Ideas and innovation are the world’s new capital. In the past, physical assets such as plants, property or machines made up the bulk of a company’s value. Today, intellectual property (IP) such as patents, trademarks, goodwill and even data and software have increasingly taken centre stage.
Take Facebook as an example, while the company only has US$109 billion of assets on its balance sheet, the company’s market capitalisation is roughly five times that.(1) Facebook’s true value in the market lies in the connections and network platforms that the company has built, which now boasts over 1.56 billion users daily throughout its many apps.
As the world economy continues its march towards greater digitalisation, these intangible assets will only grow in importance. According to consulting firm Ocean Tomo, intangible assets make up more than 80% of the market value of the S&P 500, compared to just 17% forty years ago. Household names like Apple, Alibaba, Alphabet, Amazon, Facebook, Microsoft and Tencent have a combined intangible asset value of US$5.1 trillion, according to Brand Finance’s latest report,(2) which is akin to the GDP of Japan.(3)
Collaborating Through Global Innovation Networks
The rise of the digital economy will only accelerate this trend as the global innovation race intensifies. The advances in artificial intelligence, blockchain, biotechnology, cloud computing, and other cutting edge technologies will determine who will succeed in an increasingly competitive world.
As the pace and complexity of innovation increases, businesses tend to innovate to compete, and can either invest in research and development in-house, acquire from others or collaborate with other parties to stay ahead.
Smart phones are a case in point. While Apple is largely venerated for inventing the smart phone, this game-changing gadget would not have reached such ubiquity without the collaboration that Apple had with many of its partners, from chip to screen makers all over the world. And such collaboration is only possible via IP, which seeks, at a fundamental level to define what you own so that you may decide on how best to sell, share or rent your innovation.
IP is increasingly used not just to block the competition, but also to facilitate innovation. Examples include the Open Invention Network (OIN), which is the largest patent non-aggression community in history, according to its website.(4)
The network’s mission is to enable operating system Linux and related open-source technology remain free of expensive patent entanglements. Funded in part by Google and IBM, the OIN boasts over 3,000 licensees including Microsoft, Tencent, Alibaba and Honda. By agreeing to the OIN license for free, members gain access to more than 1,300 global patents and applications.
In many ways, intangible assets like patents are now being used to set standards that make our lives easier. The establishment of collaborative research platforms that have helped develop and push the adoption of radio-frequency identification tags is one instance. These chips present in some biometric passports are making travel easier and are even helping to keep track of dementia patients.
Beyond strategic tie-ups, IP can be an additional tool, if used correctly, to influence one’s competitors and the business environment. It might seem counterintuitive, but companies including Toyota and Tesla are opening up their patents at low or no cost. With more innovators tapping on their technologies, this not only increases the breadth of their partnerships, but also helps set standards as more parties adopt these platforms.
Asia: Forefront of Innovation
Asia is fast emerging as a new region of innovation. Some six in ten IP applications were filed from Asia in 2016, rising from just four in ten a decade ago.(5)
Singapore, being at the heart of Asia, is in a good position to service and facilitate the global innovation flow. It has established infrastructure and is a known hub of capital, trade and investment. In the World Economic Forum’s Global Competitiveness Report, the country ranked third in terms of IP protection.
The Republic’s reputation for neutrality and trustworthiness places it in good stead as a destination for multinational companies looking to expand into the region, as well as for Asian companies looking to expand globally. This pro-business environment, combined by its robust IP regime, has been a draw for numerous companies to strengthen their base in Singapore including Rolls Royce and Dyson.(6)
More importantly, the Republic’s government is also known for its supportive stand to enterprise and investment, with many of its agencies working hard to stay ahead in this increasing complex environment. One of these is the Intellectual Property Office of Singapore (IPOS), which was second in the list of world’s most innovative IP offices in the World Trademark Review (WTR)’s latest ranking.
IPOS has in recent years emerged as a key player within the country’s innovation ecosystem. Using its IP expertise and networks, the agency strives to grow innovative enterprises that use their intangible assets for growth and is always looking at ways to help move innovation.
Some of its latest initiatives introduced include the FinTech Fast Track and the Accelerated Initiative for Artificial Intelligence (AI), which allows FinTech and AI patents to be granted as fast as 6 months. Such programmes ensure that innovators in these fast-evolving sectors are able to bring their products to the market faster ahead of competitors. In an effort to reduce business costs, IPOS also launched an initiative in the niche sector of IP insurance to support IP rights holders in covering legal expenses that may be incurred in infringement proceedings worldwide.
As technology advances and challenges the most successful incumbent organisations in every industry, realising a company’s own intellectual capital is essential to unlocking growth in the new dynamic business world.
This content is sponsored by Intellectual Property Office of Singapore and was created by Reuters Plus, the content marketing unit of Reuters
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