Editor’s Note: This is part five of a series entitled “Building an IP Aligned Enterprise: A Guide for Corporate and Technology Leaders.” We will examine the steps to assessing the current state of your IP alignment in your enterprise.

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Traditional models for overall company valuation will usually take into account an organization’s material assets but will tend to undervalue their intangible assets. 

We see over and over, however, that a successful technology enterprise’s worth when traded on public exchanges tends to far outshine the value of whatever hard assets they hold. This is because markets will often organically factor intangible assets, especially intellectual property assets, into a company’s market value.

For instance, internally-used software code vital to the daily function of your business can hold substantial value for your company. The need to identify and protect a trade secret like this, through physical, digital, and legal safeguards, is vital to the health and longevity of your enterprise. If your proprietary operational software is vulnerable and publicly disclosed or discovered in any way, it could put your company’s market position at risk.

Intangible assets, especially a company’s intellectual property, can account for as much as 70% of an enterprise’s value on the public exchanges. Ensuring your company’s business plan has an integrated and aligned IP strategy is incredibly important to your success. A vital first step in that process is to assess your company’s current state of IP alignment, and to identify the areas that require action to protect your intangible assets, maintain a culture of IP awareness throughout your organization, and position your company for ongoing growth and innovation.

Failing to invest in IP alignment can, at best, leave you blindsided by a competitor’s new invention and, at worst, lead to costly infringement litigation or loss of assets due to failure to properly protect your company’s own patents.

Ask yourself:

  • Do you have a clear understanding of what IP you own and its value to the company?
  • Do you consistently obtain the necessary legal opinions to ascertain patentability and freedom to operate?
  • Is there an ongoing curriculum around the development of IP awareness across all levels of your organization?
  • Do you have an established Innovation Committee in place to oversee the implementation and enforcement of policies, education plans, and IP enforcement?
  • Do you have policies and procedures in place to ensure future innovation is protected?
  • Do your contracts and employment agreements include clauses that clearly define your ownership of the intellectual property we create and develop? 
  • Do we have dedicated resources for tracking the IP activity and patents of our competitors?

Ongoing Professional Development Curriculum 

Achieving IP awareness throughout your organization is a continual process. There is no department or employee involved in the innovation, product development, or brand management functions of your organization that should be exempt from sustained education around your company’s IP. An integral part of a company that is well-aligned with its IP strategy is a thorough and ongoing professional development education curriculum for corporate leadership, R&D, marketing, and legal on IP-related topics for their respective roles and perspectives. 

An IP-aware organization that is painstaking in its efforts to keep everyone well-informed on matters surrounding asset protection will have a much better opportunity to gain and retain a strong market position. 

There are many topics a robust curriculum should cover to keep your teams IP aware. Some of these include:

  • At the level of research and development, your team of inventors and dev contractors must learn what innovations are patentable and how to write effective invention disclosures. 
  • Marketing teams need to have a strong understanding of brand awareness and protection. 
  • An IP aware legal team will need to focus on how to help in building a company-wide IP strategy, and effectively overseeing the IP pipeline.
  • Finally, your executive leadership will need to understand how to build and grow an IP-aligned enterprise. They must learn about the structure and composition of an Innovation Committee and the need to establish one. They need to know the moving parts of the company’s IP protection protocols, how to leverage and enforce their assets, and the importance of monitoring their competitors’ IP activity.

Ask yourself:

  • Have you integrated an IP awareness curriculum across the entire innovation and leadership ecosystem of your company?
  • Does your R&D team understand what innovations are patentable?
  • Does your R&D team have a clear understanding of the basics of submitting a good invention disclosure?
  • Is corporate leadership engaged in building an IP aware culture supported by a robust IP education curriculum and a well thought out innovation and brand protection process with multi-dimensional oversight?
  • Is the legal team given the resources to coordinate the various innovation and brand stakeholders?
  • Do all IP stakeholders throughout the enterprise recognize the considerable value that intangible assets, especially IP, bring to the organization?

Establishment of an Innovation Committee

To accomplish all the goals outlined herein, you’ll want to establish an Innovation Committee that includes corporate leadership; representatives from R&D, legal, and marketing; and other relevant stakeholders in order to achieve an accurate assessment of the current state of IP alignment in your company, and to move toward a greater and more integrated IP strategy.

Once in place, an Innovation Committee is a valuable forum wherein the entirety of your organization can engage in a free-exchange of ideas, avoiding departmental siloing that can suppress innovation and reduce awareness around important and valuable IP protections. This committee will exist to ensure the company’s IP strategy informs and integrates into the overall business strategy, establishes the appropriate structure to the innovation and brand protection pipeline (i.e., processes, protocols, resources, and incentives), reviews innovations and new brands for appropriate legal and internal protection, and be the champions of fostering IP awareness throughout the enterprise on an ongoing basis.

Ask yourself:

  • Which departmental stakeholders should have a seat on your Innovation Committee?
  • Are representatives of your Innovation Committee engaged in the development of the company’s business strategy?
  • Is the Innovation Committee empowered to build and enforce the structure of the innovation and brand protection pipeline?

Policies, Protocols, and Processes

Processes related to IP management are varied and complex, and likely to evolve over time. During your assessment, it’s essential that you make sure processes are established that encourage, incentivize, identify, capture, and protect innovation. 

Enforcing these processes is equally important. After all, even when you define and implement your process policies, they are of no benefit to your company unless there is a designated party to routinely review and enforce them.

Your company should have procedures laid out for the entire end-to-end management of IP assets. Your management procedures need to cover the full innovation pipeline, starting with the intake of invention disclosures, moving through the recognition/reward program, to assessment of IP protection, followed by the IP procurement process, all the way through to third-party licensing agreements, and so on. One process out of place can end up leaving valuable assets unidentified, unprotected, and unleveraged.

Finally, you’ll need to enact rigorous security protocols at all stages of the innovation pipeline that work to protect trade secrets. Next, look at the ways your intellectual property is used and communicated at the R&D level. Be sure to educate your teams on the best ways to handle your IP as it moves through the pipeline. Finally, implement standards throughout the pipeline that are overseen and enforced by a designated party.

Ask yourself:

  • Are there protocols for ensuring the confidentiality and security of trade secrets used to develop your products or services?
  • Who is responsible for the end-to-end management of the invention and patenting process? Who handles processing the invention disclosure intake form, rewarding inventors, assessing new innovations, etc.?
  • What software and systems are in place to support IP management?
  • How are internal IP processes governed and enforced, and what are the repercussions when they are not?
  • How securely kept are your trade secrets? What physical and digital protocols and legal considerations exist to protect them throughout their development and use? How can you ensure their confidentiality?

Understanding Ownership Rights

When it comes to internal inventions like those developed by employees, company ownership is often assumed, but it must be clearly defined and established in advance for it to be legally enforceable. As such, it’s important that you start by understanding the ownership rights that apply for both internal stakeholders and external collaborators, vendors, and customers. From there, a comprehensive review of existing employment agreements and contracts with external parties is necessary to ensure that your IP ownership rights are properly addressed and defined. 

When working with a third party like an outside contractor, you must establish a workable arrangement regarding IP ownership before the work begins. To minimize disputes, you should have both an agreement and compensation structure contractually defined in advance. 

The law often lays out the “bare minimum” when it comes to your company’s responsibilities for compensating a developer or inventor. However, it’s extremely worthwhile to go beyond that, offering a reward and recognition program to inspire innovation amongst employees and keep morale high for those who have contributed IP to your company.

Ask yourself:

  • Are you properly enforcing and monetizing the ownership and usage rights of your own IP?
  • Are your contracts, technical agreements, and non-disclosure agreements solid, up to date, and regularly enforced?
  • Do existing employment agreements and employee policies detail how inventions should be disclosed, rewarded, and owned?
  • Are third-party contractors briefed on IP ownership agreements and asked to commit to a compensation structure in advance?
  • Is there a standard procedure for recognizing and rewarding inventors within the organization?

Monitoring and Tracking of the IP Landscape

Ongoing tracking of competitors’ IP activities, especially patent activity, helps drive IP awareness to a greater degree by identifying the boundaries and technology landscape in which your products and services compete. Therefore, part of your IP alignment strategy needs to involve a regular and thorough assessment, not only of current activity, but of whitespaces where your product innovations might find a foothold and help propel you into a stronger market position.

Staying on top of your market’s IP landscape reaps benefits for your enterprise in several ways. You’ll position yourself well to enforce your current trademarks and patents by remaining vigilant about competitor activity. Your future IP development strategies will be more targeted for innovation opportunities in your marketspace that are currently untapped. 

Ask yourself:

  • Do you have processes in place to monitor ongoing patent activity of your competitors to identify possible infringement or simply to stay up-to-date or even ahead of their innovations?
  • Is your product development team informed by the IP competitive landscape? 
  • Are you aware enough about your own IP to identify potential patent or trademark infringement?
  • Does your IP strategy take into account the ongoing, changing IP landscape in your competitive arena?

Conclusion

The first step in developing a culture of IP awareness across your enterprise lies in assessing the current state of IP alignment in all areas of your organization. We often find that innovators will start with a piecemeal strategy that is not integrated with their overall business strategy, leaving their market positions vulnerable. Crucial to your company’s long-term growth and success is the need to address your current state of IP alignment, and take action where needed in order to shore up your policies and procedures, ensure an ongoing engagement with your IP strategy, and remain vigilant over the market space in which you compete.

 

Michael Dilworth

This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.