There’s nothing quite like the pride that a sales manager feels while showing off her company’s facilities to a visiting client.
A Reno attorney who specializes in intellectual property rights cautions, however, that seemingly innocuous plant tours have the potential to put a company’s trade secrets at risk.
Speaking at a workshop sponsored by Northern Nevada Business Weekly and co-sponsored by Great Basin Federal Credit Union last week, attorney Robert Ryan, a partner in Holland & Hart, said trade secrets often are the most overlooked — and often among the most valuable — intellectual property assets that a company owns.
And it’s not just high-horsepower technology companies that own trade secrets that are valuable and in need of protection.
“Do you do a better job than the company that’s your next-door neighbor?” asked Ryan. “If so, you have a lot of intellectual property.”
That intellectual property, the trade secrets that allow your company to work more efficiently and more effectively than your competition, requires protection that begins with acknowledgement that it is, in fact, secret.
For instance, Ryan said that control of touring visitors makes an important statement to the visitors as well as employees that some practices are secret.
Require visitors to log in, he suggested. Require that they wear badges that will tell employees to put confidential materials aside when a visitor is walking through.
Those precautions, Ryan said, support the message to employees that they are working with information that the company considers to be confidential.
While employees generally are required to respect trade secrets when they leave a job, an employer’s failure to emphasize confidentiality in day-to-day operations may erode that protection.
And no one should underestimate the value of intellectual property assets in companies great and small.
Intangible assets accounted for 80 percent of the market-capitalization value of U.S. companies in 2005, he said, compared with 16 percent three decades earlier. By another measure, intangible assets accounted for 43 percent of companies’ book value in 2005, up from a mere 2 percent in 1975.
“The vast majority of what we build in this country today is intellectual property and intangible assets,” Ryan said.
As intellectual property accounts for an ever-growing portion of the value of companies, Ryan noted that the price that owners can command when they’re ready to sell often is a reflection of how well they have used patents, trademarks, copyrights and protection of trade secrets.
“If you haven’t protected it, why would a company pay you for it?” he said. “Your asset values are incredibly diminished if they are not protected.”
And protection needs to be wide-ranging, Ryan said.
A much-sought-after distribution agreement that opens European markets to a northern Nevada company, for instance, may include little-noticed provisions that seriously damage the value of trademarks in a European nation.
Informal chats with customers at a trade show about a potential new product may put later efforts to patent the innovation at risk.
The costs of protection? Sometimes great, sometimes small.
A complete U.S. patent will probably cost $20,000 to $35,000 from start to finish, Ryan said. A provisional patent might be half of that.
But trademark protection within a local market doesn’t require any cost or registration. Ryan suggested that business owners who think they might someday take a local company onto a larger stage, however, should invest in federal trademark registration.