I am frequently hard pressed to understand why presidential administrations, cabinet secretaries, media pundits, and yes, even corporate c-suites…consistently mischaracterize, perhaps misunderstand, how to correctly describe the types and categories of proprietary (intangible) assets being targeted – acquired by U.S. economic – competitive advantage adversaries.  Let’s be clear, it’s not merely or only ‘theft of intellectual property (IP)!  https://kpstrat.com/wp-admin/post.php?post=236

Consistently, the targets of, and losses attributed to, state sponsored theft of U.S. company’s ‘crown jewels’…are characterized, almost exclusively in contexts of intellectual property, i.e., patents, trademarks, copyrights, and/or trade secrets.

However, the same illicit acts engaged in by globally scattered cadres…of ultra-sophisticated ‘legacy free’ players and data (cyber) mining operations are seldom, if ever, cited. This is troubling, in my judgment, on several levels, not the least of which is because it suggests there is only a cursory understanding of the scope (depth, breadth) of current challenges, and those that inevitably are yet to materialize, or worse, become known in a reasonable time proximity to their occurrence.

As an intangible asset strategist and risk specialist…I have been consistently engaged in efforts to safeguard and preserve the value, and mitigate risk to company’s intangible assets ala IP since the early-1990’s.

So, through my lens, those who continue (purposefully, or unwittingly) to portray these adverse events…and the subsequent financial and competitive advantage losses as being exclusively related to – involving only intellectual properties, the challenge is being woefully understated and exacerbates uncertainty about…

• global economic – trade fairness and foreign government’s adherence to international (trade) laws, i.e., World Trade Organization.
• suggest the events have ‘time sensitive’ components, thus a necessity to remedy the transgressions, real and alleged as a political expediency.

Through my, albeit, intangible asset safeguard lens…I have addressed these issues at length in private (c-suite) settings, SRO conference audiences, often as the keynote, along with comments from readers of this blog.  Rooted in these sources of information and feedback, it is my assessment, that a relatively small percentage of business leaders actually possess an operational level familiarity with the valuable intangible assets or its primary subset, intellectual property their business, very likely, consistently produces. https://kpstrat.com/wp-admin/post.php?post=5919

Intellectual property and other forms of intangible assets, and the…

• intricacies, distinctions, implications, and impact of either being stolen, misappropriated, or infringed, and

• how, and to whom, either becomes legally defensible property, and

• under what circumstances does either produce value, competitive advantage, and create sources of revenue, the specifics of which respectfully appear elusive to most.

So, government officials and the multitude of media echo-chambers...from which citizens globally seek – receive their news and information, continue to characterize economic espionage, i.e., theft, infringement, misappropriation, through a narrow intellectual property only lens.

Presumably, applying IP-related language only, is variously more ‘describable’ when supplemented with single word descriptors, i.e., patents, which many presume some knowledge.

These are not merely distinctions without differences…that-is-to-say, a company’s intangible assets, e.g., it’s intellectual, structural, and relationship capital (know how), unequivocally today, comprise 80+% of most company’s sources of value, revenue, and competitiveness. More specifically, a company’s collective know how, in most instances, is embedded in – serves as foundations to conventional intellectual properties, i.e., the foundational content of patents particularly. So it is, intangible assets, which again, IP are subsets, that constitute the real targets of economic espionage and surreptitious data mining operations conducted by global cadres of economic and competitive advantage adversaries.

In other words, these know how – knowledge-based assets are precisely what the economic – competitive advantage adversaries’ need, want, and aggressively seek…because, among other things, being successful in acquiring these intangible assets is,

…the quickest route to achieving (global, niche) competitiveness and profitability with incurring the cost                        and investment of R&D and start-up!

It is true, issued patents provide necessary legal standing…for holders to bring criminal and/or civil action against alleged infringers, i.e., those who misappropriate and/or manufacture sub-par counterfeits which ultimately enter otherwise legitimate supply chains. And yes, one of the requisites for a countries’ membership in the World Trade Organization (WTO) is having in place a comprehensive intellectual property rights (enforcement) regime.

I do respect holders of issued patents…in large part because it usually speaks volumes about the patent holder’s diligence, knowledge, and likely, well-deserved achievement. A patent issuance (certificate), in most instances, warrants framing and hung on a wall of prominence for all to see and dutifully admire.

I advise clients to…not assume an issued patent, standing alone,

• constitutes an absolute or specific deterrent to ‘idea’ infringement, misappropriation, or theft.

• magically serves as (a standalone) safeguard against theft-misappropriation, etc., for the duration or its life-value-functionality cycle, whichever may come first.

Seeking the issuance of a patent, of course, is often a business decision and/or transaction requisite, pure and simple, particularly…

• when investors are involved who demand risk mitigation and options for recourse should infringement occur, and

• in today’s globally aggressive, increasingly predatorial, winner-take-all, and go fast, go hard, go global, go black (business) transaction environments.

So respectfully, any assumption that the issuance of a patent serves, in any way, as a specific deterrent…to economic espionage or the illicit acts of competitive advantage adversaries or insiders inclined to misappropriate the assets and their foundational-underlying know how, i.e., intellectual – structural capital, represents not just wishful thinking, rather naïve thinking, which has, in my judgment, variously outlived its previous centuries of relevance.

So, please consider this…why would an economic – competitive advantage adversary, i.e., country, government entity, or independent (legacy free) data mining – information broker operation, or competitive intelligence group, undertake the risk of acquiring (stealing) the contents of a patent, i.e., usually its structural capital?

The answer to that question lies, in my view, in pure economic competitiveness…which translates as engaging in and acquiring what’s necessary to out-perform, or otherwise get ahead of competitors and rivals, irrespective of their being a (a.) sector – country specific competitor, (b.) regional competitor, or (c.) defense (contractor) competitor.

After all, the content of an issued patent (essentially the same information) will likely (eventually)…be published in open source at some point, in the U.S. anyway, through the U.S. Patent and Trademark Office website,if not by the inventor themselves in a relevant professional – academic journal.

I purposefully belabor this point to make these relevant distinctions…which are, after many years of investigative (business) research along the economic espionage spectrum, this issue goes directly to the heart of, perhaps the most important question, for U.S. company’s general counsel and chief security officers, which is…

• how and which proprietary – knowledge assets, i.e., intellectual, structural, relationship capital, etc., warrants higher level and more sophisticated safeguards and resilience planning?

The answer to this question is quite clear…it is the intellectual, structural, and relationship capital.  In other words, its the categories of intangible assets that possess – deliver the greatest contributory role and value to a company in terms of sources of revenue and competitiveness. And, otherwise serve as key (essential) ‘building blocks’ for company sustainability and growth.

Michael D. Moberly April 10, 2018 St. Louis [email protected] The ‘Business Intangible Asset Blog’ since May 2006, https://kpstrat.com/blog where one’s attention span, intangible assets, and solutions converge!

Readers are invited to explore other papers, books, and blog posts I have produced – published at https://kpstrat.com/blog/papers