inventions and ideas from unauthorized imitation, but also a valuable asset in which investors, companies, banks and asset management firms are interested because they represent an option on a certain technology monopoly and thus on high-margin products in the future. more than 90% of today's corporate value is in intangible assets - 50 years ago, the figure was only 17%.

Accordingly, patents are a way for companies to protect their own R&D potential. By patenting their inventions, companies can ensure that their ideas are not stolen or copied by competitors. This gives them a competitive advantage in the market and help them remain profitable.

For investors, patents provide an opportunity to identify hidden assets in companies and spot R&D trends. By analyzing a company's patent portfolio, investors can gain insight into the company's potential and identify investment opportunities that may not be apparent at first glance. High-value patents are particularly attractive to investors because they can offer higher returns.

For banks, patents can serve as collateral. By lending against patent collateral, banks can protect themselves against moral hazard by securing the intangible value plus the patent-usage rights. This can help reduce the risk of lending to small businesses that may not have the same financial collateral as larger companies.

Finally, fixed income asset managers can also benefit from patents. By investing in high-yield bonds issued by small companies with valuable patent portfolios, asset allocation funds can reduce default risk and increase returns. A recently published study showed that as the value of patent portfolios increases, the probability of corporate default decreases significantly.

World Intellectual Property Day is another reminder that patents are becoming an increasingly important asset for the patent owning companies themselves, but also for investors, banks and asset managers.