First seen on Forbes Business Council
In today’s highly competitive and innovation-driven landscape, intellectual property (IP) has become a critical asset. As an attorney and founder of an intellectual property law firm, I see IP typically fall under one or more of the following categories: patents, trademarks, copyrights and trade secrets. Safeguarding and strategically managing IP assets are essential for maintaining a competitive edge, protecting the company’s revenue stream and driving business growth.
Here are some guidelines to help you recognize your company’s IP needs and the budget needed to manage those assets, as well as how to effectively communicate IP budget needs to other leaders in the company:
How Intellectual Property Types Determine Budget Needs
Of course, one of the first questions you need to ask and answer is: Which type of intellectual property does my company generate? Let’s take a closer look at the previously mentioned categories:
• Patents protect inventions, processes and technical advancements. In other words, this type of IP focuses on protecting the “how” or the “know how” related to technology.
• Trademarks protect the company’s brand identity, logos and product names. This type of IP focuses on protecting the “who” that created the product or provides the services (related to the technology) so consumers know the origin.
• Copyrights protect original and creative works (for example, software code or artistic content) that is expressed in a medium. This type of IP focuses on protection against reproduction and/or distribution without permission.
• Trade secrets protect confidential, proprietary information and valuable business information (such as confidential business practices, formulas, recipes, customer lists, source code, algorithms, marketing strategies, CRM strategies, etc.) that provides a competitive advantage intended to be kept a secret. Unlike the others, this type of IP focuses on relies on secrecy for protection.
So, why is it important to allocate a budget to protecting the types of IP that the company generates? A company’s IP is often critical to gaining and keeping a competitive advantage. If left unprotected, you could lose the IP. Imagine the loss of revenue if the company’s technology was given to competitors or if the company’s most successful brand name was not owned by the company.
The right IP protection protects revenue streams because it can create barriers to competitive entry and differentiate your company from competitors. Further, strong IP portfolios can enhance brand reputation and customer trust. Importantly, IP assets can be monetized through licensing, partnerships or litigation to allow revenue growth that is used for future research and development investments.
Why (And How) In-House Counsel Should Perform An IP Audit
An audit is key to planning and budgeting and, eventually, communicating findings to the leadership team. IP audits provide a foundation of facts, which are provided by:
• Collaborating with sales/marketing teams and research and development teams to understand upcoming innovations, inventions and creative works
• Staying updated by actively monitoring industry trends, technological advancements and changes in IP laws and regulations
• Evaluating the strength and market value of the company’s current IP assets
• Determining existing IP assets and how these relate to the current and future business needs, especially as it pertains to potential enforcement and litigation
• Evaluating competitors’ IP strategies by researching competitors’ patent filings, trademarks and any litigation involving IP rights
• Engaging external IP experts to gain additional insights and expertise
Once you’ve gathered this information, it’s time to estimate IP-related costs and expenses based on the IP audit. There are three steps:
• Determine costs associated with creating and maintaining the number of possible IP filings from the IP audit to estimate filing and maintenance fees for patents, trademarks and copyrights
• Determine costs associated with IP enforcement and litigation by evaluating your competitors’ products and services to determine possible issues
• Determine costs associated with IP education and training programs
How to Communicate With Leadership About Your Intellectual Property
Having the leadership team understand that an effective IP budget is directly related to revenue growth is critical, and there are a few key elements involved with communicating an IP budget effectively. An evaluation of the types of IP needed, combined with an IP audit, will help in clearly outlining the strategic importance of IP to the company’s success. This information can be used to:
• Demonstrate how IP protection results in revenue protection and achieving the business goals/objectives
• Provide a comprehensive breakdown of projected costs and benefits
• Emphasize the potential risks in loss of revenue, market presence and growth if there is an inadequate IP budget allocation
Most often the executive leadership team needs to understand the ROI and the value proposition of IP assets. In order to help address these, ensure that you:
• Articulate how IP investments contribute to revenue growth and market position
• Explain the competitive landscape by highlighting the IP strategies of competitors and the potential risks of not protecting IP
• Illustrate that long-term planning results in the IP being a long-term asset that directly impacts future revenue and business opportunities
There are also ways you can involve leadership and demonstrate that the value of the IP budget is being maximized:
• Build an IP-conscious culture within the company by educating employees about the importance of IP protection and their role in safeguarding it
• Include leadership in implementing policies and procedures to ensure IP assets are properly identified, protected and managed
• Leverage the IP assets for strategic partnerships and collaborations with customers/clients (or even competitors) by identifying opportunities for licensing, joint ventures or technology transfers
• Demonstrate how IP assets can be used as negotiation tools in business partnerships and collaborations
In conclusion, in-house counsel plays a vital role in managing IP assets and budgets to drive innovation, protect the company’s revenue stream, maintain a competitive advantage and maximize market dominance and growth. By effectively communicating the importance of IP and aligning it with business objectives, the leadership can support and empower the legal teams to secure the company’s intellectual property and leverage it for future success.