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Often Overlooked: IP-Asset Management



Companies, especially start-ups, typically overlook IP-asset management. Viewed as a minor detail or something that can be sorted out later after the real business is up and running, IP-asset management is often ignored. But this can be a huge mistake. Many times, most of the value of a company lies in its intellectual property. And a start-up can be overwhelmed by larger late entrants into new markets without any IP protection.

1. What are IP assets?

Intellectual-property (IP) assets are different types of intellectual-property rights that a company owns. It can use these assets to protect and grow its business. They include patents, trademarks, trade dress, copyrights, and trade secrets. These rights are protected by various federal and state laws.

Patents: Patents protect both useful inventions and designs. Useful inventions can range from the steam engine to a new method of implementing a media access protocol in a wireless-communication network. Design patents cover the unique design of a product. The most famous design patent is the design patent that covers the shape of Apple’s iPhone, including the home button. Design patents— unlike trademarks—do not need to acquire secondary meaning and allow the patent owner to take the profits of an infringer—which can be more than the reasonable royalty or lost profits allowable for utility patents. Importantly, without an agreement in place, it is the individual inventors and not the company that owns inventions in the United States.

Trademarks/Trade Dress: These are marks or a way of presenting a product or service that is used to identify the source of a product. A famous example is the Nike Swoosh. A trademark or trade dress is the actual mark or dress used. The underlying rights are typically acquired by use in commerce and acquiring secondary meaning to consumers. Trademark and trade-dress owners can get additional enforcement rights by registering their marks and trade dress with state and federal trademark offices. Trademarks and trade dress can easily be lost if they are not policed and enforced by the owner, because without enforcement the mark or dress loses its source-identifying characteristics.

Copyrights: This is protection given to owners of works of authorship, like literary works or music, to have the exclusive right to make and sell copies of those works. Generally, work produced by employees belongs to the employer. But it is important that it is made clear under what circumstances an employee or independent contractor has relinquished his or her copyrights.

Trade Secrets: These are the rights that a company has in information that is valuable because it is secret. These rights disappear if the company does not maintain the secrecy of the information and maintain policies and procedures to maintain that secrecy both within the company and with vendors. The consequences of not protecting trade secrets could be devastating. Employees can take those secrets and start a competing business; competitors could take advantage of your investment in those secrets, without the same start-up costs; and vendors could become competitors by using your trade secrets. An example of a famous trade secret is the Coca Cola formula. Trade secrets are typically used to protect information that cannot be protected by copyright or patents or are used to maintain protection of inventions and ideas before they are protected by patents.

2. Benefits of IP-asset management

  • Generate more revenue from product sales—by creating legally enforceable exclusivity—and licensing royalties

  • Protect brand value by enforceable rights against knock-offs

  • Promote high-value investment

  • Motivate and retain technical personnel

  • Encourage research and development

  • Improve corporate valuation

  • Increase access to goods and technologies through licensing agreements (cross-licensing)

  • Create litigation leverage by having rights to counter-claim

3. Importance of IP-asset management for start-ups

Many start-ups do not give primary consideration to managing their IP assets. IP assets and rights are typically viewed, at best, as a nice add-on to a successful business plan and, at worst, as an unnecessary distraction. This is a mistake.

Many successful companies depend on the IP assets that they develop in the course of starting a business. But without the right procedures and policies in place to identify and protect these IP assets, much of the value that a company thinks it owns can easily be destroyed or stolen.

Moreover, without a robust IP-asset development and protection policy, companies are open to unilateral attacks from competitors and employees without any rights to assert in defense.

Successful companies, like Apple, have used their IP assets to protect their market position. Companies that struggle can use their IP assets to create value even when other aspects of the business are not doing well by licensing or asserting their IP portfolio. And a strong IP-asset development and protection program will make any company more attractive to investors, who want assurances that the technology, products, services, and secret know-how of a company cannot be taken by other companies or employees.

4. What is IP-asset management?

  • Assess and plan IP development and protection

  • Develop IP infrastructure & enforcement

  • Educate employees regarding value of IP and IP procedures; and

  • Commercialize IP assets

5. IP-asset management services

The following services may be part of IP-management consulting provided by an attorney:

  • Reviewing company files and inventory existing IP assets

  • Interviewing key employees to identify key types of IP to develop

  • Creating customizable forms for client to use with employees, vendors, and OEMs to protect and maintain ownership over IP assets, including “chain of title”

  • Creating customizable forms for project development to identify IP assets as part of product development cycle—making filing and prosecuting product-related IP efficient and cheaper; and

  • Presenting to company employees and executives to explain IP and IP-asset management procedures, with follow-up training for individual employees

This article is for informational purposes only and does not constitute legal advice. This article does not create any attorney-client relationship between Gundersen Law and the recipient. Any testimonial or endorsement in this document does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. Previous results do not guarantee a similar outcome.


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