Intellectual Capital

Protecting Your Intellectual Capital

Intellectual capital becomes increasingly valuable as a company becomes more successful. Intellectual capital includes such intangibles as customer information, marketing techniques, production process and “know-how”, vendor agreements and relations, employees in place, leasehold rights, franchise rights, phone numbers, web sites, domain names, along with patents, trademarks and copyrights. One recent study found that the intangible asset value has grown from a small percentage 30 years ago to 80% of the market capitalization value of S&P 500 companies in 2005. It is expected that smaller businesses have had similar experience.

How do you protect this valuable asset? Here is a list of items for protection of intellectual property:

  • Employee contracts addressing the confidentiality of the company’s trade secrets and proprietary information especially on employment termination.
  • Employee manual or other written documents detailing the procedures for maintaining the secrecy of trade secrets and the company’s policies on protection of its confidential information.
  • Computer information security protected by passwords, backups, offsite storage, and other methods.
  • Procedures in place to properly mark proprietary information as confidential, and procedures to properly dispose of confidential information.
  • Third party nondisclosure agreements when dealing with third parties who may have access to the company’s information.
  • Patents, trademarks, copyrights when appropriate.

A leak or loss of valuable confidential information can be devastating to a small company. This is an area worth reviewing and shoring up by the business owner.