Monday 14 December 2015

The importance of intangible assets to start-ups: Keys to proper protection

The third industrial revolution is upon us. The first was marked by controlling natural resources and building infrastructure and the second by mass production and distribution. The third is marked by generating value through information. We live in an age of globalization and hyperconnectivity, when speed in developing and implementing valuable ideas means the difference between success and failure.

In line with this, corporate value is undergoing a shift from tangible to intangible assets. Companies like Google, Facebook, and Apple have very little in the way of tangible fixed assets; instead their growth is driven by their intangible assets. Companies will be piling onto this bandwagon more and more, and this includes even traditional companies, which are adapting or will have to adapt their business models to survive.

As intangible assets grow more and more important, protection of these assets has become a vital necessity. Brick and mortar can be protected by locks, alarms, and guards – but how do you protect a valuable idea? Using the framework of the law is key. Today, intellectual property is playing an increasingly important role, and that role will only become greater.

Intellectual property is like a hand with five fingers: trademarks, patents, designs, copyright, and trade secrets. This simile is an apt one here, because the hand is an extremely versatile tool capable of performing the most intricate tasks. Think of playing a musical instrument. The trick is to use the available rights wisely.

Which right is the right one, when and where should it be registered, should it be used in association with complementary rights, how can it be enforced against competitors, and what kind of valuation is appropriate for business transactions – all these questions are key to intelligent use of intellectual property.

Integrating intellectual property into the creative process is another key factor. It is not enough to develop something and then decide on protection-related issues when finished. Projects cannot be managed without managing employee and participant, partner company, supplier, and customer relations from the very outset.

Decisions to redirect or abandon a project cannot be taken without taking into consideration rights obtained, registered, or pending, possible repurposing, and the consequences of abandonment.

This is important to all companies, but it is vital to innovative SMEs and start-ups. It can spell the difference between success and failure. I have seen many young companies with important innovative business ideas fail because they failed to plan out their intellectual property matters as required.

Companies of this kind often complain that intellectual property is an expenditure, is very expensive, serves no real purpose. I can sympathize, even with the last of these objections, because intellectual property is of little benefit when it is not used wisely.

In other words, integrating it into the innovation process and using it intelligently is what makes intellectual property beneficial, necessary, fundamental. Doing this does not require so much money, only thinking about how and when to spend it, how to invest well so that it will help bring about success.

Author: Javier Fern├índez-Lasquetty
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