Intangible Risky Business

by Ward and Smith, P.A.
Contact

The national, and many times global, reach of most businesses, regardless of size and physical location, continues to drive the ever increasing importance and value of intangible assets.  In fact, a business's intellectual property ("IP"), its intangible assets, typically represents a greater proportion of the total value of the business than the value of its tangible assets such as real property, equipment, and inventory. 

This is because IP covers a variety of intangible assets, including:

  • Patents for inventions, processes, and product designs;
  • Trademarks and trade dress encompassing brand names, logos, symbols, and the overall aesthetic look and feel of a business or its products;
  • Trade secrets including customer lists, vendor lists, and formulations; and,
  • Copyrights protecting websites, promotional materials, product packaging, software, and other visual art. 

Despite the value and universal importance of IP to essentially all businesses, many do not accurately inventory the creation, protection, management, and exploitation of their IP assets.  The challenge is typically finding the resources and management buy-in necessary to prioritize the proactive identification, protection, and management of IP assets.  Many times, the immediate and urgent issues of the day-to-day operations take precedence until the IP assets become the urgent matter at hand.  This can result in IP assets that simultaneously qualify as a business's most valuable asset and represent the highest liability, waste of resources, and loss of potential revenue.

Best IP Asset Practices  

An Intellectual Property Audit ("IP Audit") is the best business practice to minimize IP risks and liability and safeguard the protection and enforcement of valuable IP assets.  It is a systematic, solution-based review of a business's assets and policies used to identify, manage, and leverage IP assets and the related risks and opportunities.  IP Audits evaluate, preserve, and enrich IP rights; correct IP asset deficiencies and errors; identify opportunities to leverage IP assets that would otherwise be underutilized;  minimize infringement liability; and result in the development of best practice policies and procedures for IP asset management. 

Purpose of an IP Audit

  • Identify IP Rights:  The efficient and effective management of a business's assets, including intangible IP assets, is essential to the bottom line.  If a business has not identified or is unaware of its IP assets, it cannot manage or protect them from damage or loss.  Thus, the first purpose of the IP Audit is to identify all IP assets (owned or licensed).
  • Enhance IP Value:  The IP rights that comprise IP assets are created and protected by a myriad of state and federal laws, case law, and the Constitution of the United States.  These laws set forth different ways in which IP rights are created, protected, and enforced depending on which IP assets—copyrights, patents, trademarks, or trade secrets—are being considered.

Businesses often unknowingly lose, diminish, or destroy IP assets due to a lack of understanding of the varying requirements for each type of IP.  IP Audits provide an integrated approach for avoiding loss, increasing value, and strengthening the rights related to IP assets.

  • Understand IP Limitations:  IP assets, and the use of those assets, can be limited, encumbered, or compromised through contractual agreements.  IP Audits include the review of business agreements pertaining to IP assets such as licenses, employee agreements, independent contractor agreements, joint venture agreements, and settlement agreements.
  • Minimize IP Risk:  IP disputes are complex, lengthy, and expensive.  The effect is that businesses forgo enforcement (resulting in loss of IP rights), cede certain IP rights to reach a resolution (limiting business opportunities), or spend resources defending against an inadvertent infringement (wasting valuable resources).  IP Audits can help identify, and many times assist in, avoiding or minimize potential disputes through strategic planning and proactive remedial action.

Benefits of an IP Audit

  • Opportunities:  The IP Audit process requires the involvement of legal professionals and employees from all levels (e.g., inventors, managers, executives) and from all departments (e.g., marketing, research, finance).  The resulting synergy of combining the industry and business knowledge of the employees with the IP knowledge of the legal professionals can be its own competitive advantage. 

Once there is an understanding of existing IP assets and how those assets can be better leveraged, the business is in a better position to recognize opportunities for developing new IP assets and more quickly capture and leverage them before there is any loss (or risk).

  • Revenue and Budgeting:  IP Audits provide businesses with information regarding the economic benefits and value of IP assets such as the creation and maintenance cost, replacement costs, and the potential income and present cash flow values.  IP Audits can identify unnecessary cost by isolating obsolete IP assets or opportunities to dispose or license IP assets that no longer align with the business's strategy.
  • Business Transactions:  IP assets can play a large role in business transactions.  IP Audits provide information that allows a business to be nimble and responsive to business opportunities such as offers to purchase, expansion opportunities, joint ventures, licensing request, and financing requirements.

Conclusion

The IP Audit process can provide a business with more than a list of its IP assets.  It can provide a thorough, detailed awareness of the value and risks associated with a business's IP assets; many of which may be unknown without an IP Audit. 

This knowledge can give a business an improved strategic position by providing strategies for mitigating risks and leveraging IP assets.  Regardless of the size of a business,  its location, industry, or the scope or makeup of its IP assets, approaching IP assets through the lens, and as a result, of an IP Audit is essential to the fiscal growth and success of businesses in this national and international economy.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ward and Smith, P.A. | Attorney Advertising

Written by:

Ward and Smith, P.A.
Contact
more
less

Ward and Smith, P.A. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.