Investing in intellectual property

The concept of Intellectual Property (IP) has been praised for protecting the rights of inventors and artists, but also criticized for supposedly harming the public interest by providing monopolistic rights to some. To many investors, the concept, opportunities and risks of intellectual property remain shrouded in mist. This is understandable given the fact that much of the body of knowledge on IP stems from a philosophical, legal or accounting perspective. At the same time, institutional investors, such as insurance companies and pension funds, face big challenges in their investment decision-making, due to the low level of long-term interest rates and other pressures on solvency ratios. As a consequence, they increasingly look to diversify their holdings into more illiquid assets, such as real estate, private equity and infrastructure, as they realize that this new environment requires new measures to safeguard investment portfolios and benefits. Investors are now increasingly incorporating Intellectual Property in their Real Asset investment strategy. This book deliberately takes an investment perspective when discussing IP to faciliate a better understanding of the subject. In this book, we attempt to fill the existing knowledge gap by answering questions such as: What are Intellectual Property assets? How are these „creations of the mind“ translated into financial return? How do these assets generate stable and long duration cash flow? What are the return and risk characteristics? These and other questions have often been left unexplained.