If you have an idea for an invention, business, or creative endeavor and hope to market it, you will need to take steps to protect your intellectual property. If you do not protect your idea, and subsequently share it with others, it could easily be stolen. In order to prevent such an occurrence (or at least, to have some legal recourse), you must protect your idea legally.
The Concept of Intellectual Property
Any idea that is unique and is originally yours is considered your intellectual property. The term “intellectual property” may be used to refer to an original creative work, a name or logo, an invention, or a trade secret. In order to claim such intangible assets as your property, you must legally claim them as your own.
How to Make a Claim on Intellectual Property
The way you legally claim an idea depends on the type of idea you wish to protect. If your idea is a creative work, such as a short story or song lyrics, you should have it copyrighted. If you wish to protect your brand’s logo or even your name from being used by others, you would need to have it trademarked. If you wanted to protect an invention, you need to have it patented. To protect a trade secret for your business, you might require employees and associates to sign a contract that includes either a non-disclosure agreement (which would require confidentiality), or a non-compete covenant (which would prevent former and current employees from sharing your secrets).
Getting Your Idea Appraised
In order to protect your idea, you’ll need to know its value. The best way to determine its value, is to retain an appraisal firm that specializes in intellectual property. Companies tend to either under- or overestimate the value of their ideas, which can be a costly mistake.
How Intellectual Property Is Appraised
There are two principal approaches for valuing intellectual property, the market approach and the income approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The income approach uses valuation techniques to convert future amounts (for example, cash flows or cost savings) to a single, discounted present amount. Important considerations include: the amounts to be received, the risk of the investment, and the time over which the benefits will be received.
Why Intellectual Property is Appraised
There are numerous reasons for valuing intellectual property. They include litigation support, tax planning, mergers/acquisitions, financial reporting, and financing, just to name a few. The value of the IP is critical to shareholders, so they know the value of their company, to management, so they can measure performance, and to lenders, so they can assess the risk in providing financing.