Intellectual Asset Identification

The First Step in an Intellectual Property Management Program
Dave Tyrrell and Gary Floyd, Vertex Intellectual Property Strategies Inc.

In order to address the issue of Intellectual Asset identification, it is first necessary to define the terminology commonly applied in this field.

The terms "Intellectual Property" and "Intellectual Assets" are often used interchangeably. Precise definitions of these terms tend to vary depending on the application and how the parties involved define these terms in order to meet the specific needs of the situation at hand.
Vertex considers "Intellectual Property" to comprise Patents, Trade-Marks, Copyrights and Industrial Design Registrations. These four components have specific mechanisms in place to identify individual elements and in addition, legislation exists to protect the legal owners of these types of assets.

"Intellectual Assets" is considered to be broader in scope and in addition to Intellectual Property, includes Trade Secrets. Although Canada does not have specific laws that apply specifically to trade secrets, some other jurisdictions do. "Intellectual Assets" includes the codified, tangible or physical descriptions of specific knowledge to which a business can assert ownership.

A "Trade Secret" is defined as proprietary information that belongs exclusively to the business, and which is used in the operation of a business to provide an economic or competitive advantage. Trade Secrets include unpatented inventions, formulas, processes, devices, patterns, design drawings, customer databases or operations manuals. It applies to both business information and technical information. Trade Secrets are known to a limited number of individuals within the company who take care to safeguard their confidentiality.

"Human Capital" refers to the company’s know-how and capabilities embodied in its employees, as they relate to the operation of its business. Human Capital includes the collective experiences, skills, creativity, and expertise of the staff. On an individual basis, it refers to the capability of the employee to perform specific tasks necessary to the operation of the business. Businesses do not own Human Capital. When employees leave their employer, their knowledge goes with them.

Collectively, "Human Capital", "Intellectual Assets", including the "Intellectual Property" component, are known as "Intellectual Capital". The diagram below is based on the concept developed by Patrick Sullivan of the ICM Group and discussed in his book "Profiting From Intellectual Capital" (John Wiley & Sons, Inc. 1998, ISBN 0-471-19302-X). This diagram below explains the relationship between the various components just discussed.

In order for a business to maximize the value of its Intellectual Assets, it is first necessary to identify and catalogue the existing Intellectual Assets (Step # 1). Secondly, the business must capture the specific knowledge of its employees through codification of this knowledge in a form that is useful to other employees (Step # 2). When this process has been completed, the codified information and associated documents can be deemed to be trade secrets and comprise Intellectual Assets belonging to the business. Also by codifying such knowledge, potentially patentable inventions may be identified and a patenting strategy could be consciously considered (Step # 3). While it is a straightforward task to identify and list a business’ existing Patents, Trademarks, Copyrights and Industrial Design Registrations; Trade Secret identification and cataloguing can prove to be more challenging.

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