The Business Case for Intellectual Asset Management
L. Daniel Liutikas, an Associate in the firm's Business & Finance practice group, is an experienced corporate and technology transactional lawyer. He handles a variety of transactions, including mergers and acquisitions, domestic and international commercial transactions, information technology and business process outsourcing, and technology transactions related to the Internet and other new media outlets. Dan can be reached at 312.521.2424 or dliutikas@muchshelist.com.
By L. Daniel Liutikas
Much has been written recently about protecting intellectual property (IP). As executives and entrepreneurs have become more knowledgeable about the importance of protecting their trademarks, patents, copyrights and trade secrets, many U.S. companies have taken important first steps towards recognizing that their value is greater than the sum of their real estate, inventory and receivables.
However, companies that simply identify and protect intellectual property are failing to acknowledge and leverage all of their intrinsic value. Any business—whether providing services, manufacturing goods or selling products—creates marketable, value-adding intellectual assets that fall outside the typical IP categories. They encompass the collective knowledge, competence, experience, R&D, relationships, personnel and processes that deliver value to a relevant marketplace and provide a strategic advantage for the company. Typically, these assets include human capital, business goodwill, market intelligence and management strategies. By learning to identify and leverage these assets, an organization can shift from a defensive posture of mere protection to an offensive one that offers a distinct competitive advantage and measurable return from its intellectual assets.
Formulating an Intellectual Asset Management Program
Unlike protecting individual intellectual property assets, the goal of an intellectual asset management (IAM) program revolves around how intellectual assets interrelate, provide competitive advantage and improve the bottom line. It is a process of taking inventory, organizing (and reorganizing), and learning about the organization's broad capabilities to fully leverage every resource. For this reason, IAM is advisable for large, established companies, as well as smaller, entrepreneurial organizations.
A well-designed IAM program helps leverage the benefits and minimize the risks associated with various corporate activities, including R&D, marketing, acquisitions, licensing and strategic alliances. If successful, a company can expect to achieve the following:
- Grow revenue through core and non-core revenue streams by identifying and capitalizing on high-value projects
- Reduce costs by identifying and rectifying organizational inefficiencies
- Enhance its positioning in the marketplace
Most companies understand the important role their legal team plays in protecting intellectual property. But how can effective legal counsel add value in implementing an intellectual asset management program? These comprehensive programs typically span many legal disciplines to achieve their full potential.
Mergers and Acquisitions, Joint Ventures and Strategic Alliances. To capitalize on non-core assets or the commercialization of core assets in non-core markets, it may be necessary to partner with one or more third parties.
Employment Agreements and Employee Manuals. A properly designed program takes full advantage of human capital and protects the associated advantages by restricting employees from competing with the company and ensuring that they preserve the confidentiality of proprietary information during and after employment.
Vendor, Manufacturing and Other Commercial Agreements. Core intellectual assets are frequently associated with relationships. Too often, these assets are not properly identified and protected. For instance, a manufacturer's network of distributors and sales reps is key to its ongoing success. To preserve consistency and performance expectations, appropriate agreements should be in place.
IP Protection and Licensing. Lastly, a company should continue to protect its intellectual property and strategically seek suitors to license such assets.
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