August 16, 2021
Real estate, production lines, inventory – these are the classic “tangible” assets held by a company. On the other hand, there are intangible assets, the intellectual property (IP) of the company. Today, we want to address the question of how intellectual property can be better utilized through a DMS and how software helps companies to manage businesses and trade secrets in the long term.
What is intellectual property? By definition, intellectual property is one of the four types of intangible assets a company can own, along with human, relational and structural capital. Their intangibility does not make this form of asset any less complex to manage. At the same time, they are becoming increasingly important as a factor in global value chains.
Well-planned and actively exemplified IP management is a sensible investment in the future for managing directors who think long-term.
The World Intellectual Property Organization (WIPO) estimates that the annual global turnover from intellectual property amounts to around 5.9 trillion dollars (as of 2014).
In the age of the knowledge economy, the understanding of the term “intellectual property” has also broadened: Whereas traditionally the publicly perceivable aspect of a company’s IP – such as brands, patents, trademarks or utility models – was considered, today it is also understood to include intangible assets that go beyond the pure invention and reflect the breadth of the company in its many sub-aspects.
Examples of intellectual property beyond classic patents as well as trademark and name rights are:
- Supplier and customer lists
- Project documentation and e-mail histories
- Industry-specific know-how and experience
- Internally researched or purchased data sets
- Process and work instructions
- Organizational charts, costing and marketing plans
- Roadmaps, meeting minutes, memos and meeting notes
- Internal wikis and corporate blogs
- Software and plug-in licenses, registered domain names
Intellectual property protection
The management of intellectual property is a task that has become much more important since the beginning of digitization. Whereas it was originally the responsibility of the legal departments, which took care of the protection of intellectual property, it is rather understood today in the interaction of many stakeholders: Corporate management, human resources and marketing departments bear just as much responsibility for good IP management as, for example, software development, sales or employees on the shop floor who document their daily tasks and solutions to problems routinely.
In all such cases, a company invests time and human resources to exploit future potential uses. Competitors, on the other hand, can use such data to deduce long-term strategies, save their own development time or tap into customers. Protecting and maintaining this data is therefore a top priority in intellectual property management.
In this respect, it is understandable that IP management has historically been thought of rather defensively: Company secrets were to remain secret, the brain drain of senior employees was to be prevented, and copyrights were to be legally enforced. With non-disclosure agreements, this protection can also be extended to informal situations. Freedom-to-operate searches are designed to clarify at an early stage whether a new offering might infringe the IP rights of other market participants. And early defensive publication of one’s own findings can severely disrupt a competitor’s patent strategy. Specialized intellectual property protection software already exists for many such special measures.
In recent years, the broader definition of intellectual property has also been followed by European governments and the German Institute for Standardization:
- Directive 2016/943 of the European Parliament and of the European Council of June 8, 2016, on the protection of confidential know-how and confidential business information (trade secrets) against unlawful acquisition and unlawful use and disclosure.
- The DIN standard 77006:2020-06, published in 2020 by the Deutsches Institut für Normung e. V. (German Institute for Standardization), defines an open standard for comprehensive IP management.
Understanding intellectual property as a resource
A purely defensive view of such company secrets has a downside: If findings and experience are not communicated internally, but gather dust in filing cabinets or on file servers, they cannot be amortized. Staff changes and onboarding then lead to a reset rather than real continuity. Work instructions are distorted if they are only passed on verbally, and research work in one department has to be repeated unnecessarily in other departments. In short, one must not only defend one’s own intellectual property through appropriate (legal) measures, one must also make it usable within the company.
It is therefore important to have an IP action plan: If management recognizes the added value of in-house IP, it can lead by example and instill a sustainable IP strategy into the corporate culture. Knowledge transfer, synergy effects and massive time savings thus create the basis for competitiveness and innovation even in fast-moving times.
Intellectual property and due diligence
Regardless of day-to-day business, IP (and the extent to which it can be leveraged) plays a role above all when the company is up for sale: Whereas in pre-digital times physical assets and distribution channels usually were the tenderloin of a company acquisition, today intangible knowledge treasures not only increase the purchase price – they often determine it.
If a merger & acquisition is imminent, the condition of the company’s IP is often evaluated by company auditors. As part of such due diligence, it is naturally evaluated whether the existing IP rights are valid and who their actual owner is; furthermore, existing legal disputes on the subject are considered and their outcome forecast. Depending on the industry and the complexity of the business field, this process can be more or less in-depth.
It has a positive effect on the purchase price if the existing knowledge is kept directly usable and made searchable with an up-to-date document management system.
Intellectual property and document management
Accordingly, it is important that a company’s know-how does not remain with individual employees; that existing documentation is maintained, versioned and transported, and that findings are thus incorporated into all company processes in an agile manner. Many IP managers – and decision-makers to whom the importance of these measures has already been drilled – are therefore establishing clear workflows in their digital document management. This makes their jobs easier in many ways:
- Content can be shared by user group, allowing information to reach everyone it affects – and minimizing the risk of leaks and industrial espionage.
- Information is traceable even years later if mail histories and correspondence with external parties are stored centrally. This means that the departure of an employee does not lead to a complete loss of knowledge.
- Similarly, centralized document storage also promotes the transfer of knowledge between company locations; the company’s know-how is thus distributed more robustly.
- Clean documentation of company processes can serve as the basis for evidence in legal disputes, such as disputes over trademarks or copyrights.
- Through daily work with a DMS system, intellectual property loses its “intangible” flavor; the company’s treasure trove of knowledge becomes tangible for all stakeholders.
- The data stock and the know-how become part of the corporate culture and can be quantified more precisely in value in the event of a company sale or merger.
Conclusion: Managing intellectual property properly
The progress that IP management has made in the American and Asian markets in recent years is also being discussed more and more seriously in Europe. Whereas in the past the focus was on “How do I protect my intellectual property?”, today the question is much more “How do I use my intellectual property?”
The advantages are obvious: No entrepreneur wants to do without better processes, more legal security and massive savings in working time.