A System for Capturing Your Biggest Business Value

The Most Valuable Business Asset is Intellectual Property

Every business has intangible assets like reputation, brand equity and customer good-will, but intellectual property contributes the greatest value. This includes trademarks, copyrights, trade secrets, licenses, and patents. So it’s a mystery why most businesses ignore these assets. They all have systems to track inventory, revenue, and receivables, but nothing to manage IP.

This article will introduce a system that fills this need, one I’ve used for more than 30 years. It’s easy to use, and it guarantees that you capture and protect your IP, and insures against surprise litigation.

A $5 million investment lost

Recently, an investor was looking at a promising company and wanted to invest $5 million. He wanted to be sure the intellectual property was well managed because he planned to secure his investment with the IP. The company provided a list that included unregistered trademarks and copyrights, and patents in different company names. It was a mess. The investor passed on the investment and the company never knew why. The company later went out of business.

The company had the IP, but they didn’t manage it. They didn’t have a way to ensure it was in a form acceptable to investors. This wouldn’t have happened with proper management.

Other problems happen without managing IP. Valuable patents are often lost because they were not filed in time. I see lawsuits requiring companies to change their name, years after opening their doors. Copyrights are lost for failing to take necessary steps. And failing to investigate whether a new product infringes other’s patents spawn lawsuits.

The Harmony System

I developed The Harmony System to help clients manage and protect their IP and avoid litigation. The system is based on a simple, three-step framework: the ReCiPe for Success. Over the years, I’ve seen this system create tremendous value, and avoided expensive litigation for many clients.

The Three Steps

1. Recognize

This step involves a general knowledge of IP rights. It’s the 40,000-foot view. It’s not intended to get deep into the weeds of Intellectual Property. These are the creative aspects of your business.  names, inventions, writing. If someone thought it up, then it’s intellectual property.

2. Collect

This step trains your organization to recognize and record potential IP. Everyone involved with creating participates in collection. The obvious ones are owners, managers, engineers, marketing, sales, and creative people. Less obvious examples might include assistants, secretaries, consultants, and even suppliers.

3. Protect

This step includes your IP counsel. It’s a review of what was collected, projects in development, and your IP portfolio. It should be quarterly and pre-scheduled for the year. It’s limited to about one hour, so it’s not a burden.

Recognize is an ongoing process

Every business has at least one trademark, copyrights, and multiple trade secrets. Some businesses will also have patents. These are all valuable assets worthy of attention.

Businesses are also vulnerable to their competitors’ intellectual property. Infringement doesn’t require intent. It’s your responsibility to recognize these risks and protect yourself. Litigation is expensive, distracting, and uncertain. A lawsuit avoided is as much as asset as any other.

Recognizing your intellectual property and litigation risks becomes a system, just like production or accounting. You begin to realize what to look for. Regular reviews spread internal knowledge of what to protect. They also highlight infringement issues.

As you use The Harmony System, you learn to recognize a potential asset, and what may be a risk.

Collecting becomes routine

Your key creative people are part of the 3 Step Process. They buy in on the importance of intellectual property and collect it. The process is a training program to reinforce the importance of IP, and the need to capture it in the system.

Two critical questions provide a shortcut for capturing IP.

  1. Is it important to your business?
  2. Do you want to keep it from competitors?

If your answer is “yes” to both, then collect it.

There are many ways to create incentives to collect IP. There are also many ways to make recording routine.

The Harmony System provides a free service to make collection and recording easy. It provides a report of all your IP and a snapshot of critical information. There is also a report on your competitors IP activities that will keep you and your team informed.

Protecting pulls it together

This is the most critical step, when you meet with your IP counsel. Together you review what’s collected and make decisions on what to protect. The System includes budgets to help manage legal expenses. We review the competitor investigations, look at new products to determine what needs to be done to avoid future conflicts.

The Protection meetings are pre-scheduled, with a prepared agenda. Regular meetings confirm the value of your IP and increases institutional knowledge. Attendees include the decision makers in your business. Representatives from engineering, product development, and marketing can all participate and benefit as well.

The Key to the System.

Preparation for the meeting is key. IP counsel must have all your existing IP in a clear and practical report, so everything is collected and summarized in an agenda. With these two components, the meeting can be held in an hour or less.

The IP report includes all dates and costs related to your IP. It also gives your management institutional knowledge. It’s a report you can share with investors or potential purchasers of your business. In the example above, the company could have provided the report to the investor and given him the assurance he needed. It also gives comfort to potential purchasers of your business. I’ve seen this in many transactions. Providing the report gives purchaser the comfort they need.

The Takeaway

Your IP is a business asset, just like buildings, machinery, or inventory.  It’s invisible, but no less valuable. A recent report stated that intangible assets can account for 90% of a businesses’ value. This may seem high, but even if it’s 50%, or 30%, they are valuable. Like any valuable asset, it needs tracked and monitored. The Harmony System provides an easy, reliable way to do this. Thirty years of use proves its value and success.

 

Bill Honaker, The IP Guy

About the Author:

Bill Honaker, “The IP Guy” is a former USPTO Examiner, a partner with Dickinson-Wright, and author of the forthcoming book, Invisible Assets – How to Maximize the Hidden Value in Your Business. To download a sample chapter, click here.

To get answers to your questions click here. To schedule a time to talk, you can access my calendar by clicking here, email Bill@IPGuy.com, or call me at 248-433-7381.

 

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