Intellectual property often undervalued, unprotected

Imagine a manufacturing company that left its factory doors unlocked on weekends, or a retail company that allowed employees to take goods off the shelves.

We know that such policies would expose the key assets of a business to theft or vandalism. Most companies go to great lengths to protect valuable hard assets.

Not so with intellectual property. In many companies, the high value of intellectual property assets and the minimal steps taken to protect them do not match.

Perhaps this is the case because intellectual property is intangible, or because its value is under-appreciated.

Whatever the reason, in my law practice I see many cases of inadequate care and protection of key intellectual property. Intellectual property is the "knowledge" asset of the company and bears a closer look.

First, let's define intellectual property. Certainly it includes patents, copyrights and trademarks.

Many companies, however, lack patents or copyrights and have only one or two trademarks.

This leads many managers to assume that intellectual property isn't important to their company.

However, intellectual property also includes trade secrets such as customer lists, business methods, financial information, marketing plans, blueprints and designs, and proprietary formulas.

Computer software is also intellectual property, even if licensed from a third-party vendor.

Everything unique about a business is potentially a trade secret, and may even be eligible for a patent.

Intellectual property is more important to some businesses than others, but even low-tech businesses are more likely to have their value expressed in ideas than was the case a few years ago.

Think of "idea capital" and you can see how ideas are assets just as much as inventory and equipment. For example:

A flower shop uses proprietary software to more efficiently map and schedule its deliveries in a large city, giving it a competitive advantage.

A restaurant perfects its own recipes and a floor layout that maximizes revenues.

A retailer develops its own employee training materials to cope with high turnover among entry-level workers.

These are but a few of the examples of businesses that have valuable trade secrets.

What should companies do to better protect that knowledge? First, make someone responsible for the issue. It is not enough to name the head of the computer department as the person responsible, because he or she may not have jurisdiction over trademarks, business trade secrets and other types of intellectual property that don't fall under the rubric of computers or software.

Some companies treat intellectual property as a legal or loss-prevention function. Both approaches can work, but it is important to make someone responsible for protecting knowledge assets.

Next, catalog the assets that qualify as intellectual property. An easy way to do that is to list everything about the company that you wouldn't want your competitors to know.

Also, list trademarks, logos, service marks and patents that the company uses, even if they are licensed by someone else.

Protecting your license rights is just as important as protecting your ownership rights. List all software programs used by the company and note whether they are proprietary. If you have a Web page, consider it intellectual property.

Finally, evaluate how that knowledge is currently protected. This is partly a matter of passwords, firewalls and secure file cabinets. It is also a matter of contracts and how the company's rights are protected in those contracts.

For example, if your Web page was constructed by an outside vendor, you should determine who owns the content, source code, and look and feel of that Web site.

If software was written in-house or by consultants for hire, does your company have agreements in place with those people that make it clear that the resulting product is owned by the company?

This article only touches on the issue. In many cases, an intellectual property attorney will be helpful in evaluating your level of knowledge asset protection. The key point is to protect knowledge assets at a level that is commensurate with their value to the company.

(Kenneth A. Cobb, a partner with the law firm of Blackwell Sanders Peper Martin LLP, practices technology and intellectual property law.)