Why is it important to identify your most valuable intangible assets?

5 mins

Intangible assets are non-financial assets without physical substance. They can be used in the production or supply of goods or services or be licensed to others, and if identifiable, can be controlled by an enterprise and used to add value to the company.

These assets can include, for example, registered or unregistered intellectual property rights, branding, goodwill, know-how, legal agreements, or trade names and trade secrets, which we have covered in more detail here.

Intangible assets can facilitate a competitive advantage, helping your business outperform your competitors due to their uniqueness and limited availability, if appropriately protected. This can be extremely important for giving your business an edge over your competitors, and it is therefore equally, if not more, critical to safeguard such assets.

Holding long-term value and feeding into future economic benefits, protected intangible assets can also result in a higher share value. Having a well thought out strategy for obtaining intellectual property rights (IPRs) is essential, however, the approach may differ for each type of intangible asset.

Registered rights

Registered rights can include patents, designs, and trade marks. Having registered IPRs may protect you from your competition monetising on your idea or design and diluting the supply, which can lead to an unintentional price reduction and market saturation. It can also discourage competitors from copying your idea or product, meaning they would no longer have the capacity to potentially harm your business, brand, or other intangible assets. If someone were to attempt to infringe a registered right, the IPR owner has the power to dispute this. Some registered rights, such as patents, can provide businessowners a ‘monopoly’ within their niche, meaning they have a competitive advantage over their competitors.

Unregistered rights

Unregistered rights can protect non-registrable assets, such as copyright, unregistered trade marks and unregistered designs. These rights arise automatically on the creation of the work, and you do not need to apply to have them granted. They are typically harder to enforce than registered rights, but it is worth considering what benefits these rights are associated with and incorporating them into your portfolio and intangible asset protection strategy. You can read more about unregistered rights here.

Confidential information

Know-how, and by extension trade secrets, is another particularly important type of an unregistered intangible asset. This can include information that relates to how your business, goods or services work or are manufactured, for example. To be a trade secret, the information must be commercially valuable, be known only to a limited number of personnel, and be subject to reasonable steps taken by the rightful holder to keep it a secret. You can read more about how trade secrets can be used here.

One way to protect know-how and trade secrets is to look after your staff and employees well, to ensure this information stays within the business. If the business has high staff turnover, you may risk trade secrets and know-how being exposed and utilised by the competition.

One solution that could help mitigate this problem is to implement non-disclosure agreements (NDAs) and/or very strict and detailed employment contracts. In addition, if you seek registered rights for as many of your registrable IP assets as possible, the risk or impact of stolen or exposed know-how or trade secrets is significantly reduced. The two approaches can therefore complement each other and offer a reliable protection.

Given the critical role of intangible assets for competitive advantage retention and sustainable performance, it is worth giving proper consideration as to how to identify, measure and manage the assets that add value to your business.

Written by: Andrew White and Lindsay Pike