IG, Regulations & Compliance

Intellectual Property 101: How To Leverage Intangible Value

Intellectual Property

IG, Regulations & Compliance

Intellectual Property 101: How To Leverage Intangible Value

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  2. Intellectual Property 101: How To Leverage Intangible Value
Understand the basics of Intellectual Property (IP) and how to leverage IP assets.

I recently had the pleasure of presenting on the basics of Intellectual Property (IP) and how to leverage IP assets along with industry colleague Mary Juetten, CEO of Traklight. I thought I’d share some of the highlights of the CPA Academy webinar presentation, and a link to the webinar replay (it’s free, but registration is required).

Intellectual Property, or intangible assets, can comprise more than 80% of a company’s value. In addition, IP theft costs US companies $300 billion annually. It’s a huge problem. However, many organizations do not recognize their IP until it’s too late. One of the main points of the webinar was that early decisions can impact IP ownership and the ability to leverage intangibles. If you ignore IP protection issues up front, it can come back and bite you later.

Here is an overview of topics covered in the presentation. We encourage you to listen in to hear the full recording.

Four types of IP (Intangible Assets)Although, you may not think you have intellectual property, most businesses do, and capturing and retaining innovation is difficult. The four primary types of IP are:

  • Patents (protect ideas for utility or design)
  • Trademarks (protect names)
  • Copyright (protection of idea expressed in tangible medium)
  • Trade Secrets (protects secrets that hold value)
    Note: There is a new Defend Trade Secret Act (DTSA) that is about to be signed into law at the federal level – more on that in an upcoming blog post.

Common IP Misconceptions
Many people have misconceptions about intellectually property – what it is, how it is used, and who can use it. Here are some of the common misconceptions:

  • IP is just for technology and tech start-ups
  • Patents are the only form of IP for inventors
  • Domain name = a trademark
  • If you pay for it, you own it
  • You can copy anything without the © symbol
  • Patents mean you have the right to make or sell
  • Trade secrets are easy to protect

All of these are NOT true. So, what’s the bottom line? From the very beginning, it is important set up contracts properly, taking your IP into account. This is something that is much more difficult to deal with later. It can get very expensive and complex.

We also touched on open source and work for hire. In both cases, understand what rights you own, and what rights you are receiving. Read the licenses for open source, and make sure work for hire is properly protected.

IP Management Best PracticesWhat are some of the reasons you need an IP strategy?

  • Trying to exclude competition
  • Attract investment (including crowdfunding)
  • Leverage and license
  • Avoid IP loss, infringement, or business failure

If, at some point in time, you want to sell your company, you need to make sure your IP is properly protected. Why? You can’t sell what you don’t own. Valuation is based on you and your business plan, but also your IP and what it will be worth.

There are about 500,000 new start-ups launched monthly, and most don’t protect their IP because they don’t identify it. After the first year, only about 20% are protecting IP.

Ignorance is not a defense! A few more tips … Make sure ownership and co-founder agreements are established early on. If you are an employee of another company, review your contract – the IP you develop may be property of company you work for. Also note that fundraising or selling outside of US is not covered by US laws. READ contracts, licenses, and permission to use. And, always get it in writing!

Here are 7 Things You Can Do Now

  • Make sure you identify and inventory your IP
  • Think of your IP in all relevant contracts
  • Develop and communicate your IP protection policies in your company; make it part of your business
  • Get everyone committed, including your board and senior management
  • Use due diligence and other risk assessments to know where you stand
  • Document and secure your IP in a verifiable way
  • Review your IP protection and proactively manage it

You can find more information on the Traklight Resources page of their website, and Traklight and Iron Mountain are offering a free Business Risk Assessment – complete it now to ID your IP.


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