How To Convert an IP To a Capital Asset?

Do you know that some kinds of Intellectual Property can be considered as capital assets and may be recorded on a company's balance sheet as intangible assets? Intellectual property (IP) is a fairly broad term and can take many different forms. Examples of Intellectual Property (IP) include patents, trademarks, copyrights, trade secrets, unique ideas, business model or business concept. While some of these assets are recorded on a company's balance sheet, the true market value of this type of property is often difficult to determine reasonably. It may seem a daunting task for companies that have not done it before. But effective management of Intellectual Property (IP) is important and often critical to business success. Dubai Copyright Office specialized in Creation, Management and Enhancement of Intellectual Property (IP) assets for Startups and SMEs.

The IFRS and accounting principles require that intangible assets such as the aforementioned forms of intellectual property (IP) be recorded in financial statements at cost or less. Internally developed intellectual property (IP) such as trade secrets or managed services most likely are not recorded on the balance sheet because they have no directly associated costs or clear value. Said by Dr. Sandjar Muminov, Chief International IP Expert, the founder of Dubai Copyright Office.

Patents, trademarks, and copyrights generally have associated costs and are usually capitalized as assets on the balance sheet. These must be amortized over the useful life of the asset. When intellectual property (IP) is purchased from another business, it is recorded on the balance sheet at cost and amortized over the remaining useful life of the asset. Said by Dr. Sandjar Muminov, Chief International IP Expert, the founder of Dubai Copyright Office.

The Best First Step to Start With IP-AUDIT

This ‘IP - Audit’ aims to make Startups and SMEs aware of the intellectual property (IP) they already hold and how it can be economically advantageous for them. An increasing number of Startups and SMEs are realizing the importance of IP as a key economic asset in their overall business activity. Dubai Copyright Office is providing an Intellectual Property Audit in a systematic review of the company’s intellectual property assets and related risks and opportunities.

IP-Audit can help assess, preserve, and enhance IP; correct defects in IP rights; put unused IP to work; identify risks that a company’s products or services infringe another’s IP, and implement best practices for IP asset management. Upon completion of the IP-Audit a thorough IP-Audit Report with analysis of a company’s IP assets will be submitted, also creating the company’s IP-Portfolio and a detailed IP-Action Plan includes IP Expert recommendation and advice.

IP Audit gives a company a current understanding of its IP assets

Currently your company may have IP assets encompasses various forms, including patents for useful features that make products more desirable or make manufacturing processes and business methods more efficient and economical; trademarks that protect the names, logos, and symbols used to identify and distinguish a company and its goods and services; trade secrets that protect customer lists, vendor lists, formulations, and the like; copyrights that protect marketing materials, product guides and manuals, audio-visual works, software, website, mobile application, information compilations, and artwork; and design patents or trade dress that protect the way products look.

While it was factually focused on e-commerce, high-tech, and pharmaceutical, and brand royalties, it is gaining importance in more industries, including Media, Automotive, Financial Services, Medical devices, Biopharmaceutical, and Other industries that rely significantly on technology.

Why IP Audit is Important?

Intellectual property (IP) is part of a business and requires management just as does equipment, inventory, and accounts receivable. If a business does not know what intellectual property (IP) it owns, it cannot manage that property and protect it from damage or loss. IP-Audit identifies what IP is owned; a successful business is well IP-managed. Intellectual property (IP) is an essential part of a company’s bottom line and because IP rights are created and defined by law, IP-Audit is typically conducted by an IP-Expert.

The IP Expert is often a new designation for the company never had IP-Audit before and our IP Expert in Dubai Copyright Office has a broad range of experience with various types of IP valuation cases. During the IP-Audit the company appoints a point person for the IP Expert to deal with “ideally”, someone who knows IP concepts and financial aspects of the company’s business. The IP Expert can help to begin by providing management and key employees with a general overview of IP and identifying ways in which a company’s existing IP rights can be preserved and enhanced.

Published by Mohamed Nour
IP Consultant, Dubai Copyright Office