In her presentation, Janice Denoncourt discusses the challenges of making intangible resources, such as patents, visible in corporate accounting and reports. While corporate law and accounting practices have routines and tools to report and value tangible resources, intangible resources and patents tend to be unaccounted for. This tendency to ignore, or even actively hide, patents in corporate reporting is further exacerbated by the common practice of placing a corporation’s patent ownership in separate patent holding companies. Disclosing patents in accounting and corporate reports becomes increasingly relevant in a time when the value of intangible resources often vastly exceeds the value of the tangible resources and patent information in general is becoming increasingly accessible in public databases.
The importance of making intangible resources and patents visible in corporate reporting goes to the heart of the question of corporate transparency and accountability, towards shareholders as well as to customers and the general public. Accounting for patents is instrumental not only to properly value corporations but also to ethically evaluate their business practices and to prevent insider trading. Furthermore, the invisibility of patents in accounting makes it much harder to trace the chain of ownership of patents over time, compared to tangible resources such as real estate where it is usually much easier to find records of past ownership.
In worst case scenarios, the inability to properly account for the character and quality of patents as corporate properties also opens for outright fraud. One of the most blatant examples of this being the infamous case of the biotech company Theranos, where Elizabeth Holmes managed to raise huge investments based on patents to faulty innovations that were never properly scrutinized or accounted for.
Dr. Janice Denoncourt is Associate Professor at Nottingham Law School, she is founder and leader of the NLS Intellectual Property Research Group at the Centre for Business and Insolvency Law (CBIL). More here https://www.ntu.ac.uk/staff-profiles/law/janice-denoncourt
Video by LiU communications officer Per Wistbo Nibell. Text by Martin Fredriksson who also chaired the event.