Boards of directors often focus on innovation, growth and competitive advantage. Much less attention is paid to Intellectual Property, or IP. And yet, it is abundantly clear that IP has a significant economic impact and is key to strategic positioning.
According to data from the recent publication by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO), “IP and innovation in European sectors – Industry level analysis report – January 2026”, the contribution of companies that make intensive use of IP accounts for 47.9% of gross domestic product in the 2021-2023 period. These types of companies (in the manufacturing, technology and business services sectors) generated 30.6% of jobs in the same period. These companies are defined as intensive users of IP rights in the EU if, for any of the IP rights considered (trademarks, designs, patents or copyright), the number of employees in the company is above the average for all companies using the same type of right. This data is therefore particularly relevant.
No, this is not a legal debate, but rather a matter of pure negotiating power, albeit with a significant technical and legal component. A clear way to see this is to observe the behaviour of one of the great investors of recent decades: Warren Buffett.
On 31 December, Buffett retired (at the age of 95) as CEO of Berkshire Hathaway, and his farewell was met with a standing ovation from the more than 20,000 shareholders who attended the event. Not surprisingly because since 1965, $100 invested in Berkshire shares would have grown to $5.5 million, compared to a mere $39,000 if invested in the S&P 500 (Buffett’s Intangible Moats) “Buffett’s Intangible Moats”, Sparkline capital, Kai Wu, July 2025.
Buffett has long since moved beyond the tangible book value approach, preferring instead companies with few assets and broad intangible competitive advantages.
Buffett’s long-term success is largely due to systematic exposure to two key factors: intangible value (with clear competitive advantage and the ability to exclude competitors; brand value, industrial/intellectual property, or network effects) and quality (El Secreto de Warren Buffett: Nunca Fue Solo un Inversor de Valor | Morningstar España). “El Secreto de Warren Buffett: Nunca Fue Solo un Inversor de Valor”, Morningstar (markets), Larry Swedroe, 26 Jan 2026.
A few days ago, Berkshire Hathaway announced Buffett’s latest moves at the helm of the company before stepping down as CEO. Among his most notable decisions were a 77.24% cut in his position in Amazon and his entry into The New York Times (Las últimas apuestas de Buffett antes de retirarse: baja su posición en Amazon y entra en NYT – Bolsamania.com).
These new positions and adjustments suggest that Berkshire’s portfolio is turning towards assets with barriers based on brands, customer networks and traditional competitive advantages, with less emphasis on the big tech winners of the last decade (cutting Amazon by more than 77% and Apple by more than 4%), taking positions in the New York Times (brand and reputation), increasing positions in Chevron (concessions difficult for competitors to obtain, strong brands) and Domino’s Pizza (strong brand and proprietary customer management software platform).
Buffett’s most valuable legacy may not be his stock recommendations, but the framework he developed to identify lasting competitive advantages.
Therefore, open and competitive companies must generate lasting competitive advantages, similar to those sought by Buffett; advantages that competitors cannot easily replicate or imitate, and this requirement can only be met by intangible assets. However, the main problem for a company deciding to build its strategy based on these intangible assets seems to be understanding the nature of intangible assets, how to measure them, and how to develop and manage them (El modelo de empresa basado en activos intangibles – Hacia una empresa responsable, sostenible y competente (The intangible asset-based business model – Towards a responsible, sustainable and competent company). Study led by CÉSAR CAMISÓN ZORNOSA, 2016. El modelo de empresa basado en activos intangibles).
Many R&D-intensive companies, especially in sectors such as biotechnology, agribusiness, or inputs for sustainable agriculture, generate real and distinctive knowledge/technology. However, that knowledge/technology may have an insufficient legal scope, may be difficult for third parties to understand, and therefore is not always negotiable.
The result may be an intangible asset with high technical value but low strategic value. Accordingly, the company will have less capacity to bring in investment and maximise valuation in corporate transactions.
Today, and always, relevant IP is that which defines markets, reduces risks for itself and third parties, accelerates investment decisions and, ultimately, allows the negotiating power of the management team to be strengthened.
IP should not be considered a one-off asset disconnected from the business, without a strategic narrative, but should become an instrument of the company’s corporate strategy.
At this point, the parallel with Buffett is no coincidence. Buffett has not invested in isolated patents, brands without positioning or strength, or informal “industrial/commercial secrets”, but rather in companies where IP has enabled the company to occupy positions in the market, generating a clear competitive advantage that is reflected in the accounts.
If start-up companies, without significant cash flow, can be considered illiquid financial products, isolated IP assets are even more so.
An illiquid financial product (e.g., based on patents) is an asset that cannot be converted into cash quickly or easily. They tie up capital by offering higher long-term returns in exchange for low liquidity. Patents, or any other type of IP asset, are not easily sold on an organised market (unlike shares), making it difficult to recoup the investment immediately.
The aforementioned EPO/EUIPO analysis reveals a strong, positive and statistically significant correlation between the intensity of IP use and the intensity of funding from private equity and venture capital. These results confirm the commitment to these illiquid financial products (IP-intensive companies) by accepting high risk in exchange for waiting for higher returns, which are not immediate. The data is revealing; in the 2021-2023 period, more than 88% of funding was invested in IP-intensive start-ups.
It is likely that the companies that lead a sector, those that attract the attention of investors who follow Buffett’s teachings, do not always have the best technology, but they do have the IP that is best prepared to negotiate and climb the rankings, thereby providing better returns to those who trust in them.
Written by: Rafael López Moya. Director of PONS IP Valencia and Technology Transfer.
