IP Management Company
An IP Management Company creates substantial benefits and adds significant value to your intellectual property assets.
An intellectual property (IP) management company, is a company created solely to look after the IP assets of a company or group.
IP companies are sometimes known as IP management companies or IP holding companies.
Why intellectual property is valuable
Intellectual property can be a vital business asset. For example, consider the patent for a product that's unique on the market, or a business process that competitors don't know about. A business's knowledge can be even more important than its physical assets.
More and more companies are realizing that their Intellectual property portfolio is not just a set of resources for the rest of their business. It can also be an important source of revenue in itself. In fact, if it's exploited well, Intellectual Property could even become worth more than the company.
That's why protecting and monetizing IP is so important.
What is intellectual property (IP)?
In simple terms, intellectual property is anything created by the mind that has value to your business.
Examples can include:
Patents
Trademarks
Website & software codes
Inventions, formulae or product designs
Graphic designs, branding, text or video content
Business processes, know-how, trade secrets
How an IP management company can help
An IP management company can offer a wide range of benefits to your business:
- Separate intellectual property from the rest of the group, so you can register and manage it independently
- Generate revenue through licensing rights and royalties
- Create franchises based on your IP more easily
- Better corporate tax planning
- Maintain registration, police infringements and enforce protection of your IP rights
- Protect your IP from litigation or the insolvency of the operating company (IP cannot be sold to pay creditors)
- Preserve your competitive advantage or strategic position.
- If you set up your Intellectual property management company in a tax-efficient jurisdiction, you may be able to reduce administrative costs and reduce your tax burden.
Steps to setting up an IP management company
- First, determine the value of the intellectual property itself.
- Select a jurisdiction for your IP company. See why Cyprus is an excellent choice to register a company.
- Transfer your IP to your new company as soon as you can, while the value is still low.
- To authenticate your transfer and avoid any potential challenge from tax authorities, make sure the transaction takes place at the market value for the IP.
Intellectual property tax planning
Once your IP management company is set up, it will open up many opportunities for tax planning.
If you derive any income from IP rights – for example, from licensing – it is kept separate from your operating company, and taxed separately from the profit you make from your regular sales. So you can reduce your tax liability at a stroke.
If you're aiming to expand internationally or create franchises, your IP company will be able to collect rights and licensing fees on your behalf, so these revenues flow to the subsidiary rather than your operating firm.
Your IP company can also protect your IP rights, maintain registration, and police any IP infringements.
If you decide to dispose of your main operating company, you will have the option to retain the IP you've worked so hard to build up. You could then continue to generate revenue from it – for example, by leasing it back to the original operating company, or to other firms.
If your main operating company runs into financial difficulty, any liabilities only apply to the operating company, not your IP company. Your IP remains safely ring-fenced in your IP company – outside your main company, and also outside its jurisdiction. If you wish, you can dissolve your operating company without affecting your IP Company or your IP rights.
Here at Meridian, we’ll help you identify the best course of action to protect, add value and make the most of your Intellectual property assets. We will create a profitable IP strategy for your business and monetize your intellectual property so as to make the most of your most valuable business assets.
Free Consultation
Are you considering setting up an intellectual property company? Would you like to learn more about how an IP management company can protect your IP, minimize your tax burden and broaden your IP management options?
Let's talk! Fill in the form below and schedule your 30-minute free consultation with one of our corporate lawyers, to discuss any questions about creating an IP Management Company.