Top 20 Destroyers of Business Value Tip # 19 – Not Protecting Your Intellectual Property

Posted on March 20, 2013 · Posted in Blog

Patent_Innovation-742813Merriam-Webster defines intellectual property (IP) as: property (as an idea, invention, or process) that derives from the work of the mind or intellect; also, an application, right or registration relating to this.

Many businesses possess some form of IP. It is categorized into two areas by The World Trade Organization: industrial property and copyright. Examples include, inventions, trademarks and tradenames, industrial design, literary, artistic, musical works, and more.

The most common ways to protect your IP are through patents, copyrights, registered trademarks (and tradenames). Some IP however is not easily protectable, or you may just choose not to release information to the public through the patent process.  This is often the case with trade secrets (formulas and recipes – a good example of this is the century old recipe for Coca-Cola).

A simple way to gauge how vital certain IP is to your business, is to imagine a scenario where that portion was removed or greatly infringed upon – ask yourself, how will it affect sales, pricing strategy, or market awareness? A valuation professional will calculate the value of IP in a similar, but much more detailed manner, and may also analyze similar IP in the market.

Of course, the most difficult part is determining whether the costs of protecting your IP is worth the risk or likelihood it will be infringed upon. Hiring patent attorneys, and other professionals can be very costly to small business owners. Not only is it expensive, but it also is a lengthy process that can take years for a patent to be granted, if at all. While protecting your IP can be costly, if you believe it  accounts for a significant portion of your business’ value, it may very well be worth protecting.

Is your business’ value being destroyed by not protecting your intellectual property?

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