Think You Don't Need an Intellectual Property Strategy? You're Probably Wrong.

Recently, a seasoned businesswoman friend told me “our company doesn’t need an intellectual property strategy because we don’t own any intellectual property.” The company to which she was referring, which I will call “Restaurant Supplies to U,” does not make products. Rather, this company distributes the products of other companies to restaurants and food service facilities.
As we continued our discussion, I discovered that my friend believed that company needs an intellectual property strategy only to prevent other companies from knocking off a company's products or manufacturing techniques. Since Restaurant Supplies to U did not manufacture or sell products, she assumed that her company did not need to worry about intellectual property.

As an IP Strategist and owner of an IP Strategy and Consulting service (more info here: http://www.jackiehutter.com/), I can tell you that this is a false, but surprisingly common assumption: almost all companies derive significant value from intellectual property and, as such, need to have an intellectual property strategy.Restaurant Supplies to U exists only because it has developed sophisticated and efficient methods to deliver products to its customers; these methods are known only to the company. The company also owns voluminous databases of customers, suppliers and other information that allows the company to derive value from its distribution services. These methods and lists that are known only within the company and, accordingly, comprise valuable trade secrets. If Restaurant Supplies to U did not own these trade secrets, the company would be only a collection of employees, trucks and office supplies. Put another way, the primary form of shareholder value for Restaurant Supplies to U is derived from the company’s intellectual property in the manner of trade secrets.

The importance of intellectual property to Restaurant Supplies to U’s shareholder value necessitates that my businesswoman friend re-evaluate her belief that her company does not need an intellectual property strategy. At a minimum, her company should compile an inventory of the trade secrets that comprise significant company value, and ensure that the company has established processes to keep these trade secrets from being disclosed outside of the company. Also, her company should implement procedures to capture and inventory new or improved ideas that will enhance shareholder value. Some of these ideas may even be patentable, which, if strategic to the company's future, could greatly enhance shareholder perception of the company’s value. Restaurant Supplies to U should also exploit patent information to determine whether its competitors are seeking patents that could restrict Restaurants Supplies to U’s ability to compete freely in the future.

As a publicly traded company, Restaurant Supplies to U may also need to demonstrate that it has established an intellectual property strategy in order to comply with the requirements of Sarbanes-Oxley regulation. Since intellectual property comprises a significant portion of the company’s value (i.e., is material to the company), this U.S. government regulation requires that the corporate officers can demonstrate that Restaurant Supplies to U understands and is properly managing this substantial corporate asset. (For more on this, see www.aicpa.org/pubs/jofa/nov2005/banham.htm) At the very least, Sarbanes-Oxley requires a company to know what intellectual property it owns, which takes us full circle to the need for Restaurant Supplies to U to compile an inventory of its valuable trade secrets.

My businesswoman friend now understands that Restaurant Supplies to U is an intellectual property owner. She is now planning on establishing a relationship with an intellectual property attorney who is accomplished at assisting companies in developing and deploying corporate intellectual property strategies. Her company’s shareholders will be glad she did.