Why must businesses focus on intangible assets?

By Mayora IP

When the entrepreneur knows where the value of the company lies his assesment can be accurate. To do this, he must know what assets and resources the firm commands: does my business rely on tangible property, intanigble property or both to drive? A combination of both is likely to be the case, however, the reliance on each one will differ depending on the nature of the business, and its growth strategies. E.g.: a marketing consultant firm will probaly need an office to gather the majority of its workforce; yet its knowledge into the services and the manner in which it provides them are likely the main factors that will drive the company's success. 

Conversely, one could argue that a retail company will -apparently- rely mainly on tangibles: warehouses, financial capital, inventory, and trucks to deliver the products to its stores. But, is this really true?

Businesses must understand the importance of their intangible assets and the role that they play in driving the business forward, as well as the need to prioritize a thorough protection strategy to prevent valuable information loss.

For example, in the case of Tesla vs. Cao, US-based automotive company, Tesla, sued former employee Dr. Guangzhi Cao, claiming that he uploaded confidential information relating to Tesla's driver assistance software code to personal devices, during his time as company employee. He then went on to be employed by competitor XMotors. In order to have standing to sue against Cao, Tesla demonstrated that they had been diligent as to the protection of their trade secrets, through several measures, such as non-disclosure agreements, restricting physical access to facilities, password and firewall protection against others. However, Cao contested that company management allowed employees to store sensitive work-related information on personal devices, despite an alleged policy to the contrary, and that he deleted any such information before leaving the company. 

The parties ultimately settled the case, in a confidential agreement, but the lesson may be drawn that, given the high-value of information and trade secrets nowadays, implementing an adequate protection regime is utmost important, and constitutes a difficult and technical task that must be tailored to each company's needs and current assets. 

Doing so may prevent costly loss of information and high-stakes litigation, which even if it results in a positive outcome, is likely not to undo the effects of losing valuable trade secrets to competitors.