Spring 2014 issue of Horizons

LIFE SCIENCES LIFE SCIENCES

Protecting Intellectual Property by Steve Hays, CPA & Jason Mannello, CFA

T heft and misuse of intangible assets are significant problems for most businesses and the risks are increasing every day. It is estimated to collectively cost companies billions of dollars each year. Discovery, investigation and prosecution is an expensive, time-consuming, and distracting process, with uncertain recoveries. Preventative maintenance, in the form of a strong internal control environment, goes a long way in reducing the risks companies face and maximizing the value of intangible assets. Businesses succeed by creating and protecting competitive advantages from effective use of their assets. Intangible assets have displaced physical assets as a primary source of value in today’s economy.

This is especially true for life sciences and technology companies that are reliant upon intangible assets as a key contributor to success. Intangible assets (also known as intellectual property or IP) include ideas, processes, trademarks, or even reputation, that provide companies with competitive advantages over their competitors. IP is at risk from misuse, misappropriation,and damage that can significantly reduce an organization’s value. Therefore, identifying and establishing effective internal controls over your organization’s IP is vital to mitigating risk and increasing the chances of long-term success. Some of the risks to IP include misappropriation, infringement, loss of rights and reputation damage.

page 48 | horizons Spring 2014