Intellectual property protection Featured

8:00pm EDT March 26, 2008

When business owners think about intellectual property, it’s often in the context of products or manufacturing processes. But other forms of intellectual property can be just as valuable, and should be protected accordingly.

“For 12 years I worked in the electronics field where product and process development and the protection of that work through the application for and enforcement of patents was a central part of the business,” says John Kilgarriff, account manager at The Graham Company. “Intellectual property protection doesn’t just work in high tech — it can be applied to a broad range of industries.”

Smart Business spoke to Kilgarriff about why companies should consider protecting their business assets.

Why should companies protect their intellectual property?

Virtually every company relies on proprietary or confidential information to develop and grow their business. For most organizations, this information is the company’s most valuable asset. It needs to be protected in order to preserve the company’s competitive advantage. Intellectual property includes all kinds of intangible assets, including processes, procedures, formulas, copyright, trademarks and trade secrets. In many industries this protection is essential for the continuation of a business.

Consider a media company’s protection of the rights to their music; a software company’s protection of its applications from piracy; or even a baker with a great recipe for chocolate chip cookies. All of them have the need to protect their proprietary information. Many other companies with less obvious intellectual property assets also have a strong interest in protecting their rights.

How do companies protect their intellectual property?

The initial way to protect intellectual property is to have good internal controls on the distribution and the access to materials that differentiate a company’s services or products from its competitors. For example, use non-disclosure agreements whenever sensitive details are being disclosed to others. The next step is for companies to take action to patent or copyright proprietary information that is destined to be widely distributed, such as their products or published materials. It could be marketing materials, an innovative way to solve a technical problem, published analytical work, or some other form of their work product. These are things that are patentable or can be copyrighted and can secure a competitive position against others.

The Graham Company, for example, has copyrighted the standardized framework that we use to evaluate the insurance programs of our clients. Our work product is something that we’ve spent a significant amount of effort, time and resources to hone and develop. The copyright enables us to protect our rights in the event someone sought to use this material without permission.

What should companies know about infringement of intellectual property?

The increasing number of U.S. patents issued and the never-ending availability of electronic content via the internet have dramatically increased the risk that a company could unintentionally infringe on someone else’s intellectual property. Companies can reduce this risk by being careful about the material they publish and by not engaging in certain activities that could lead to infringement. Businesses should have documented internal procedures that make sure that their employees research the sourcing of information before it is distributed or used in the business.

A final way companies can reduce risk is to transfer it by requiring indemnification from others who work on their behalf or by purchasing insurance.

A standard general liability policy provides a very limited amount of protection, mostly related to how businesses might infringe upon intellectual property of others in their advertising. But, if it’s a company that has a Web site or that does any kind of development of work product, be it training manuals or marketing materials, there is an increased exposure. And depending upon the nature of what they do, the protection afforded in a standard general liability policy may not be sufficient. Insurance products that will provide broader coverage for infringement on the intellectual property of others are available in today’s marketplace.

How does a background in technology relate to being an insurance broker?

The best parallel I can draw is that when I worked in semiconductors, my role involved enabling communication among people of a variety different backgrounds — technical, marketing, finance. At the end of the day everyone needed to grasp the issues in order to proceed — no matter how obscure they may have been.

Being able to work through details and still deliver concise, effective programs to clients is something that my previous background in technology development has really allowed me to do effectively in the insurance world.

JOHN KILGARRIFF is an account manager at The Graham Company. Reach him at (215) 701-5425 or jkilgarriff@grahamco.com.