Business IP and Intangible Asset Blog, Michael D. Moberly

Archive for 'Managing intangible assets'

Intangible Assets: Management Team’s Responsibility To Engage!

May 7th, 2013. Published under Intangible asset training for management teams., Managing intangible assets. No Comments.

Michael D. Moberly May 7, 2013 ’A blog where attention span matters’!

Asset risks can materialize instantaneously, sequentially, and simultaneously and rapidly cascade throughout an enterprise to produce long lasting, and with increasing frequency, permanent adverse economic (competitive advantage) effects, so, in today’s increasingly predatorial global business environment….

First, the responsibilities associated with safeguarding (preserving use, ownership, and monitoring value, materiality, and risk to intangible assets are now akin to fiduciary responsibility (Stone v. Ritter). They should not be construed as merely constituting new business jargon or optional tasks that can be dismissed or neglected, i.e., it will get done as time permits, when the resources become available, or when competitors do it.

Second, in today’s increasingly ‘flat world’ (Thomas L. Friedman) in which R&D, global business transactions, and company operations are routinely conceived, shaped, driven, and executed by the interconnected flow of data and information, i.e., intangible assets, it makes it all the more important that management teams converge their expertise to ensure the intangibles that are in play, are effectively safeguarded and positioned to realize the economic and competitive advantage benefits which they are capable of delivering without succumbing to risks, challenges, or other forms of asset compromises.

To better enable this, practices, processes, and strategies must be in place, along with a (enterprise-wide) culture that recognizes and appreciates intangible assets, and possess levels of alertness and skill to sustain sufficient control of and monitor key assets’ value, materiality, and risk.

Third, the time frame(s) when most companies can realize the greatest value from their increasingly intangible asset intensive products and services continues to erode, variously due to…

the abbreviated value and functionality cycles’ of intangible assets.
the absence of (conventional) market entry barriers and enforceable intellectual property law which allow for…
- global cadres of ‘instantaneous’ competitors and infringers, and
- extraordinary profits gleaned from (intangible) asset theft, infringement, piracy, and counterfeiting operations that pollute legitimate supply chains.

Fourth, intangibles’ development, acquisition, and utilization must be aligned with core business (and security and risk management) strategies rather than being considered primarily as intellectual property-based legal processes and/or decisions. That’s because, conventional forms of intellectual property enforcement, patents primarily…

no longer serve as deterrents, safe harbors, or consistent indicators of asset (company) value.
can advance a company (economically, competitively) only so long as a company can sustain unchallenged – undisputed use, ownership, and value, of its IP.
are relatively easy prey (vulnerable) to global networks of legacy free players and increasingly sophisticated entities engaged in predatorial data mining, business/competitor intelligence operations and economic espionage.

Fifth, safeguards for intangible asset intensive firms and transactions can be best addressed not solely through legislative mandates which, while generally being politically well-intentioned, are often unenforceable on a global scale, particularly in regions with highly country-centric IP and technology transfer law. Rather, effective intangible asset safeguards are a product of real attitudinal and operational adjustments in a company’s outlook, strategic thinking and planning coupled with a strong recognition that key intangibles, particularly those linked to ‘operational know how’ are highly sought after globally, and therefore consistently at risk.

Sixth, it’s virtually impossible today to engage in any type of business activity or transaction in which intangible assets are not in play and integral to achieving a favorable outcome. Ultimately then, the line between a company achieving profitability and fighting for its financial survival is now more closely linked than ever before, to its ability to

identify, mitigate, and safeguard against risks to its intangible assets ranging from disputes, challenges, theft, infringement, or other forms of (asset) compromise while simultaneously extracting – exploiting value and converting intangibles into sources of revenue.

Indeed, intangibles have become embedded in even the most routine business operation and/or transactions. Absent this acknowledgment, the result is often that substantial asset value, competitive advantage, company reputation, and market space may be irreversibly lost, undermined, or er

Each blog post is researched and written by me with the genuine intent it serves as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community. Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk. As such, my blog posts are not intended to be quick bites of unsubstantiated commentary or information piggy-backed to other sources.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction. I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

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Intangible Asset Roadmap

April 29th, 2013. Published under Intangibles as strategic assets, Managing intangible assets. No Comments.

Michael D. Moberly April 29, 2013 ’A blog where attention span matters’.

It’s really quite straight forward, embedded in the economic fact – business reality that increasing percentages of company value and revenue lie in – evolve directly from intangible assets, management teams, boards, and other business decision makers, regardless of a company’s size, the location of its headquarters’, its maturation, its receptivity to being innovative and forward looking, or industry sector(s) it serves, its quite likely that a practical and viable roadmap for (a.) putting intangible assets to work, and (b.) preserving their (contributory) value and competitive advantages will be beneficial.

Such a roadmap, particularly the type that I advocate which includes ’putting intangible assets to work’ for a company, starts, in my view, with (a.) the misnomer that intangible assets are synonymous with intellectual property, i.e., patents in particular, and (b.) re-framing the perception that the management, stewardship, and oversight of a company’s intangible assets fall exclusively to the legal and accounting domain.

Let’s be clear, most, if not all decisions and actions related to intangibles assets are and should be business decisions, preferably in collaborative concert with the c-suite, security, risk management, legal counsel, and accounting. Too, as articulated by a Delaware court in Stone v Ritter, they can also assume a fiduciary responsibility that includes (a.) having consistent operational familiarity, and (b.) preserving their control, use, ownership and monitoring value, materiality, and risk.

Let there be no misunderstanding, the (effective) management, stewardship, and oversight of a company’s intangible assets has permanently shifted from merely being optional tasks and/or ‘nice to have’ processes, to, as noted above, something akin to fiduciary responsibilities that can no longer be dismissed or neglected, e.g., it will happen only when (a.) time permits, (b.) the resources become available, (c.) competitors are observed doing it, or (d.) a professional standard or a legislative mandate is adopted leaving businesses with few, if any options, other than compliance.

Too, the intangible asset ‘roadmap’ advocated here, dispels the really unfortunate assumption held by far too many management teams that intangible assets and their management are the sole province of large, multi-national, Fortune 1000 categories of corporations. The reality is, intangible assets are firmly embedded in and being routinely produced by the 20+ million small, mid-size, and early-stage firms in the U.S. and no doubt, an equal number of international firms regardless of sector. A key issue, in my view, in both circumstances, does either understand it, know it, and actually (a.) put their intangibles to work, and (b.) have processes and procedures in place to identify, unravel, assess, protect, preserve, and monitor their intangibles’ contributory value and the competitive advantages and revenue they produce.

Most every company, with few, if any exceptions the author has had contact over the years, possesses what I refer to as ‘home grown’ (internally produced) intangibles that are frequently highly specialized and company specific irrespective of size, industry sector, or maturity. In most instances, I find these assets, managerially speaking, are not well suited for one-size-fits-all or snap-shot-in-time (asset) management approaches. Instead, they require nuanced handling aligned – commensurate with…

achieving the most effective and efficient use
maximizing their contributory-collaborative value, and
building and strengthening a company’s structural capital and competitive advantages throughout its supply-stakeholder value chain
particular types of (business) transactions.

For these reasons, I advocate practical, yet individualized intangible asset management approaches which I routinely refer to as my ’what fits best’ approach. That is, at least my experience suggests that ’what fits best’ for a company will usually ‘work best’ for a company insofar as helping achieve business goals and objectives through its stewardship, oversight, and management of its intangible assets.

So, whether one conceives my ‘roadmap’ through a conventional sequential lens or more as a ‘big picture’ mosaic that reflects – encompasses a range of challenges fully integrated with practical insights for solving (intangible) asset management, stewardship, and oversight challenges, my message remains laser focused; business decision makers, regardless of their specialization, professional experiences, or title, need to acquire, if they haven’t already, a strong operational and managerial clarity – familiarity with intangible assets because these skill sets are essential requisites for successfully and effectively managing intangible asset dominated/intensive companies in the globally competitive, aggressive, and predatorial business transaction arena in which there are absolutely no indicators of reversal.

I respectfully recognize, just making sense of the knowledge (intangible asset) based economy and the increasingly intense business environment it has given birth to, is not sufficient unless readers can literally use and apply the information provided, that is, to frame and execute their own profitable and sustainable roadmap for their intangible assets. That’s why the various chapters in our upcoming book will, individually and collectively, provide readers with relevant and current insights about, not just a starting point, but the practical steps that are necessary along the way to help management teams arrive at a successful, profitable, and strategically sustainable destination!

While I am a strong advocate of utilizing intangible assets as fully and completely as possible, it is not my intent to represent intangibles as constituting either a silver bullet or a one-size-fits-all template that will produce immediate financial – competitive advantage magic for a company.

I do know however, that it remains an irreversible economic fact that 80+% of most company’s value, sources of revenue, and growth potential lie in – evolve directly from intangible assets. Thus, unless and until management teams, boards, investors, stakeholders, and other business decision makers begin demanding that (their) company’s intangible assets ‘be taken out for a ride’, those assets will likely remain idle, taken for granted, and otherwise left unused, under-valued, and vulnerable to global competitors to acquire and use at will.

Intangible Asset Risk Officer

March 14th, 2013. Published under Intangible asset protection, Managing intangible assets, Value Propositions. No Comments.

Michael D. Moberly March 14, 2013 ‘A blog where attention span matters’.

As conveyed numerous times in this blog; underlying the stewardship, oversight, and management of a company’s intangible assets is board, c-suite, and management team recognition that practices must be in place to sustain (protect, preserve) control, use, ownership, and monitor asset value, materiality, and risk.

In my view, there are no particular priorities attached to these tasks (responsibilities) but, I’m increasingly confident that if any aspect is dismissed, overlooked, neglected, or otherwise does not occur, or fails, little else may matter, because asset value and the competitive advantages being produced/delivered will quickly be undermined, compromised, or stolen with asset value ‘going to zero’! And that readers, is attributable to the increasingly aggressive, globally predatorial, and ‘legacy free’ business transaction environment that is so prevalent.

To remedy or preferably prevent such calamities which can, in more instances than are publicly reported and understood, amount to financial catastrophes or collapses because they’re often irreversible and/or very costly for a victim company to return to a state of revenue generation normalcy and competitive advantage position. In other words, once intangible assets have been compromised, having available (or, at least knowing) an intangible asset risk specialist may be worth considering if not become a (fiduciary) requisite.

Should there be hesitancy, reluctance, or worse, the feeling of invincibility by company decision makers, it’s important to remember the global economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today lie in – evolve directly from intangible assets! The compromise of one (key, contributory intangible asset) may well prompt adverse cascading (reputation risk) affects throughout an enterprise and its stakeholders.

To be sure, an intangible asset (risk) specialist, familiar with the ever expanding array of sophisticated, globally asymmetric, costly, and momentum stifling types of risks that adversely affect intangible assets when materialized, would bring measurable ‘ROI’ (benefits) some of which include…

Developing a strategic plan to monitor asset risks, value, and materiality changes in accordance with assets’ respective value and functionality cycle.
Adding predictability to business transaction outcomes, projected returns, and anticipated exit strategies when intangibles are in play and/or part of a deal by assessing their stability, fragility, defensibility, and vulnerability.
Conducting specialized market entry and/or transaction due diligence assessments regarding the intangible assets in play, in both pre – post transaction contexts.
Reducing the probability that project/deal momentum will be stifled by recognizing and mitigating circumstances that can (a.) ensnare and/or entangle the assets in costly and time consuming legal challenges, (b.) undermine/erode asset value and performance, (c.) adversely affect asset reputation ‘risk points’, i.e., product- service quality expectations of consumers and other stakeholders.
Building an ‘risk intelligent company culture’ for intangible assets that converges with a company’s business objectives.
Designing and executing comprehensive organizational resilience (continuity, contingency) plans that encompass mission critical intangible assets in order to preferably produce quicker recovery of asset value, revenue production, and market position, etc., following significant business disruptions or disasters.
Monitoring (internal, external) intangible asset value chains, i.e., the inter-connectedness between the production, acquisition, and utilization of intangibles vis-a-vis their contributions to company value, revenue, and creating and sustaining competitive advantages.
Providing on-going guidance to business units and management teams regarding effective stewardship, oversight and management of intangibles relative to identifying, unraveling, bundling, and extracting value and delivering competitive advantages.

The contributory value of intangibles (to company revenue, future wealth creation, and sustainability) continues to rise as intangibles have become increasingly integral to knowledge-intensive industries operating in global knowledge-based economies. These interacting economic and intellectual, structural, and relationship capital phenomena consistently put intangibles, quite literally, in play and, ‘at risk’ in most very business transaction and/or activity.

Each blog post is researched and written by me with the genuine intent they serve as a useful and respectful medium to elevate awareness and appreciation for intangible assets throughout the global business community.

Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk. As such, my blog posts are not intended to be quick bites of information piggy-backed to other sources, or unsubstantiated commentary.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction. I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Intangible Asset Strategist…It’s Time Your Company Finds One!

March 2nd, 2013. Published under Managing intangible assets. No Comments.

Michael D. Moberly March 2, 2013 ‘A blog where attention span matters’.

It’s not a cliché…for some management teams, c-suites, and boards, the phrase ‘knowledge-based or intangible asset driven economy, or the notion that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability reside in intangible assets remains more cliché than reality or economic fact. Reluctance or reticence to recognize and act on these facts – realities are respectfully, but most assuredly, mistaken.

The truth does not lie somewhere in the middle…One would think those economic facts, standing alone, fiduciary responsibilities aside, would be sufficient inducement for management teams to act accordingly. Unfortunately, and for various reasons, not all management teams have achieved operational familiarity with intangible assets. Instead, experience suggests they find them unwieldy, sometimes challenging to engage and difficult to measure. That’s in part due to the adverse tri-fecta of…

lacking a conventional sense of physicality
the absence of being included in b-school curriculums, and
not being reported on company balance sheets or financial statements, unless they’re bundled together as the catchall ‘goodwill’.

In today’s tightly wound, highly compressed, and increasingly aggressive and predatorial (global) business transaction environment, companies that continue to overlook, be dismissive of, or routinely hand-off intangible assets to legal counsel or accounting units, assuming they’re legal versus business management issues, then readers are respectfully obliged to read further!

Intangible assets, e.g., intellectual, structural, and relationship capital, brand, etc., can expand and mature very rapidly within an organization. If not recognized, unraveled, developed, safeguarded, and monitored from the outset, the probability they will be compromised, misappropriated, or literally meld into open – public domain sources is predictably high. And, once a company’s intangible assets, whatever form they may take, i.e., unique knowhow and/or competitive advantage enters the public domain, re-covering their real (full) contributory value and uncontested use will be both costly and unlikely. Having an experienced intangible asset specialist – strategist in place can go a long way toward mitigating, if not alleviating such problems.

How does this translate…? Stone v. Ritter in particular, (but also, In Re Caremark and In Re Disney) are three cases that uniquely draw attention to the importance, if not fiduciary responsibility for companies to have effective (intangible asset and IP) stewardship, oversight, and management practices (procedures, policies) in place.

Yes, these are Delaware cases, and yes, they are 2006 and 1996 decisions respectively, but they present relevant issues that warrant board and management team attention. Collectively, these cases, particularly Stone v. Ritter, elevate ‘the bar’ insofar carving a path of permanency to the stewardship, oversight, and management of a company’s intangible (non-physical) assets, not tangible (physical) assets.

Most importantly, in my view, these cases conveys much warranted clarity to the necessity that boards, management teams, and c-suites be kept apprised of what’s going on inside their company in the form of a (a.) good faith duty, and/or (b.) duty of loyalty to ensure their company has sufficient (intangible) asset monitoring and reporting (compliance) systems in place to routinely and properly keep decision makers – strategic planners appropriately apprised, i.e.,

with timely and accurate information, that is sufficient to allow them (within their respective scope of responsibility) to
reach informed judgments concerning a company’s compliance with law, and business performance.

In other words, absent specific and effective (communication, reporting) practices to ensure each of the above consistently occur, companies may well be (in light of the aforementioned court decisions) fail to satisfy the duty to be reasonably informed about the company and therefore, be held personally liable for problems that arise pertaining to the stewardship, oversight, and management of intangible and other assets.

The business rationale for engaging intangible assets is much deeper than Stone v. Ritter alone…admittedly, a significant, but unknown number of management team members, c-suites, and boards have yet to fully and consistently engage their intangible assets or realize it’s in their interests to do so. For them, let’s return to the basic economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, sustainability, and profitability, do, in fact, originate in intangible assets! That irreversible 2013 business reality, should serve as a strong, stand alone motive for management teams, c-suites, and boards to not merely take notice, but to act, and act effectively.

A difficult theory of corporate law…it’s far from being rocket science to recognize that endeavoring to hold members of a company’s board (personally) liable for poor or the absence of oversight, stewardship, and management of a company’s intangible assets, is a difficult theory in corporation law to prevail. It is, nevertheless, essential, in today’s increasingly competitive, aggressive, predatorial, and ‘winner-take-all’ (global) business and transaction environment, that those bodies assume a more ‘hands on’ position with respect to the stewardship, oversight, and management of a company’s (intangible) assets.

Intangible asset strategists are impediment to productivity or efficiency….in Stone v. Ritter it was found that important and necessary information failed to reach the board because of ineffective internal asset controls, monitoring, or communication of those controls fell far short or were non-existent. So, the significance of this particular ruling is that personal liability may attach along with damages if there’s a failure to, (a.) implement an effective information dissemination system, and (b.)coupled with regular (system) monitoring to ensure boards have sufficient and correct information to make informed decisions.

Irrespective of this particular Delaware court decision, a company’s size, its revenues, or industry sector, it’s quite likely some management teams (and boards) will regard the (potential) contributions of an intangible asset specialist-strategist as being unnecessary or an impediment to achieving a company’s (strategic) goals and objectives, i.e., impeding productivity and efficiencies in favor of dispersing such responsibilities throughout a c-suite.

But, in my view, management teams and boards who continue the path of dismissiveness and/or table this managerial responsibility indefinitely are doing so at their financial and competitive advantage peril. That’s because there remains this pesky reality that 65+% of most company’s value, sources of revenue, and future wealth creation capabilities today are directly related to intangible assets.

So, when the proposition is framed in this factual economic context, management teams are remiss, at minimum, if they don’t objectively deliberate the following ‘is their company effectively positioned, insofar as possessing the expertise and skill sets…

to consistently identify, unravel, nurture, utilize, bundle, and effectively and efficiently extract as much value as possible from its intangibles, and
simultaneously safeguard and monitor those assets’ value, materiality, and risk.

So, instead of assuming satisfaction with past practice, or worse, assuming all things intangible are either legal or accounting decisions, not strategic business decisions, management teams and boards are obliged to critically and objectively assess ‘has the time come’?

My blog posts are researched and written by me with the genuine intent they serve as a worthy and respectful venue to elevate awareness and appreciation for intangible assets throughout the global business community. Most of my posts focus on issues related to identifying, unraveling, and sustaining control, use, ownership, and monitoring asset value, materiality, and risk. As such, my blog posts are not intended to be quick bites of information, unsubstantiated commentary, or single paragraphed platforms to reference other media.

Intangible Asset Management ‘S.O.M.’ Plans: Stewardship, Oversight, and Management

February 20th, 2013. Published under Managing intangible assets. No Comments.

Michael D. Moberly February 20, 2013

It’s an economic fact that 65+% that most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today arise from – are embedded in intangible assets including IP (intellectual property). Irrespective of the on-going economic challenges, business decision makers will find it both prudent and lucrative to put forth the relatively minimal time and effort necessary to devise and implement an asset stewardship, oversight, and management (S.O.M) plan.

There here are numerous perspectives about what the ingredients of an effective S.O.M. plan should include. My perspective is that it include the following sequenced ideologies, i.e.,

first, identify, unravel, and assess (distinguish) each intangible asset relative to its contributory value, sustainability, and vulnerability to compromise, i.e., undermine its competitive advantages or other act that adversely affects asset value.
second, identify specific (asset) S.O.M. measures to ensure the rightful asset holder (company) are positioned to sustain control, use, ownership of the assets and monitor their value, materiality, and risks.
third, explore – examine ways and opportunities which certain assets may be bundled or otherwise monetized and/or commercialized, i.e., licensing, as collateralization, auctioned or collaboratively applied to joint ventures.

A critical attribute of an intangible asset S.O.M. plan is for its designers – implementers to avoid focusing on an unmeasured presumption that a particular asset will deliver the most sustainable and strongest contributory value while being dismissive of other equally strategic intangibles.

Again, a well structured intangible (IP) asset S.O.M. plan should include a strong forward looking (projective oriented) posture that encourages identifying, unraveling, and examining specific assets that can serve as ‘building blocks’ (foundations) to a company’s future opportunities for growth, sustainability, and profitability.

So, an intangible (IP) asset S.O.M. plan is not solely about today, tomorrow, or otherwise, the near term, it’s also about taking the proverbial ‘long view’ with respect to adopting prudent strategies for utilizing and exploiting all things intangible.

Why is an intangible asset S.O.M. plan necessary? The answer lies in the fact that when business (asset) valuations were initiated in the 19th and 20th centuries, they were, at the time, exclusively about measuring the value of physical (tangible) property (assets), e.g., real-estate, inventory, and equipment, etc. But, beginning in the late 20^th and certainly now in the 21st century, the value of businesses and companies are increasingly embedded with and dominated by intangible asset (and IP) portfolios. The reason is, globally speaking, businesses are significantly more dependent on and utilize these largely knowledge or know-how based assets which include all forms of intellectual, structural, and relationship capital to achieve competitive advantages, elevate company value, generate revenue, and (build) extend sustainability.

The Brookings Institution contributed to a global awakening of the intangible asset phenomena when it conducted and publicly released the ‘Intangibles Project’ report in the late 1980’s which clearly gave business credence to the economic fact – business reality that intangible assets, including IP, does not merely serve as a company’s market – sector competitive differentiators’, but also represent the increasingly dominant (primary) source of current – future company value, revenue, and sustainability.

With few exceptions at the time, there were seemingly few sufficiently forward looking – thinking management teams that understood the permanence, significance, and impact of the Brookings’ report other (intangible asset) value signals would come to have on business operations and transactions. For many management teams who ‘got it’, embarked on various transformations away from the conventional management and extraction of value from tangible-physical assets to identifying, nurturing, acquiring, and extracting value from intangible assets!

Let me be clear about a particular aspect of intangible (IP) asset S.O.M. plans. That is, I remain unconvinced that a pre-requisite for either plan development or commencement occur only after an intangible asset – IP audit and/or valuation have been completed. I am not suggesting, neither may not be helpful to management teams. But likewise, neither should be considered the absolute starting point for an intangible asset S.O.M. plan. That’s especially relevant in light of my perspective that an unnecessarily high percentage of companies and their management teams remain dismissive at best, or operationally unfamiliar at worse, of intangible assets and their stewardship, oversight, and management.

There are of course, specific accounting – valuation standards and methodologies used which can be useful rebuttal to technical scrutiny when asset origination, ownership, and/or value are being contested or litigated. Frankly, I often sense there are varying levels of subjectivity in asset valuations that reduces their credence.

Two things I remain confident about are, every company management team competing in this irreversible knowledge (intangible asset) based global economy absolutely must…

engage their firm’s intangible assets, and
be consistently engaged in strategies to exploit value, generate revenue, and elevate competitive advantages of all of its intangible assets.

Determining the group, team, or individual responsible for a intangible (IP) asset S.O.M. plan as well as a company’s intangible asset – IP portfolio, may respectfully warrant some training. Admittedly, there are various options (possible choices) as to who may be best or at least better suited to assume these responsibilities ranging from inside or outside legal counsel, external licensing agents, and/or intangible (IP) asset disposition firms.

Broadly speaking, any of the above may be a satisfactory choice, but, for this position, it may be somewhat relevant to company size, sector, and affordability. Professionally speaking, I am an advocate of making the selection internally, e.g., an individual(s) broadly familiar with

the company’s operations and culture…
inter and intra-sector global competitiveness…
objective measurement and performance of individual (intangible) assets and/or the asset portfolio as a whole…
current principles of asset assessment and valuation in order to assign values triage
a proactive and strategic outlook relative to identifying, assessing, and prioritizing assets’ current contributory and (potential) future value…
a current sense of global acts and conduct that can adversely affect asset control and value…

Too, whoever is selected, it is essential they can objectively frame and articulate each of the above as necessary into a ‘best possible and most affordable’ intangible (IP) asset S.O.M. plan.

And, of course, whatever the process and criteria used to select those responsible for the implementation and consistent operationalization of the S.O.M. plan, it will be important they have a clear and unmistakable chain of authority which ‘all things intangible’ flow.

It’s important for management teams to recognize that IP is merely one type or category of intangible asset. There are indeed millions of companies globally that do not hold or own, for a variety of reasons any issued – registered intellectual property. That said, it’ important for management teams to recognize that registered intellectual property often, has embedded within it various intangible assets that routinely serve as its foundation or ‘building blocks’.

Too, in most circumstances, comparable intangible (IP) asset S.O.M. practices and methods which are applicable to the Fortune 100’s are also relevant to SME’s (small, medium sized enterprises). In fact, I’m hard pressed to think of any business and/or sector that would not find an intangible asset S.O.M. plan beneficial insofar as…

unraveling (and establishing) a clear, preferably uncontestable – documentable chain for each (intangible) assets’ origin, ownership, control, use, and assignment, if applicable,
recognizing intangible assets produce varying levels of contributory value relative to a company’s sources of revenue and competitive advantages, and
laying a foundation for recognizing the necessity to not merely utilize intangibles, but safeguard them, which collectively
enhances a company’s operational and strategic outlook and positioning capability.

Intangible Assets In 2013: Where Businesses Must Be…!

December 31st, 2012. Published under Intangible asset strategy, Intangible asset training for management teams., Managing intangible assets. No Comments.

Michael D. Moberly December 31. 2012

Recognizing how and strategizing where and when intangibles ‘fit’ in a company’s 2013 strategic business plan is a New Year’s resolution that will almost guarantee efficiencies, profitability, and sustainability! But first, we must agree at the outset, that, globally speaking, 65+% of most company’s value, sources of revenue, and building blocks for growth, sustainability, and profitability today either lie in or evolve directly from intangible assets!

That’s an economic fact – business reality that no, heretofore reluctant, reticent, or dismissive management team, c-suite, or board should needlessly squander any time debating or arguing, rather, just press forward with the knowledge that if executed correctly will, not may, produce impressive strategic outcomes, i.e., competitive advantages, more secure and profitable transactions, and equally important, extend a companies’ sustainability.

Far too often, this economic fact – business reality is dismissed and/or disregarded by management teams who either lack understanding, harbor misgivings, or simply don’t possess the necessary interest to unravel the embedded and sometimes camouflaged benefits and multipliers that well nurtured intangibles can consistently deliver for a company and the various transactions undertaken and/or engaged. One rationale is that a percentage of management teams, c-suites, and boards, are quick to dismiss intangibles as being (too) esoteric, or worse, somehow irrelevant to their company, the nature of its business, and it strategic positioning.

Any unfamiliarity and/or uneasiness among some management teams, c-suites, and stakeholders about what intangible assets are, how to identify them, and assess their contributory value, and then utilize and/or extract value (from them) efficiently and profitability can and should be overcome.

An initial step is designing and executing the proverbial, but always essential business case (rationale), which, for intangible assets, require some intellectual capital to design and integrate an enterprise-wide (intangible asset) awareness campaign that include…

developing congenial asset identification, stewardship, management, and oversight practices
sustaining control, use, ownership, and monitoring value, materiality, risk, and assess asset performance.

Each component above represents an essential element to achieving success as measured by elevated profitability, growth, and sustainability.

Those possessing the requisite fortitude and business acumen already know that designing and executing a company-wide initiative will inevitably present its own set of challenges, in this instance, the reality that intangible assets that…

lack physicality, and
seldom, if ever, are accounted for – reported on company balance sheet or financial statement.

The following represent (some) key factors which I personally recommend, that management teams, c-suites, boards, and relevant stakeholders should fully consider when conceiving and designing the necessary business case for making their intangible assets an integral part of their business routine and strategic planning and positioning…

Bring operational clarity to intangible assets through a repertoire of relevant examples applicable to a variety of industries and sectors in terms of not just their value, rather their contributory value…
Draw attention to the importance of practicing consistent stewardship, oversight, and management of intangible assets, framed as fiduciary responsibilities, not merely as additional or unnecessary tasks…
Describe how and why it’s necessary to not just identify intangibles, but unravel their origin, evolution, nurturing, ownership, control, defensibility, sustainability, and contributory value…
Incorporate best practices for sustaining control, use, ownership, and monitoring value, materiality, and risks to the assets, why each it’s necessary and who the adversaries are likely to be in addition to – other than sector competitors…
Articulate (intangible) asset valuation, contributory value, revenue conversion, and performance measure in understandable (plausible) ‘economics 101? contexts…
Describe how to determine asset ‘suitability and contributory fit’ to particular initiatives, projects, and/or transactions relative to their transferability, life/value cycle, and risks, and retaining/transferring ownership rights…
Demonstrate relationships between the production (acquisition) and use of intangibles relative to how they produce multiplier-effects, add company value, and deliver competitive advantages, sources of revenue and specific contributory value…
Describe ways to position and/or bundle particular assets (when/if feasible) to achieve broader leveragability, competitive advantages, and value potential…
Avoid reliance on subjective – worst case scenario anecdotes or tactic to convey (asset) risks and threats as a tool to attract attention…

My blog posts are researched and written with the intent they serve as a venue to elevate awareness and appreciation throughout the the global business community for the identification, use, contributory value, and measuring performance of many forms of intangible assets. My blog posts are not intended to be either quick sound bytes or merely commentary or references to other existing blogs. Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of any of my posts, attribution is expected and always appreciated. While visiting my blog readers are also encouraged to browse other topics (posts) which may be relevant to their circumstance or transaction. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

Intangible Assets…What Management Teams Don’t Know Will Lead To Adverse Affects…

December 3rd, 2012. Published under Intangible asset training for management teams., Managing intangible assets, Measuring Performance. No Comments.

Michael D. Moberly December 3, 2012

Let’s respectfully cut to the chase, c-suites, boards, and management teams not only need, but, it’s a fiduciary responsibility, to know more about – have an operational understanding of the intangible assets they develop, possess, and are embedded throughout their companies.

Professional and objective studies, papers, and articles, too numerous to mention here, collectively draw the same conclusion, which is, growing percentages (65+%) of most company’s value, sources, of revenue, and ‘building blocks’ for growth, profitability, and sustainability reside in intangible assets. In my view, this means acquiring the operational know how to not just periodically, but routinely and consistently identify, nurture, monitor, safeguard, and exploit a companies’ intangible assets effectively, efficiently, and profitably is a very worthy and responsible use of time, but very few resources.

I am increasingly hard pressed to explain why this globally universal economic fact is not being acted on more consistently and ardently, particularly among U.S. firms. Yes, we can acknowledge there exist numerous and real hurdles or impediments to operationalizing a company’s intangible assets. One is, intangibles are seldom integrated in b-school curricula as correctly constituting distinguishable assets that warrant management, quantification, and exploitation to fit the bottom line. We also can acknowledge that far too many, otherwise extraordinary business persons, remain predisposed to understate their relevance and contributory value by assuming intangible assets are merely synonymous with intellectual properties, i.e., patents, copyrights, trademarks.

It is true that part of my being perplexed, if not frustrated by these incongruities, is related to being a 20+ year advocate of utilizing intangible assets to enhance business’s profitability and sustainability, and competitive advantage. It’s actually distressing to observe companies, led by otherwise experienced, successful, and highly educated management teams seriously understate, trivialize, or be inattentive to the relevance and contributory value of the intangible asset either they or their company have developed and instead, merely ‘lumping’ them together into the proverbial catchall of goodwill. And please, avoid assuming intangible assets are merely a euphemism

Yes, developing, building, and sustaining goodwill, for any company is an important and necessary contributor, but, it is one of many intangibles that warrant effective managerial treatment that again, includes consistent oversight, monitoring, and stewardship to achieve the results which most are capable.

But, let’s be clear, this is not about changing canoes in midstream. Nor is it about taking on additional (business) risk by engaging a company’s intangible assets. The evidence is already there and it’s quite clear, and certainly, intangible assets are already in place, that is, they’re integral to and embedded in most every business environment and/or transaction I can conceive. It’s merely a matter of recognizing what more a company can do, how additional competitive advantages can be achieved, solidified, and enhanced, efficiencies created, and of course, favorable effects on company sustainability, profitability, and stability.

Let’s go way back to 2004, when Accenture commissioned the Economist Intelligence Unit to conduct a survey regarding ‘asset’ management. One hundred and twenty senior executives, representing globally operating companies, were asked to share their views on the management of strategic assets, both tangible and intangible.

Not surprisingly, 94 of the 120 executives (respondents) stated that ‘managing intangible assets, one of which is intellectual capital, is an important management issue’. While, at first blush, this may appear to be a favorable finding, especially to intangible asset advocates and business strategists like myself. Fully, 95% of the respondents went on to state that (again, keep in mind, this survey was conducted in 2004) they ‘did not have a robust system in place to actually measure (monitor) the performance of (their company’s) intangible assets’.

Even more distressing, in my view, from an asset management and financial strategist’s perspective, was the revelation that a full third of the senior executives surveyed stated they ‘had no such system in place at all’. At the same time however, nearly half admitted they recognized that ‘stock markets actually rewarded companies that invested in (their own) intangible assets’! For any savvy business person, that represents an irony and missed opportunity in any language.

To put at least a small positive spin on this survey, respondents should be acknowledged for admitting their companies lacked the means and/or systems in 2004 to measure – monitor intangible assets.

Hopefully I am making a respectful but very positive case throughout my Business IP and Intangible Asset Blog, that intangible assets should be front and center in terms of aiding management teams, c-suites, and boards to recognize…

what intangible assets really are.
the various types and categories.
how to unravel and approximate their contributory value…
- relative to goodwill, reputation, brand, relationship, intellectual, and structural capital, etc.
- as sources of revenue and ‘building blocks’ for future wealth creation, i.e.,
- insofar as bringing greater tactical – strategic clarity to
- how intangibles can be most effectively utilized
- strategies to extract as much value as possible.

Two general and perhaps larger points are worthy of making irrespective of the survey. The first is this; intangible assets are not the sole province of large, multi-national corporations. Rather, intangible assets are widely developed, possessed, and embedded in most every company, ranging from start-ups and spin-off’s to SME’s (small, medium enterprises) to mature, as well as, maturing firms.

In other words, intangible assets have little, if virtually nothing to do with a company’s size. It’s truly a case where size does not matter! Rather, it’s a matter of business decision makers recognizing what intangible assets their company possesses, produces, and/or has acquired and how they can be effectively and profitably (exploited) used.

The second point is that most issues today related to – affecting a company’s intangible assets have moved from merely being voluntary (I’ll do it if I have time) to truly constituting a fiduciary responsibility!

So, as most management teams, c-suites, and boards already know, whether they actually elect to act on that knowledge or not, is that the value, sources of revenue, and growth potential of most companies is increasingly embedded, not in physical or strictly financial assets that are reported on balance sheets and financial statements, but in intangible assets, i.e., brands, patents, franchises, reputation, R&D, intellectual, structural, and relationship capital and competitive advantages.

But, as the Accenture – Economist survey clearly revealed, few companies try to measure – monitor either the performance or returns from their intangible assets. Yet intangibles are certainly the clear and unequivocal underliers to most company’s profitability, sustainability, stability, and overall success. Quoting Dr. Roya Ghafele a proponent of intangible asset specialist and prolific Oxford University-based author, balance sheets and financial statements that do not encompass intangible assets simply do not provide the whole picture of a company.

There appears to be growing enthusiasm, albeit, at times, excruciatingly slow, for better management, stewardship, oversight, and monitoring and measuring (the performance of) a company’s intangible assets.

With respect to my particular corner of the world of intangible asset use, enhancement, and strategy, the radar of accounting firms, IP law practices, and insurance companies should surely be picking up the scent for developing and offering new business services specifically related to clients’ intangible assets.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to the circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Please watch for Mike’s book ‘Intangible Assets: Security Managers Roadmap’ to be published soon!

Restrictive Covenants…Can Be Powerful Tools For Safeguarding Intangible Assets!

November 26th, 2012. Published under Intangible asset protection, Managing intangible assets. No Comments.

Michael D. Moberly November 26, 2012

The objectives of this post are to…

Recognize restrictive covenants as constituting a type of intangible asset that when effectively designed and implemented contribute to safeguarding company’s key proprietary – trade secret information, i.e., intellectual, structural, and relationship capital
Encourage senior security, HR, c-suite, and legal executives to collaborate insofar as formulating specific, transparent, and defensible restrictive covenants.

Intangible assets are now the globally universal and dominant sources of most company’s value, revenue, profitability, and sustainability. Conservatively, 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible assets.

So, whether one is a senior security executive and part of a company’s c-suite and/or management team, a key objective is to build and maintain a profitable and sustainable firm. An integral strategy for achieving this, is coordinating best practices with restrictive covenants that collectively aid in – contribute to sustaining control, use, ownership, and monitoring (intangible) assets’ value, materiality, and sustainability throughout the assets’ respective life, value, and/or functionality cycle.

There Are No ‘One Size Does Not Fit All’ Restrictive Covenants…

Every company has an obligation, if not fiduciary responsibility, to develop, nurture, distinguish, and safeguard its most valuable, revenue, and competitive advantage producing assets, i.e., intangibles. Unfortunately, for a significant number of companies, a strategy to achieve these obligations, which we now recognize as being integral to most every company’s profitability and sustainability is relegated to shoehorning employees, irrespective of position, into signing, what I would describe as generic, one-size-fits-all restrictive covenants which are frequently absent language and/or position specificity and transparency to employees.

This oversight renders broad, all-inclusive, one-size-fits-all restrictive covenants frequently vulnerable to being challenged and contested during litigation for the reasons noted above, particularly in litigation in which misappropriation, infringement, and/or theft of intangible (IP) assets is being alleged. Typically, the challenges to such restrictive covenants strikes at their non-specificity which, it is argued, leaves employees with a defensible sense of ambiguity and variance as to what actually constitutes a company’s proprietary information and/or knowhow. Consequently, generically themed/conceived restrictive covenants pose a higher probability of being disallowed (dismissed) by a court.

Restrictive Covenants Should Convey Specificity…

A much wiser tactic today is for restrictive covenants to be as specific as possible by including, among other things, language and updates to reflect an employee’s evolution within a company in terms of position change responsibilities, and access to and/or handling of particular types of proprietary (trade secret) intangible (information–based) assets.

One indicator that the scope of a restrictive covenant is too broad lies in assessing how closely it reflects the company’s actual business interests. That is, each business is unique and employees develop their own operational nuances (intangible asset, i.e., structural, intellectual, and relationship capital) that (a.) when acknowledged, and (b.) appropriately managed contributes value to a company and/or business unit in the form of efficiencies, effectiveness, output, etc.

Given these realities, using standard (off-the-shelf) restrictive covenants for employees to safeguard a company’s most valuable (intangible) assets and trade secrets is surely unwise. So, a company’s often unique and nuanced operational knowhow demands, at minimum, carefully tailored restrictive covenants relative to a company’s specific operational and sustainability, profitability, and sustainability, and business environment.

It’s worth repeating, if restrictive covenants are overly broad and not obviously reflective of (a.) the nature of a company’s actual business, (b.) its mission, or (c.) an employee’s position within the company, such oversights will collectively elevate the probability that the restrictive covenants will be contested on their merits.

Ultimately, if/when restrictive covenants are contested as part of litigation strategy, plaintiff’s counsel must effectively demonstrate the covenants were designed, administered, and updated with (a.) sense of fairness, (b.) reasonableness, (c.) transparency, and (d.) relevant to an employee’s position.

It’s also prudent for introductory language to restrictive covenants draw attention to – explain how unfair competition will surely result should departing employees be allowed to share proprietary operational know how, i.e., intellectual, structural, and relationship capital gleaned from their former employer with a new employer.

With respect to departing – terminated employees, it’s both prudent and meaningful to ensure their exit interview includes re-familiarizing them with…

previously signed (perhaps successive/progressive) restrictive covenants, and
specific trade secret, proprietary information and operational knowhow they had access to and presumably know.

Effectively tailoring employee restrictive covenants requires, in my view, (a.) genuine collaboration among senior security, HR, and legal counsel, etc., and (b.) evidence which demonstrates…

unique and valuable information that has been developed and is being applied in the company, has been identified and distinguished, e.g., customer lists, R&D, marketing plans, any other information-based (intangible) assets that deliver value, produce revenue, and/or contribute to achieving competitive advantages…
whether or not particular any of the above information qualifies – meets the requisites of trade secrecy?, and, if so, are correct safeguards in place…
that employees receive adequate training (orientation, understanding) about how to safeguard information-based (intangible) assets the company considers valuable to its mission, profitability, and sustainability…
whether (employee) restrictive covenants are being periodically reviewed and updated to reflect an employees (a.) promotion, (b.) assumption of new responsibilities, and/or (c.) access to and use of additional confidential – proprietary information…
transparency with respect to restrictive covenant development and implementation that brings maximum clarity to signatories, (be they applicants, new hires, or long time employees), regarding (a.) content, context, and purpose, (b.) covenant enforcement, and (c.) consequences for violation.
companies have/are not treating restrictive (employment) covenants as insignificant addendums to conventional employee ‘on-boarding’ processes, nor are they imposed unexpectedly and compelling employee signatures as a condition of employment, absent explanation or allotting sufficient time (for employees) to review, reflect on, and/or intellectually absorb covenant language and consider – inquire what affects it may have relative to (a.) their current position, (b.) their future employment prospects, and/or (c.) departure from the company.

Correctly conceived and implemented restrictive covenants are extraordinarily (increasingly) important intangible assets to companies in as much as they…

describe which information assets are determined to be proprietary, confidential, and/or constitute a trade secret, and
represent important (strategic) indicators about where a company believes its value and sources of revenue originate and its sustainability resides.

When executed professionally and articulated respectfully, restrictive covenants can…

contribute to solidifying – embedding a long term company culture receptive to safeguarding valuable intangible assets, and
convey intolerance to those who may, at some point, become inclined to disregard the covenants.

In summary, it’s prudent that restrictive covenants should…

be drafted as narrowly and specifically as possible, without incurring over-reach.
be tailored reflect the employer’s particular business and not in a ‘one size does not fits all’ (generic) context.
be disclosed during employment interviews as a condition of employment and in a manner that elevates applicants understanding of their purpose and consequences for violation.
inspire a culture of confidentiality.
be implemented as quickly as is feasible and enforced consistently.

Avoid Developing Restrictive Covenants That Are Over-Reaching…

I’m confident we are familiar with some companies whose explanation-rationale for utilizing restrictive covenants includes one-off events, anecdotes, and/or ‘war stories’ which, in my view, leaves many new hires as well as existing employees with the impression that either…

everything about the company is, in some manner, proprietary or confidential, or perhaps worse,
the company management team and c-suite are unfamiliar with its revenue – competitive advantage producing intangible (information-based) assets and uncertain about how or which ones to safeguard.

The reality is, while many business’s may rely on important, valuable, and presumably secret or proprietary information and knowhow, when challenged, they may find much of it does not meet the legal definition of trade secret or confidential information. Consequently, while much operational information is very important to a company, it may well not warrant the time and resources to safeguard it as either a trade secret or even confidential.

My message is; put efforts toward safeguarding information a company can and must be kept out of the public domain and certainly out of the hands of competitors!

It’s worth noting, when challenged, if a company is unable to clearly articulate sound (business) reasons why certain information assets warrant protection, it’s unlikely the company will be able to effectively – successfully identify a reason when ‘secret’ information assets walk out the front door with a former employee or insider. Again, if, when litigation becomes necessary should counsels’ opening remarks not meet the burden (requisites) of proof, professional embarrassment may be the least of one’s worries at that point. So, a second message is, in my view, avoid minimizing the significance and value of the information assets that a company has assessed as genuinely warranting protection.

Implement Restrictive Covenants As Quickly As Possible…

In litigation, adequately safeguarding intangible assets for the long term should not be perceived nor characterized as either boiler plate or a ‘snap-shot-in-time’ initiative. Rather, it must be demonstrated as ongoing with regular reviews and ‘tune-ups’ when and where necessary. Simply drafting a restrictive covenant plan, absent thoroughly considering its execution, will generally be for naught. It’s advisable then, to avoid designing any restrictive covenant plan that is unnecessarily comprehensive, and challenging to implement and enforce.

Enforce Restrictive Covenants With Consistency…

It’s important to acknowledge that a restrictive covenant plan/strategy will be quite ineffective absent specific efforts to incorporate – embed it into a company’s culture and practice with consistency. Otherwise, restrictive covenants may prove quite difficult, regardless of counsel’s grasp of the English language, to successfully persuade a judge that the company is doing everything correct relative to safeguarding its proprietary information, knowhow, and trade secrets.

Therefore regular (consistent) training, teaching, and refreshers about employee’s obligations (to their restrictive covenants) are important, necessary, and convey a strong sense of seriousness to courts when challenges and/or litigation occurs.

Conducting periodic, or, at minimum, annual audits and assessments of a company’s intangible assets that not merely (a,) identifies or accounts for them, but (b.) unravels the assets’ location and origin, (c.) assesses their stability, vulnerability, sustainability, and contributory value, and (d.) determines their respective value and functionality cycles’ is a very positive activity, especially when courts seek – want convincing of same!

Please watch for Mike’s book ‘Intangible Assets: Security Managers Roadmap’ to be published soon!

Safeguarding Intangible Assets Through Restrictive Covenants

November 23rd, 2012. Published under Intangible Asset Value, Managing intangible assets. No Comments.

Michael D. Moberly November 23, 2012

The broad intent of this post is multifold, i.e.,

address (examine) personnel restrictive covenants in a way that
recognizes their contributory role in safeguarding company’s most valuable intangible assets, and
encourages senior security, HR, c-suite, and legal executives to recognize the necessity for collaboration insofar as formulating specific, transparent, and defensible restrictive covenants.

So, whether one is a senior security executive or part of a company’s expanding (c-suite) management team, the objective is to help a company and/or client build and maintain a profitable and on-going concern of which an integral obligation, be it cast as a fiduciary responsibility or in a contractual context, is to contribute to safeguarding those (intangible) assets by sustaining control, use, ownership, and monitoring their value and materiality throughout the assets’ respective life, value, and/or functionality cycle.

Intangible assets include not only conventional forms of intellectual property, i.e., patents, trademarks, and copyrights, but also a company’s trade secrets, along with an array of proprietary innovation and unique operational knowhow in the form of (a.) intellectual, (b.) structural, and (c.) relationship capital.

Speaking from 20+ years of experience, in part, because intangible assets are intangible, i.e., non-physical, their vulnerability to misappropriation, theft, infringement, etc., seldom tidily fits conventional risk management – prevention regimes which, in most instances are designed for tangible-physical assets. One consequence to this ‘un-tidiness’ is that the full extent of intangible asset losses, compromises, thefts, and misappropriations, etc., are more likely to go un-noticed, unreported, or objectively measured.

This situation will likely persist unless and until companies formally recognize their intangible assets and design – put in place effective processes and procedures to consistently identify, assess, safeguard, and monitor the value, materiality, and vulnerability of key revenue – competitive advantage driving intangible assets.

The Preliminary Injunction Hearing

In my view, processes, procedures and restrictive covenants to safeguard companies intangible assets should be designed and implemented based on an inevitability not merely a probability, that asset risks – threats will materialize and reach the point that legal action is warranted to try to recover control, use, ownership, value, competitive advantages, and market space of misappropriated, infringed, stolen (intangible) assets.

Legal action will almost always involve a (preliminary) injunction hearing in which the plaintiff’s primary objective is to very ably and convincingly demonstrate, to the satisfaction of the court, that all that could be reasonably expected and necessary, in accordance with existing standards and/or best practices was in place and fully implemented, i.e., relevant procedures, policies, and practices to effectively and consistently safeguard a company’s key intangible assets.

From legal counsel (plaintiff’s) perspective, the most important outcomes of a (preliminary) injunction hearing are that…

the court recognizes the cause is just, i.e., the allegations counsel make are well founded and convincing, and,
there is clear evidence that intangible assets developed, possessed, and used by plaintiff have been compromised, stolen, misappropriated, and,
those assets have specific and contributory value to plaintiff’s company, i.e., in the form of competitive advantages, brand, reputation, sources of revenue, etc.

For the plaintiff (victim company) a grant of injunctive relief can impede, stop, or at least minimize additional (asset) value and competitive advantage hemorrhaging and market space erosion relative to the stolen and/or compromised (intangible) assets. A favorable injunction ruling is important to the plaintiff company because experience clearly suggests that asset hemorrhaging in all its forms has already commenced, in most instances, immediately following the perpetration of the adverse act itself.

This means that quantifying asset value losses, competitive advantage hemorrhaging, and market space erosion that have occurred as a result of the alleged illegal act can be very useful evidence presented in preliminary injunction hearings. That is, providing of course, the assessments are readily distinguished as being linked to the (specific) alleged adverse act and not to other coincidental or irrelevant market forces or events or operationally poor or non-existent safeguards, both of which defendant’s counsel will surely seek to draw attention.

Plaintiffs of course, seek expedited preliminary injunction hearings, due largely to…

its implication that plaintiff company had asset monitoring practices in place that provided timely notification of circumstances (economically, competitively) adverse to the company’s intangible assets, and
the high probability, as already conveyed, that asset value hemorrhaging and market space erosion has and will persist, if not surge up and to the time a favorable injunction ruling may be granted.

Make no mistake though, regardless of the preliminary injunction hearing outcome, asset holders should not assume any/all asset hemorrhaging will immediately cease, for we are talking about a truly global business economy comprised of literally thousands of ‘legacy free’ players who not only disrespect but genuinely feel immune to western law.

Restrictive Covenants: Non-Competes, Non-Solicitation, and Confidentiality

Embedded throughout this post is the genuine intent that important foundations are laid that will encourage senior security executives, management team members, HR, and legal counsel to collaborate in advance to formulate viable, defensible, and transparent restrictive covenants to mitigate, if not prevent ‘insider’ (employee) initiated acts of (intangible) asset theft, misappropriation, or infringement, etc.

Having well-articulated, explained, current, and transparent restrictive covenants in place can increase the probability that a court (in a preliminary injunction hearing) will grant the preferred outcome i.e., injunctive relief against the alleged perpetrator(s).

Restrictive (personnel) covenants essentially constitute strategies for contractually safeguarding a company’s information-based (intangible) assets and generally exist in three forms and are intended to…

Non-compete – prohibit/restrict current – former employees from re-engaging in employment related to one’s former position (occupation, profession) in a particular geographic area for a specific, but often limited period of time following either their voluntary departure or termination.
Non-solicitation – deter, but preferably prevent, about-to-be dismissed or voluntarily separated employees from soliciting customers or colleagues from their former employer for a specified period of time.
Confidentiality – protect an employer’s confidential, proprietary information, operational knowhow, and/or trade secrets from being improperly (or illegally) disclosed or used following an employee’s voluntary departure and/or dismissal.

Please watch for Mike’s book ‘Intangible Assets: Security Managers Roadmap’ to be published soon!

Safeguarding and Managing Company’s Intangible Assets…six essential requisites!

November 9th, 2012. Published under Intangible asset training for management teams., Managing intangible assets. No Comments.

Michael D. Moberly November 9, 2012

To effectively practice the necessary stewardship, oversight and management of a company’s intangible assets can, in my judgment, only begin, when those with the managerial and fiduciary responsibility for doing so…

recognize precisely, not just generally, what intangible assets are…
how they’re developed and evolve within a company…
the economic fact that 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability lie in – evolve directly from intangible assets!

A business reality is however, experience suggests, absent the above levels of understanding and managerial commitment, it’s not just unlikely, it’s virtually certain, that a company’s intangible assets will go unidentified, unleveraged, under-utilized, or under-exploited insofar as facilitating company value, sources of revenue, and competitive advantages.

Other, equally adverse outcomes when intangibles are overlooked, dismissed, or neglected, their vulnerability to a host of asymmetric (global) risks and threats elevates accordingly to adversely affect their contributory value and functioning as sources of revenue and drivers of competitive advantage. Instead, they will be ready targets for compromise, i.e., theft, misappropriation, and infringement, etc.

The objective of course, is for the troika of management teams, c-suites, and boards to meet their fiduciary responsibilities to effectively manage and safeguard the intangible assets their company has developed, possesses, and/or acquired by…

being consistently and collaboratively engaged in – attuned to monitoring (the assets’) status, stability, sustainability, contributory value, and materiality.
recognizing how to position – align intangible assets to create value, sources of revenue, build competitive advantages, and strengthen relationships (build relationship capital) attract external investment, and/or leverage the assets as collateral in asset-backed lending proposals.
having the capability to distinguish and pursue the most prudent and lucrative strategies to exploit intangible assets for commercialization, monetization, or otherwise convert them into sources of revenue, value, and competitive advantage.
being current insofar as identifying, unraveling, and safeguarding a company’s intangible assets and assessing their relevance, contributory, and collaborative value to other company processes and/or transactions, (usually in the forms of intellectual, structural, and/or relationship capital).
consistently bringing business (strategic) clarity to intangible assets insofar as their creation, utilization, positioning, leveraging, and ways to extract value to reflect strategic business planning.
ensuring intangible assets are routine action (discussion) items on management team and board agendas insofar as (a.) identifying ways to increase their contributory/collaborative value (b.) creating new sources of revenue and competitive advantages, (c.) enhancing brand, image, goodwill, and reputation, and (d.) taking action to mitigate asset risks.

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance. And, I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com

Business IP and Intangible Asset Blog, Michael D. Moberly

Archive for 'Managing intangible assets'

Intangible Assets: Management Team’s Responsibility To Engage!

Intangible Asset Roadmap

Intangible Asset Risk Officer

Intangible Asset Strategist…It’s Time Your Company Finds One!

Intangible Asset Management ‘S.O.M.’ Plans: Stewardship, Oversight, and Management

Intangible Assets In 2013: Where Businesses Must Be…!

Intangible Assets…What Management Teams Don’t Know Will Lead To Adverse Affects…

Restrictive Covenants…Can Be Powerful Tools For Safeguarding Intangible Assets!

Safeguarding Intangible Assets Through Restrictive Covenants

Safeguarding and Managing Company’s Intangible Assets…six essential requisites!

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