The World Intellectual Property Organization's (WIPO) education division normally concerns itself with legal and policy issues on the protection on intellectual property. But now, it is wading into the finance area by offering a course on Strategic IP Finance. The description is as follows:
IP has emerged as a strategic corporate asset and a critical value driver in the contemporary knowledge economy. Private firms in the United States of America are reported to be investing over one trillion dollars annually in IP and other intangible assets. Estimates of the portion of corporate value associated with intangibles vary but most professionals ascribe the figure to over fifty percent.
Sophisticated companies have recognized the value of IP and have developed systems, structures and capabilities to harvest rich financial rewards, establish superior market position and enhance company performance. Unlocking the hidden value in IP requires teamwork. Finance executives are playing an increasingly central role in the strategic management of IP assets.
Finance professionals who have mastered the art of IP finance are usually more successful in the valuation and accounting of the firm’s intangible assets, in the optimal allocation of corporate resources, in minimizing risks, in IP securitization and in sustaining investor confidence.
Recent developments in financial regulations and accounting standards, combined with the increasing curiosity of shareholders, investors, analysts and tax authorities, is encouraging companies to provide a more transparent and reliable disclosure of a company’s intangible assets either on the balance sheet, in the Management Discussion and Analysis section of the financial reports, or in a voluntary intangibles report.
Managing IP as a major business and financial asset is a new area of business competence. It is essential that executives and managers develop a good conceptual framework as well as a practical understanding of IP and how it contributes to the firm’s business operations. Effective use of IP as a business asset is one of the keys to corporate sustainability.
Much of that statement I agree with. However, I don't know about the how recent developments are "encouraging companies to provide more transparent and reliable disclosure." Yes, there has been progress, but it seems to me that we still have a long, long way to go on that. I am finishing up a paper on the monetization of intangibles assets which will have more on this issue (see also my earlier paper on Reporting Intangibles).
In any event, WIPO's de facto seal of approval on the topic of IP financing lends a certain air of respectability. Given all the machinations of other new financial instruments (i.e. collateralized debt obligations backed by subprime mortgages), such a discovery by WIPO may be timely indeed.
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