It’s The Intangible Assets Economic – Competitive Advantage Adversaries Seek!

Today’s globally interwoven business (transaction) environments are, it is well known, increasingly competitive, aggressive, predatorial, and winner-take-all…in fact, it’s nearly a given, that company’s so-called ‘crown jewels’ of knowledge and know how, ala proprietary intangible assets and intellectual properties are not merely vulnerable, instead, the probability that either will fall prey to theft, misappropriation, infringement, and/or counterfeiting at opportune points during these assets’ life-value-functionality cycle is, in my judgement, approaching an inevitability.

Just how inevitable, is, as most things, subject to numerous many variables…i.e., asset demand, attractivity, effectiveness of safeguards, ease of value-monetary conversion, and noticeability of infringement and/or counterfeiting, etc..  Asset safeguard practitioners are obliged today to mitigate such risks through, among other practices, close scrutiny regarding pre – post transaction due diligence regarding the key intangible assets in play and required for consummation.

There is a global array of ‘legacy free’ (independent, state sponsored) players-operators, who have amassed the technical and personal expertise…to access and exploit the intellectual, structural, and relationship capital, ala, intangible assets, produced-held by others, not to mention conventional forms of IP, i.e., patents, trade secrets, copyrights, and trademarks which are routinely the target of economic and competitive advantage adversaries.

Safeguard practitioners, which I am one…advance compelling, relevant, and experienced cases, further describing how the loss – undermining of valuable IP and other intangible (business) assets is occurring at levels that translate to multiple billions of dollars annually to their rightful holders. Interestingly, there are few experienced practitioners in this arena, representing a U.S. companies, which have not experienced value undermining and/or loss to their IP and/or proprietary intangible assets engaged in business transactions with particular-countries.

The reasons these ‘risk realities’ exist – are persistent, are very straight-forward, i.e.,

• misappropriation and/or infringement of IP are anticipated, presumed, and calculated aspects to U.S. companies executing (business) transactions and technology transfer arrangements with certain countries and/or their governments.

• the upsides – outcomes to such transaction are generally negotiated to be sufficient, desirably sustainable, and strategic to moderate the anticipated and/or actual losses of proprietary information and other intangible assets, i.e., intellectual and structural capital in-particular.

A difference worthy of note now…is that security professionals charged with safeguarding the content of any IP on behalf of its rightful holder and for the duration of a business transaction have observed that when legitimate IP holders become aware – are alerted to a transgression or loss, some business leader are exhibiting less inhibition, compared to years past, to publicly acknowledge the alleged culprit(s), i.e., countries, government entities, sponsored individuals, etc., where-how the challenge originated.

More specifically, in a growing number of instances…IP rights holders are citing either state sponsored, independent operators, and/or legacy free player countries as instigators, recipients, and (economic, competitive advantage) beneficiaries of purposeful transgressions.

Naming the (alleged) culprit countries, entities, and/or persons carries some potential benefits, i.e., the adverse publicity can, in some instances…

• bring political – diplomatic pressure on a named named country’s legislative and enforcement bodies to be more aggressive insofar as pursuing alleged infringers through available legal means.

• prompt holders of valuable intangible (IP) assets to strengthen their business transaction due diligence to further mitigate risks – vulnerabilities (to their knowledge-based assets) by putting in place practices and procedures specifically designed to sustain control, ownership, and consistently monitor the value and materiality of the knowledge-know how in play with special attention to pre and post transaction contexts.

It’s also worthy to note, that much of this information has been and remains available...for many years through the U.S. Trade Representatives’ Section 301 list, as well as the U.S. Department of States’ Overseas Security Advisory Council,

While there should be no dispute about the significance and persistence of this type of challenge, to international trade, I do find reason to dispute individual company and/or this administrations’ consistent characterization of it solely constituting a (conventional) intellectual property only problem’. Again, intellectual property is comprised of patents, trademarks, copyrights, and trade secrets, ala information and other (intangible) assets registered with the U.S. Patent and Trade Mark office, i.e., USPTO,

Professionally, I hold a somewhat different perspective…regarding what many of the more sophisticated economic and competitive advantage adversaries are targeting. It’s not solely a company’s intellectual property, as many, including this administration proclaims. I have worked, studied, and conducted much research on matters related to economic espionage vis-a-vis intangible assets over the past 25+ years.

This research includes much more than cursory understanding of the U.S.’s economic – competitive advantage adversaries’ social, political, and legal history…collectively, my, and others research findings indicate numerous ‘legacy free’ countries, government entities, and individuals, are now commencing the early stages of a generation of individuals who possess the economic – competitive where-with-all to build R&D and scalable manufacturing to produce and meet expanding internal demand for largely western goods, services, and products. It is widely understood then, the quickest and least expensive route, for those so inclined, to accommodate same is to engage in misappropriation, infringement, and/or theft of the relevant knowledge – know how.

What’s missing in my judgment, from the economic (cyber) espionage equation…is the growing number of economic – competitive advantage adversary’s ability to distinguish and replicate the intangible assets (intellectual, structural, relationship capital and know how) which are embedded in any-all (registered) intellectual property.

Intangible assets today comprise 80+% of most company’s value, sources of revenue…and building blocks for growth and competitive sustainability. Of course, it’s important to recognize that acquiring – applying – exploiting the relevant intangible assets, is absolutely-essential to building product/service quality, securing supply chains, and creating efficiencies in distribution, etc., necessary for today’s interwoven global economy.

The various parties who wish to engage in exploiting stolen intangible assets and intellectual properties…generally possess, based on my experiences anyway, an equally strong desire as the legitimate holders-owners, to compete globally and often in the same market space as the rightful holder-owner of those assets do!

….to that, I routinely suggest, should there still be skeptics, that one can photograph an object and/or prototype today, transmit same to certain known ‘specialists’ globally, and with a high degree of certainty, that product can appear – be available for sale the following week at several (U.S.) west coast ‘flea markets’!

I can also confidently report that every company – holder of registered IP and/or proprietary intangible assets… would be well served to identified, distinguish, and safeguard, the contributory role and value of the intangible assets that underlie all-of-their IP, if, for no other reason, because that’s what economic and competitive advantage adversaries want and need most.

Michael D. Moberly April 9, 2018 St. Louis [email protected] ‘The Business Intangible Asset Blog’ since May 2006 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

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