According to the U.S. Patent and Trademark Office, intellectual property in the United States is worth over $5 trillion. Intangible assets are estimated to make up as much as 85 percent of an individual company’s value, but experts believe many companies have failed to recognize the growing importance of IP in the global economy.
In September 2015, Rolla-based Brewer Science announced a major victory against IP theft with a court decision that found an ex-employee, his wife and the company they formed guilty of stealing trade secrets and selling knockoff products to unsuspecting victims. Brewer Science was awarded $10 million in damages to cover the company’s lost profits and research and development costs. The judge determined the couple partnered with a Chinese manufacturer to make and distribute machines that used Brewer Science technology and was in direct competition with the company. While the IP in this case was the technical details of products and/or the manufacturing process, IP also includes your business plan, development plans and new services.
IP includes works of authorship, such as software code, website content and marketing materials. Because many works incorporate third-party materials, things can get even more complicated. For example, your company may use open source software or your vendor may use code she created for a previous project, refining it to work for your project. This extremely common practice can make it very difficult to determine after the fact which parts of individual works are owned by your company, and which are merely licensed. While your company owns the physical documents on which such plans are recorded, the abstract idea or information is generally not legally considered “property” that a business can own.
While patents and trade secrets, like the recipes to Coca-Cola and Kentucky Fried Chicken or the Google search algorithm, have obvious value, for many companies, a strong brand is their single most valuable asset. Often a company name can be a brand, but a brand is normally associated with a fictitious or assumed name (Gmail, Google Maps or Google Plus for example).
Brand rights, in the form of a trademark, seem deceptively simple to obtain and maintain. Unfortunately, the complexities of securing effective trademark protection can lead to a weakened ability to enforce trademark rights or outright loss of those rights.
Competitive differentiators are the beneficial and unique aspects of your product or service. These qualities may provide benefits to consumers, such as a useful and unique feature, more reliable operation or lower price; or may provide benefits to your organization, such as reducing manufacturing or operational costs. A competitive differentiator may be the functional and technical capabilities of your product or service that make you superior to consumers over your competition. In one sense, your competitive differentiators are your “secret sauce.”
According to the Risk Management Monitor blog, 74 percent of respondents say it is likely their company failed to detect a data breach involving the loss or theft of knowledge assets, and 60 percent state it is likely one or more pieces of their company’s knowledge assets are now in the hands of a competitor. Like physical assets, digital assets should be treated and identified, located, inventoried and tracked, valued and prioritized, plan for transferability and disposition, and reviewed and maintained annually.
Richard Russell is general counsel of Ollis/Akers/Arney, an employee-owned consulting and insurance advisory firm. He can be reached at email@example.com.