Jack Ellis

Licensed trademarks generated US$5.454 billion for their owners last year according to a North America-focused study from the International Licensing Industry Merchandisers’ Association (LIMA) released yesterday.

The 2013 Licensing Industry Survey – conducted by researchers from the Yale School of Management on behalf of LIMA and based on responses from licensors – found that North American trademark owners raked in $5.454 billion in royalties in 2012. The estimated retail value of products and services bearing licensed trademarks was $112.1 billion over the same period.

Entertainment, TV, movie and celebrity-related brands accounted for the largest licensing revenues, generating $2.55 billion in royalties. Corporate brand owners made $928 million from trademark licensing, while universities and colleges received $206 million in licensing fees.

Last month, License! Global magazine released its rankings of the top 150 worldwide brand licensors. The companies featured on the list collectively made around $230 billion in retail sales of licensed products worldwide last year, with The Walt Disney Company alone accounting for $39.3 billion.

When it comes to IP value creation, it is patents – and the monetisation opportunities they present – that appear to have caught the imagination of boardrooms and investment funds of late. But without strong brands it would not be possible to effectively market and sell the products and services which are underpinned by patents, trade secrets and copyrights – just ask Apple, Samsung, Coca-Cola, McDonalds et al. Brands – and the trademarks that protect them – are absolutely critical to ensuring a return on R&D investment and it is no wonder that they are such valuable assets for so many businesses.

As the studies from LIMA and License! Global indicate, brands have the potential to generate massive returns for their owners through monetisation; and they can be leveraged by third-party licensees to add value to their own businesses. For a smaller industry player or a new market entrant, licensing in an existing trusted and established brand means avoiding many of the costs and risks associated with developing a brand of its own, and can result in quicker market success.

As far as brands and trademarks are concerned, ‘IP as an asset class’ is not a new concept; senior executives and investors have been putting their trust in both for a very long time. It’s just that they may not think about it in that way.