Your Ideas Are The Most Valuable Things Your Company Owns

by Kevin Xu


In the Information Age, value lies squarely in ideas, especially as an entrepreneur.



You thrive on new ideas, inventions, or processes — it’s how you make a living. But it’s more than that: Your ideas are your property; they’re what make you and your company unique and valuable. That’s why it’s crucial that you safeguard your ideas from those who wish to cash in on your hard work.


Steve Blank, a serial entrepreneur and academic, learned this lesson the hard way.


As he was developing a marketing automation company, he was out and about with a deck of slides showcasing his idea to various investors. One day, he left a copy of the presentation with an enthusiastic VP of marketing at a big company, thinking he was interested in investing.


Nine months later, however, a VC showed Blank some slides. “Have you seen these?” he asked. Blank was astounded. That enthusiastic VP had stolen Blank’s slides — his intellectual property — and used them to start his own company.


Anyone could execute Blank’s vision for marketing; it was the idea that counted. And his story is a cautionary tale for every entrepreneur: Your ideas are your business, and you have to protect them.


Guard Your IP

While IP theft can affect any industry that’s producing innovative ideas, mechanisms, or products — such as marketing automation, in Blank’s case — it’s more impactful in industries that require high funding and regulatory hoop jumping. In these cases, IP mismanagement could be fatal. Here are three industries affected in particular:


1. IT: The IT and tech industries continually churn out new ideas, software, and products in a very competitive market. Because of this, patents and property rights become vital.


Apple and Samsung, for example, have been at each other’s throats concerning patents for features like slide-to-unlock and word correction. Their court battle began in 2011, and the pending outcome puts millions — or even billions — of dollars at stake.


2. Media: Publications and broadcasters alike have the right to protect the distribution and purpose of their work.


3. Researchers and universities: University research programs gain grants and funding from their work, both in writing and in theoretical and applied research. Their ability to maintain control of their intellectual property greatly effects how they fare from semester to semester.


These are all entrepreneurial fields. Employer firms with fewer than 20 employees make up 71 percent of software publishers, 92 percent of the motion picture and video industries, 58 percent of the pharmaceutical and medicinal manufacturing industry, 94 percent of music publishers, 96 percent of sound recording industries, and 84 percent of book publishers.


This is big. The Department of Commerce has conservatively estimated that “IP-intensive industries” account for 35 percent of GDP and 28 percent of all jobs.


Assess Your Situation

Ideas are usually protected with patents, trademarks, and copyrights, so look at your company as a collection of ideas, and make a master list of what you see.


Then, ask yourself these questions:

  • How innovative are your patents? Do they address completely new ideas, or are they extensions of a previous invention?
  • How many people will your product influence?
  • How do they distinguish you from possible competitors?
  • How advanced is your idea in your field?
  • Are you the founder of a new field, allowing you to speak with authority? Or are you simply the owner of a patent or other protection?


With this analysis on hand, you’ll have a clearer picture of the value of your company’s ideas, and you’ll be able to outline a plan to keep them safe. Then, you can put legal tools and business processes in motion to protect your IP.


Here are some basics:

  1. Keep the majority of your IP a trade secret. This is especially crucial if your IP is confidential. This can include technical or non-technical data, compilations or information, marketing or financial data, manufacturing processes, and lists of actual (and potential) customers. 
  1. Maintain control of your IP. Always ensure that you are the creator of the IP and have full rights to its use and distribution.
  1. Don’t dilute its value. Accepting too many investors or shareholders can seriously weaken your IP’s market value, so be wary of whom you invest with and how many shareholders you accept.


Even as you establish your defenses, however, you have to be aware of other potential landmines. Of course, competitors should be a concern, but disputes over an IP may also arise with partners or firms you have a licensing agreement with. Entrepreneurs can also have trouble expanding if their IP profile is not flexible enough to separate the components.


However, you should always be on the alert for outside threats. “Patent trolls” prey on weak patents and leverage the high cost of defense to gain settlements. Online research tool FindTheBest, for example, was recently ensnared in a lawsuit with a patent troll over a vague, invalid patent.


Your IP’s safety is something that should never be taken lightly. View your company through multiple viewpoints — those of the investors, the customers, and the employees — and see your firm as a system of ideas, with each of these groups having a special interest. Believe me, protecting your IP now will save you a huge headache later.


Kevin Xu is the CEO of MEBO International, a California- and Beijing-based intellectual property management company specializing in applied health systems.


Photo Credits

Andrés Nieto Porras | Courtesy of Kevin Xu