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You Never Forget Your First Time …

Relax.  It’s not that kind of post.

Today I am christening a new TacticalIP blog category:  Intellectual Asset Management (IAM).  To introduce some terminology used in the field, I thought I would share the story of my initiation to the world of IAM.

john_wayne-sm1Long before I became a patent attorney, I was a software engineer and entrepreneur.  My five-employee company licensed property insurance rating software to agents across the State of Florida.  One day, I called my only competitor and pointed out that the Florida rating software market “wasn’t big enough for the both of us” (yes, it was an awkwardly John Wayne-esque conversation between two computer geeks).  I eventually agreed to sell my software line of business to the competitor company.

No tangible property changed hands in our sales transaction, as my little software company owned no buildings, vehicles, furniture, nor even our rapidly-depreciating computing hardware.  To support the sale, I collected an inventory of all the intellectual property my company was to formally hand over to the buyer.  For example, our copyrighted software code, training manuals, and website content all qualified as intellectual property.  Also, the trademarked software product name, logo, and slogans I conveyed to the buyer were all intellectual property.  Had my company owned and transferred any patent rights to insurance-related inventions, those patents certainly would have qualified as intellectual property.

Immediately after the deal to sell my rating business closed, the buyer unceremoniously pitched all of my company’s inventoried intellectual property directly into his trash can (figuratively, if not literally)!  Why?  Refer to the beginning of my story:  the buyer was a competitor!  That company already had its own insurance rating source code, training manuals, website content, product name, logos, slogans, etc.  So what exactly did that competitor really buy if not formal, government-registered intellectual property?  It turns out the only asset my company had that was of value to that competitor was … our customers!

While my company was operating, we followed the common industry practice of keeping our customer database confidential to complicate, if not prevent, pilfering of those customers by competitors.  Proprietary information used in the operation of a business and that is maintained confidential for competitive advantage is called trade secret.  My company’s customers were not its property (no company can “own” its customers).  Nonetheless, that trade secret list of customers was certainly an intellectual asset and, in the eyes of that competitor anyway, it was the only asset my company had that was of any value at all to his business.

Moral of the story:  Intellectual assets certainly include formal intellectual property rights (e.g., patent, trademark, copyright), but also may include a vast array of intangibles that nonetheless are of value to the asset holder or to some interested acquirer.  Intellectual Asset Management (IAM) is all about creating, managing and exploiting such intellectual assets to realize value for the owner.  What constitutes an intellectual asset often is limited only to the eye of the beholder.  (Original post: May 19, 2012)