Although intellectual property (IP) has always been an essential part of most companies’ overall value, with the rapid rise of internet-based technology and e-commerce over the last few decades, IP is increasingly becoming the primary source of value for businesses both large and small.

In fact, studies show that today up to 80% of the value of a typical business is IP. And as of 2020, more than 84%—$19 trillion—of the S&P 500’s market cap is represented by intangible assets like IP.

Despite the critical importance of these assets, even the largest corporations aren’t always properly valuing or protecting their IP.

“Very few companies recognise the value of their intellectual property, nor have they secured an IP strategy that mirrors their long-term corporate strategy in order to maximize this value,” said Brian Hinman, Chief Innovation Officer at Aon and Head of EMEA for Aon’s Intellectual Property Solutions.

Without legal protections like patents, trademarks, and copyrights, your IP is at serious risk of being stolen by your competitors, hackers, and even your own employees, vendors, independent contractors, or clients. Worse yet, if you don’t take your IP seriously, you are likely undervaluing your greatest assets, not capitalizing on the most valuable part of your business, and staying stuck in a model of getting paid only for the actual hours you work, rather than for the ideas and value you create.

If even the biggest corporations aren’t properly protecting and leveraging their IP, we’re guessing that you probably aren’t either. If this is the case, this article is aimed at serving as a wake-up call for you to start taking your company’s IP seriously and implementing strategies to ensure these highly valuable assets are protected and leveraged to the fullest extent possible.

One reason business owners fail to protect their IP is because unlike more tangible assets like real estate, vehicles, and office equipment, most don’t understand how to properly value and protect their intangible capital. Many times, by overlooking your IP, you fail to pay attention to your business’ most valuable assets until something goes wrong.

This might include receiving a cease-and-desist letter after another business claims your name, or a former independent contractor you used to work with begins selling services to your customers in competition with you, or you discover that you don’t actually own the source code of a website you paid someone else to create for you.

Protecting your IP can begin with trademarking the name of your company, registering for copyright protection for the copy on your website and in your advertisements, ensuring that all of the agreements you have with independent contractors and vendors include work-for-hire provisions, and that all agreements with clients and customers have limitations-on-use provisions, ensuring your business owns what it creates.

In order to ensure you are able to properly identify and protect your IP, you should have an experienced business lawyer like us perform an IP audit for your company. An IP audit is a comprehensive, systematic review that identifies all of your IP assets, and evaluates all of the potential risks and opportunities associated with those assets.

An IP audit can not only identify your IP assets, it can also help ensure you have all of the necessary IP protections, such as trademarks and copyrights, and that you own the full spectrum of rights related to your IP in all of your legal agreements. Moreover, the audit can allow you to fully leverage your IP to ensure you are getting the maximum value possible from each of these assets.

At the same time, the audit can identify potential areas of risk related to your IP, such as instances where your company may be in danger of infringing upon another brand’s IP rights. From there, you will be better able to take the appropriate corrective actions, and implement more robust IP management strategies.

Finally, conducting an IP audit can also help ensure that these assets are not only protected and leveraged during your lifetime, but that your heirs are also able to fully benefit from these intangible assets in the event of your potential incapacity or upon your eventual death. As with any tangible asset you’d seek to protect and pass on to your loved ones, you can achieve the same benefits for your IP by including these assets in your estate plan. And as your Family Business Lawyer™ firm, protecting and passing on your IP through estate planning is one of our specialties.

If you haven’t reviewed your IP and its value recently, reach out to us, your Family Business Lawyer™ and ask for an IP audit. When combined with our proprietary Life & Legacy estate planning services, our IP audit will give you the peace of mind that your company’s most valuable intangible capital is not only fully protected and leveraged during your lifetime, but that your loved ones will be able to benefit from these creations for generations to come. Contact us today to schedule an audit for your company.

This article is a service of a Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.

We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.

You might assume that you automatically own the IP rights to the work your employees and/or independent contractors create while employed by you. However, unless you’ve had that individual sign a contract that explicitly states that you own all rights to any IP they create, using what’s called a “work for hire” clause, you might not actually own any of it.

Be sure all of your employees and/or contractors sign a contract stating that the company owns the rights to everything they create while working for you. And if your team members have access to any trade secrets, make sure they sign non-disclosure and non-competition agreements. Note, there is no legal registration for trade secrets, so an NDA is the only legal way to keep your proprietary systems and formulas a secret.

If you think you may be at risk here, contact us immediately.

A trademark protects your company’s brand name from being counterfeited, but it only protects certain aspects of your work. Trademarks are used to protect a word, phrase, symbol, design, or other distinguishing feature that identifies your specific product or service. Yet that protection doesn’t cover everything about your brand.

For instance, you could own a brick-and-mortar store that sells unique 3-D seascape art that’s called “C-Scapes 2.0” and have a trademark for the business name and logo. But someone else could still buy the legal rights to the URL “C-Scapes2.0.com,” unless you do it first. This is why it’s so important to secure all IP rights and domains as soon as you develop the idea, or you could be extorted by trademark and patent trolls, who monitor IP registration, waiting for a clueless business owner to put off securing all rights for their company.

Unlike copyright owners, who can pick and choose when to defend their copyrights, trademark holders must make efforts to enforce their trademark or risk losing it. While forcing a business to enforce their trademark might sound harsh, it’s designed to ensure that the foundational value of trademarks doesn’t become diluted.

Indeed, the entire point of having a trademark is to distinguish your company as its source, so allowing a bunch of people to use your trademarked logo devalues the protection. And it doesn’t matter who the offender is—a multinational corporation or your 12-year-old nephew—or if they even compete with you, you have to enforce your rights.

However, enforcing your trademark doesn’t mean you have to take the party to court. There are numerous options for enforcement available, from a polite cease and desist letter to requiring the offender to pay a nominal licensing fee, so you don’t have to be a total hard-ass about enforcement. In fact, we often write letters that inspire resolution as well as ongoing joint venturing to infringers if our clients want that. And we can do that for you, too.

With so many things to deal with when starting a business, it can be tempting to think that protecting your IP is something you can put off. But this can be a huge mistake. When it comes to IP, especially patents, you absolutely must file for protection as soon as the idea becomes a reality, or you could lose all rights to that idea.

For example, the U.S. patent office recently changed from a “first to invent” system to a “first to file” one, so patents are actually now awarded based on who filed first, not who came up with the idea first. As soon as you take the first steps to bring a business or product idea to life—incorporating, obtaining business licenses, or initiating production of a product—you should identify which aspects of your business need IP protection and file for a patent, copyright, or trademark. Of course, you’ve hopefully researched your idea first to make sure someone hasn’t already beat you to the punch!

Not to mention, you’re probably putting a lot of investment capital into building your website. But did you know that you may not even own your website? Yes, that’s right, without the proper agreements in place, you may not own the source code of your own website! Have us review any agreements you enter into when you create anything online or offline, and make sure your investments in intellectual property are protected.

Because intellectual property law can be quite complex and confusing, it’s vital that you contact us as your Creative Business Lawyer® to ensure all aspects of your IP are safeguarded. We’re well-versed in the latest IP laws and will work with you to develop a comprehensive strategy to protect all of your assets, so you can focus on taking your company and brand to the next level.

We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule. Or, schedule online.