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The Value of IP and Related Intangibles in the Time of COVID-19

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What assets will maintain value in the current economic environment? Real estate? Property Plant and Equipment? Intellectual Property (“IP”)/Intangible Assets (“IA”)? We all understand that uncertainty depresses value, and in this environment the value of all assets will experience downward pressure.  The question is, which ones are most stable: either because of legal protection, uniqueness, or income production.

Where does IP land in the spectrum of asset values? The answer is: it depends on the type of IP and the aspects of this unique economic environment in which we find ourselves.  As revenue sources slow to a trickle, the pressure on contributions from IP revenue increases – affecting some IP/IA more than others.

For example, copyright portfolios and income levels are most likely to maintain their value, particularly if those copyrights are attached to the music, publishing, home entertainment, and home services. With large portions of the world under stay at home orders, the lack of live sporting events, and the majority of television and film production on hold, there is an increased focus on existing content portfolios.

Internet/social media assets should also sustain a relatively high proportion of their value.  A rise in usage of social media platforms is helping to not only hold, but build long-term value for many of the asset holders.

Similarly, large data and database assets should remain a key part of IP portfolios. Increasingly, accurate pinpoint data becomes a part of everyday commercial and corporate life.

Trademarks/brands:  The jury is still out on these assets – branding, and particularly retail brands, becomes less important in the online world we are all currently living in. Many retailers whose businesses are predicated on physical storefronts may not survive the pandemic. Meanwhile, online retailers such as Amazon are at or approaching all-time highs in terms of stock prices. But as normalcy returns, trademark and brand names will resume their critical importance and economic value on a selective basis.

Where the pain will be felt the most in the near term is in technical IP – patents and trade secrets. New technologies will not be introduced and successfully commercialized as quickly as before. However, leading current technologies should prosper in the near term. There are also exceptions related to the increased focus on the production of protective equipment, testing supplies, and treatment options.