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Protecting and Transferring Intellectual Property
Every business is a complicated machine of moving parts. From key employees to critical machinery, a business is more than the sum of its parts. A vital part of the assets of any company aren’t tangible: they aren’t people or place or items. The biggest part of these intangible assets is intellectual property: things that your company owns that exist only on paper, but are a critical part of any business. Properly protecting and transferring intellectual property can make or break a business.
What is Intellectual Property?
Today’s economy is as much based on information as it is invested in physical assets. Intellectual property is taking information vital to your company and gaining ownership of it, preventing others from gaining access to or using it. It’s the idea that certain products of human intellect should be afforded the right to the same legal protections as physical property. A company’s intellectual property consists of the intangible property that has been able to be secured through various legal protections.
Intellectual Property and Their Protections
Information is power, and a large part of any industry is in the ideas and implementations it has that separates it from its competition. Massachusetts’ Attorney at Law John Alexandrov shares the four basic legal protections in his blog, Protect Your Business’ Intellectual Property, which we’ll go over briefly below.
Intellectual property that distinguishes your business from others is protected under the concept of trademarks. These include designs, signs, and even expressions that identify a product or services. For example, the phrase “Big Brown” has been trademarked by UPS: those words have been connected to that company through the use of branding. They are now protected from being used by other companies to exploit the connection for their own use.
Artwork, music, words, and other complex creations are protected by copyright law. Copyright is held by those who create the work, or in the case of most businesses those who employ the creator. Copyright laws prevent other businesses or individuals from copying and using your work without your permission, as long as you’ve legally secured their copyright.
New processes and products can create or reinvigorate a business, just as other businesses copying their designs can undermine their user base. Patents are designed to protect these ideas. While the patent process is long and expensive, ideas that are unique, functional, and have a market should be patented. Until the patents are finalized, all information should be secured to avoid someone else stealing the idea.
The Coca Cola formula or the 11 herbs and spices of KFC recipe are famous examples of trade secrets. However, a trade secret can be any formula, practice, process, design, instrument, pattern, or commercial method not generally known and which obtained by another business could gain an advantage over the company who owns the secret. This can even extend to compilations of information, such as customer lists and data. Legal protection is generally backed by practical security, as once this information is leaked, its value is significantly diminished.
Selling Intangibles: Transferring Intellectual Property
When it comes to performing a valuation or even selling a business, the first step is finding the value of your company. Every business is a complicated machine of moving parts, of physical property and assets, goodwill, and of course things like your brand. Calculating the value of your intangible assets, particularly your intellectual property, is a vital part of these kinds of valuations. Investors and buyers buy companies based off not only the physical property of a company, but also its brand, clients, processes, and products that separate it from the competition.
When it comes to divesting intellectual property or selling a business complete with its intellectual property, it’s important to get professionals involved that understand both the legal security needed behind these transfers, as well as ability to properly evaluate intellectual property when it comes to finding the worth of your company. Businesses brokers like George & Company have over 35 years of experience and the knowledge of hundreds of business sales to pull from. If you’re interested in learning the true value of your intellectual property and how to secure it, contact us.