What does IP mean?

Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. IP represents property rights and is protected in law by, for example, patents, copyright, industrial design and trademarks, which enable people to earn recognition or financial benefit from what they invent or create.

What advantages do IP confer upon a company?

Companies, large and small, need to set themselves apart from others in order to compete successfully in the market place. For technology companies, their R&D efforts are often captured as inventions and proprietary technology. Inventions and proprietary technology are generally protected as patents and trade secrets, respectively. Without adequate protection, which often requires setting up an internal process to document and harvest the fruits of their R&D efforts, companies would be replaced by competitors, and lose out. Companies such as Intel, Microsoft, IBM, Nvidia, Apple, and Huawei are such IP owners, to name just a few.

For other companies, they set themselves apart more by offering goods or service of consistently innovative and superior quality. They create name recognition, and thus goodwill, to distinguish themselves from others. For such companies, their brands can be protected as trademarks, which require the companies to take affirmative steps to ensure the quality of the goods, or services, bearing such marks. They would also take aggressive measures to protect their brands by policing the market place. Companies such as Coca Cola, Proctor & Gamble, Apple, Gucci, and Prada are such companies.

Whether the core strengths are based on technology or not, their IP represents a competitive advantage, which could contribute to the overall valuation of the company. Without IP, investors would wonder what a company has to keep their competitors away. Or what has the company done with the investors’ funding? Why would their customers keep coming back to them if “me-too” products are widely available from a 3rd party?

In the eyes of competitors and customers, a company’s IP asset is what keeps one away, while retaining the other. Having IP awareness also helps companies become more creative and innovative as they focus on creating values that distinguish themselves from others.

How about the status of IP in China?

China has come to embrace IP much later than other industrial countries, such as the US, Germany, Japan and UK. However, since China’s entry to the World Trade Organization (WTO) in 2001, its pace on building an IP society has picked up, in terms of innovation, patent filings, and enforcement atmosphere. Nowadays, China has earned the top spot in patent filing at the Patent Cooperation Treaty (PCT). Companies wishing to be listed in China’s vibrant stock markets are increasingly improving their IP assets in order to improve their qualification. Companies with exports to the US, ASEAN and EU are also more aware of the risk of entering new markets if they don’t do their due diligence on IP beforehand. Overall, IP in China has been improving but it still has a lot to catch up.