Conducting regular assessments and due diligence are essential for sustaining control, use, ownership, and value.
Periodic, even regular assessments of company’s intellectual properties and intangible assets are important because those assets play increasingly important roles in a company’s value, sources of revenue, future sustainability, and profitability.
Assessments are not exercises to be performed only in conjunction with a merger or acquisition, or when there’s suspicion of fraud, theft, infringement, or after being notified the company is a defendant to a lawsuit.
Rather, periodic, even regular assessments of company’s intellectual properties and intangible assets are important because those assets play increasingly important roles in a company’s value, sources of revenue, future sustainability, and profitability, and, as such are frequent targets for legal disputes and challenges over their origins, use, control, and ownership.
Respecting the economic fact – business reality that for most companies today, 75+% of their value, sources of revenue, and sustainability is directly linked to intellectual property and intangible assets, assessments should not be relegated to mere confirmatory reviews of filings, certifications, and/or renewals, etc., or ‘warmed over’ (generic, one-size-fits-all) versions intellectual property audits.
A well designed and executed assessment should provide decision makers with:
1. an objective sense – appraisal of the assets’ fragility, stability, defensibility, and value and identify any gaps-disconnects that may exist relative to ensuring the assets’ control, use, ownership, and value can be effectively sustained throughout its functional-life-value cycle.
2. actionable/practical recommendations for making sound and strategic business decisions about risks – threats to those assets and practical/efficient measures for sustaining their control, use, ownership, and value for the duration of the life-value cycle
When conducting assessments of intangible assets particularly, its important to recognize this may be a company’s (and their decision makers’) initial foray into intangible assets so it’s important for the assessor to assume multiple and intertwined roles, i.e., a teacher, analyst, protector, and business strategist:
o As a teacher – bring operational and economic clarity to the company’s intangible assets, intellectual property, proprietary know how and competitive advantages.
o As an analyst – identify and unravel centers, clusters, chains, and operational complexities of (intertwined) intangible assets, intellectual property, know how, and competitive advantages.
o As a protector – identify risks, vulnerabilities, and threats that elevate probability of asset impairment, i.e., threats/risks that would entangle the assets in costly, time consuming, momentum stifling (legal) challenges or disputes.
o As a business strategist – identify efficient-effective asset value preservation measures aligned with company’s strategic business plan and/or a transactions’ objectives, i.e., exit strategy, projected returns, and/or the life-value cycle of the assets in play.
For most companies, assessments – due diligence of the type addressed here should, at minimum, be conducted to coincide with or serve as a prelude to any significant business transaction (new initiative) in which intangible assets, intellectual property, proprietary know how, and/or competitive advantages will be bought, sold, transferred, bartered, or are otherwise part of a deal.
One of the most important products (outcomes) of an assessment is that it clearly convey to business decision makers that theft, misappropriation, infringement, compromises, and/or unauthorized replication/use of a company’s hard earned and valuable intellectual property, intangible assets, and know how should no longer be characterized as mere ‘risks of doing business’. Left unchecked and unmonitored, those risks (probabilities) rapidly become inevitabilities in today’s hyper-competitive, globally aggressive, predatorial, and winner-take-all business environments.