Intellectual Property Valuation and Innovation

Transcription

1 Intellectual Property Valuation and Innovation Event and Book Launch Jon Dawson 28 November 2013

2 Intellectual Property Valuation and Innovation Professor Ruth Taplin, Editor & Director of the Centre for Japanese and East Asian Studies Book overview & highlights of chapters Dr. Tim Jones, Founder of Future Agenda Key points from chapter: Future Innovation & Intellectual Property Graham Morgan, Partner & Head of Innovation, Kingston Smith LLP Tax Incentives available for Intellectual Property

3 By Prof. Ruth Taplin For Book launch at Kingston Smith 28 November 2013

4 Intellectual Property Valuation and Innovation: An Overview There is a dichotomy in the global move towards a universal definition of Intellectual Property Valuation and Innovation Is the production of content being decoupled from the original creator making IP irrelevant? Is open source a genuine alternative with no one owning the IP or it being granted royalty free to everyone? Can we create value in health care through social innovation by preventing illness through social means?

5 Intellectual Property Valuation Can signalling through the financial reporting of research and development costs affect the market value of companies? Can the value of the energy we use be turned into a universal taxation tool? Is all value creation intangible the case of residual value insurance in the maritime sector. Are different forms of co-creation a new way of adding value?

6 Intellectual Property Valuation Can innovative ways to create Big Data create value for users- the example of crowdsourcing Is the use of innovation and value creation essential to ending the current economic crisis? Are both tangible and intangible assets capable of producing value but in different ways Will Intellectual Property continue to be essential for value creation?

7 Future of Innovation and Intellectual Property 28 November 2013 Tim Jones

8 Innovation and Intellectual Property Innovation is increasingly moving beyond the established arenas of product and technology development where IP has traditionally had a major role to play - we need to understand potential future impact.

9 Looking Forwards Organisations increasingly want to identify and understand both the anticipated and unexpected changes from within and outside their sector so that they can be better prepared for the future

10 Looking Back Ten years ago some saw the emerging shifts that might have impact to include the resurgence of patent pools, IP development companies and new financial strategies such as Asset Backed Securitization

11 # US Patents Granted (USPTO) Amazon Google Companies of Note Over the past decade many have been surprised by shifts such as the success of ARM s licensing business model and the ways in which Amazon and Google have built and exploited their IP portfolios

12 1. Differentiated Knowledge 2. The End of IP 3. Failed Drugs 4. Business Model Open Innovation 5. Corporate LEGO 6. Projects Worth Working For 7. Big Collaboration We see seven issues that may have significant future impact

13 The End of IP Following change in the music industry, technologies such as 3D printing are decoupling the production of content from the original creator and, in doing so, IP is becoming irrelevant.

14 Business Model Open Innovation Increasing sector-to-sector transfer of know-how independent of IP enables successful approaches to be adopted and adapted without value transfer between parties.

15 Corporate LEGO With more free agents and outsourcing, more functions within organizations are interchangeable and easily rebuilt around new value-creating units.

16 Future Agenda 84 Brook Street London W1K 5EH futureagenda.org The world s leading open foresight program

17 Tax and Innovation - Update Graham Morgan November 2013

18 Topics Research and Development Tax Reliefs The Patent Box

19 Research & Development Tax Reliefs

20 Research & Development Tax Reliefs Three separate schemes: SME scheme deduct 225% of expenses or surrender costs for payment of 24.75% Large company scheme (until 2016/17) deduct 130% of expenses Large company scheme (optional until 2016/17) Above the line credit SME group has less than 500 staff, turnover up to 100m and balance sheet total up to 86m

21 Research & Development Tax Credits SME scheme R&D tax credit claim No R&D tax credit claim R&D expenditure 100, ,000 Either: (A) Surrender 225% loss to HMRC for 11% payment (24,750) - Net cost of R&D 75, ,000 OR (B) Offset 225% against taxable profits taxed at 23% (51,750) (23,000) Net Cost of R&D 48,250 77,000

22 R&D Tax Relief Large Company scheme R&D tax credit claim No R&D tax credit claim R&D expenditure 100, ,000 Offset 130% against taxable profits taxed at 23% (29,900) (23,000) Net Cost of R&D 70,100 77,000

23 Research & Development Tax Credits To qualify for R&D, your project must fulfil the HMRC definition. They look at four key aspects: What is the scientific or technological advance? What were the scientific or technological uncertainties involved in the project? How and when were the uncertainties actually overcome? Why was the knowledge being sought not readily deducible by a competent professional?

24 Research & Development Tax Credits No minimum annual claim from 1 April 2012 Qualifying expenditure: Employee costs Subcontractors (65%) Consumable stores Software used directly on R&D project

25 What is R&D The 5 P s Are you developing new Products? Are you improving or developing new Processes? Are you filing for a technical Patent? Do you have engineering or technical Professionals? Are you developing Prototypes or bespoke equipment?

26 R&D Tax relief Collaborating with our R&D Partner Peer to peer interview between RDP expert and client technical staff to identify establish feasibility of claim and identify projects ; Scoping and agreement of basis of charging; Identification of qualifying expenditure and quantifying claim; Preparation of supporting document; Incorporate claim in CT Return.

27 Patent Box

28 Overview of the Patent Box A new system from 1 April 2013 to reduce the tax charge for companies exploiting qualifying patents etc; Applies to profits derived from Licensing or sale of patent rights or certain medicinal/botanic innovations; Sales of patented invention or products incorporating it; Use of patented invention in company s trade; Infringement and compensation. Optional regime. Companies elect in.

29 Patent Box Effective tax rate on Patent Profit 2013/ / / / / % 13.3% 12% 11% 10% A product only needs to contain a single patent for all profits from the sale of that product, and sale of accessories and spare parts to qualify for the special Patent Box tax rate.

30 Typical Patent Box structure Holding Company must actively manage the patents it holds by being involved in planning and decision making in developing and exploiting its patent portfolio. Development Company must significantly contribute to the creation of an eligible patent or patented invention or perform a significant amount of activity to develop the patent or patented invention or any product or process incorporating the patented invention Patent Holding Company Patent Developmen t Company Grant of exclusive licence

31 Patent Box Recent Developments July 2013 Germans call for ban on all EU tax breaks for patents; EC says UK patent box violates several provisions of the EU's code of conduct on taxation; 22 October EU Code of Conduct Group met; Agenda item for December ECOFIN; Watch this space!

32 Disclaimer This presentation covers topics only in general terms and are intended to give a wide audience, an outline understanding of issues in tax, and therefore cannot be relied on to cover specific situations; applications of the principles set out will depend on the particular circumstances involved. Furthermore, responses given in the seminar to questions are based on only an outline understanding of the facts and circumstances of the cases and therefore do not form an appropriate substitute for considered specific advice tailored to your circumstances. We recommend that you obtain professional advice before acting or refraining from acting on any of its contents. We would be pleased to advice you on the application of the principles outlined in this presentation to your specific circumstances, but in the absence of such specific advice cannot be responsible or liable.