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Knowledge Protection – Don’t Treat Your Company’s Intellectual Property As Renewable Resources

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An idea, by definition, exists primarily in one’s mind, where it remains somewhat secure, but not terribly useful so long as no one else knows. To produce (commercial) value from that idea it must be expressed, and therein, often lies the starting points for many potential problems and challenges for the originators – developers of that idea.

Fundamentally, protecting ownership rights to the products of one’s mind represents a contract of sorts between society, the government, and the individual(s) who created/developed the idea.

But, the risks (threats, vulnerabilities) to ideas (information assets) today, e.g., compromise, theft, misappropriation, infringement, counterfeiting, etc., are asymmetric, change rapidly, and, when they occur, can instantaneously:

. stifle momentum for further development and/or (economic)

commercialization of the idea

. undermine projected transactions, investments, strategic (business) plans, or

competitive positioning, and

. erode (evaporate) the ideas’ value and projected (future) use, profitability, or

anticipated competitive advantages.

In the pre-Internet era, when company’s experienced compromises/losses to their proprietary-sensitive information, and/or trade secrets, etc., a common strategy/practice was to try to contain (compartmentalize) the damages and/or extent of the loss, usually in a business continuity/contingency planning context. Today, however, while such strategies may be viable in limited circumstances, they seldom reflect the reality of the ‘nanosecond speed’ in which valuable information assets can be acquired and disseminated globally to an ever growing array of adversaries, e.g., infringers, competitors, counterfeiters, etc. And, once the asset has been successfully compromised, reliance on containment, in the conventional sense, is seldom a viable option.

Elevating (exacerbating) the probability that a company’s proprietary know how, etc., will be compromised is the widespread availability of ultra-sophisticated and predatorial data mining, scanning, and analysis (competitor intelligence) tools (software programs) which can quickly discern and extract substantive advantages embedded in a company’s information assets and ultimately distribute same to a growing labyrinth of skilled and highly organized information brokers and state and corporate sponsored economic-competitive adversaries globally. This makes a company’s proprietary information assets at risk (vulnerable) 24/7, and at increasingly earlier stages of (their) development and without regard for conventional IP protections.

Thus, while conventional intellectual property enforcement mechanisms (i.e., patents, trademarks, copyrights) remain a much nuanced and country centric requisite for conveying ownership and providing legal standing to address potential disputes and challenges, the reality is they, particularly patents, are reactive, that is, they require consistent self-policing and monitoring by the owner/holder to be even reasonably effective.

Equally important, the assumed deterrent effects of intellectual property (e.g., filing – issuance of a patent, for example, will actually inhibit others from stealing, infringing, counterfeiting, and/or misappropriating) are (a.) conceptually and practically oversold, and (b.) readily/easily outpaced, circumvented, and utterly disregarded by a growing global cadre of ‘legacy free’ players and well organized information brokers, infringers, and counterfeiters.

Legacy free players, as characterized by Thomas Friedman (The World Is Flat) are individuals – organizations (globally) who generally have, for a variety of reasons, little or no cultural – national legacy for respecting private (tangible) property rights, let alone intellectual property rights. Therefore, legacy free players, may well unabashedly engage in theft, misappropriation, and industrial (economic) espionage to acquire others’ ideas, IP, and proprietary know how to advance their position (economically, competitively) and without incurring the upfront (tremendous) costs associated with ‘idea development’ (R&D).

Arguably then, in today’s increasingly predatorial, aggressive, and ‘winner take all’ global business (transaction) environment, conventional forms of intellectual property are rapidly becoming less relevant, perhaps even obsolete, as (a.) the primary ‘tool’ to safeguard a company’s most valuable assets, (b.) ensure the rightful owner receives the economic – competitive advantage benefits from the hard earned and expensive know how they have developed, or (c.) ensure control, use, ownership, and value of their intangible assets and intellectual property that are in play – part of a transaction.

That is, in many transactions (in which a company’s IP and intangible assets are in play – part of a deal) one can assume today, all, or a significant portion of those assets’ value and functional-commercial life cycle will be significantly abbreviated, if not lost altogether (irretrievable).

Unfortunately, the new business reality is that conventional intellectual property enforcements produce little benefit to an organization, other than providing (legal) standing for dispute resolution and/or bringing litigation when challenges arise, which do with growing frequency and consistency. That is not to imply conventional IP protections should not be used. But, any assumption that the issuance of a patent, standing alone, will be sufficient to absolutely deter (inhibit) infringement, product piracy, misappropriation, or theft and allow the rightful owner/holder to sustain unencumbered, unchallenged control, use, value, and ownership rights for the 20 years, is neither a credible, viable, or prudent course of action.

Thus, it’s imperative today that company decision makers (holders, owners of IP and intangible assets, proprietary know how, trade secrets, etc.) practice consistent and effective stewardship, oversight, and management of those assets which includes (a.) monitoring their status, stability, fragility, and sustainability, so that (b.) ownership – IP rights, when necessary, can be aggressively pursued in a timely (real time) manner.

Even in light of the economic fact – business reality that 65+% of the value, sources of revenue, and future wealth creation (sustainability) for most company’s lie in – are directly linked to intangible assets and IP a significant percentage of company’s intangible assets go unrecognized and undervalued. This is especially true when a company’s know how (intellectual capital) has been literally embedded in its products, services, and processes over the course of many years, much like a ‘company culture’ that often goes unnoticed and under-appreciated insofar how it contributes to quality, consistency, and sustainability.

Ultimately, the probability (likelihood) that a company will experience a compromise, breach, or loss to their IP, intangibles, and/or proprietary competitive advantages and know how should not be characterized as merely representing another ‘risk of doing business’. Rather, in the current global business environment, its more closely resembling an inevitability, which, if dismissed or left unchecked by company decision makers, c-suites, boards, and D&O’s, can constitute not only a breach of fiduciary responsibility, but bring about significant and unrecoverable losses.

Michael D. Moberly

All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.
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