Protecting Intangible Assets Through Business Contracts

Think you don’t have intangible assets? Think again. In today’s world, virtually every business has intellectual property and other intangible assets which add value to the business. In our practice, we see that almost all business relationships—B2B, B2C, employment, and vendor—present opportunities to protect, grow, and possibly monetize a company’s intellectual property and other intangible assets.

What is intangible property anyway?

Real or tangible assets are physical things like furniture, equipment, supplies, raw materials, an office building, and the like.  

Unlike real property, intangible property does not derive its value from physical attributes but rather from a non-physical right or idea.

As our society has modernized, intangible assets are growing faster than tangible assets. Intangible assets include:

  • Traditional intellectual property: patents, software, trademarks, copyrights
  • Trade secrets: information or methods used in a business which are valuable or advantageous, not known to the public, and the owner attempts to maintain as confidential or secret
  • Licenses: agreements which allow one party to use intellectual property which belongs to another
  • A company’s brand: identifiable symbol, logo, color or name that a company uses to distinguish its product or services from competitors
  • NFTs: the fastest growing intangible assets – non-fungible tokens grant a right or license of use to an intangible good
  • Franchises: a special kind of license which allows one party to access another company’s brand without owning the brand, subject to the contract
  • Goodwill: the value above and beyond a target company’s assets that another company would pay to acquire the target company

Contracts Protect Assets

The key point to understand as a business owner is that different types of intangible assets can be protected and monetized through different types of registrations and contracts. It is not enough to merely register your intangible assets the correct way. You also must ensure all your contracts are written to continue and leverage that protection.

For example, the owner of the copyright to a song could grant a license to receive a royalty payment each time the song is played. Likewise, the developer of a software app could grant a license per user of the app.

On the other hand, customer lists and marketing strategies need to be protected via confidentiality agreements and non-solicitation agreements so that employees don’t walk away with them.  

Routine Clauses Get The Job Done

When reviewing a contract, it is important to look beyond the basic business terms at how the contract protects intangible assets, even when these clauses seem incidental to the core purpose of the contract. For example:

  • Vendor confidentiality: Protect yourself from competition by ensuring that your company’s pricing and terms are kept confidential
  • Use of company’s name or logo: Protect your brand by controlling how and under what circumstances another company can use your name or brand
  • Customer data share: Protect your customer data by clearly stating a vendor’s rights to the data, including who owns the data and who is responsible if a data breach occurs

These are just some examples of how to protect your company’s intangible assets through routine business contracts. 

As wholistic business attorneys, we help our clients protect their intangible assets through strong internal contracting procedures as well as proper registration. Let us know how we can help.

Natasha M. Nazareth, Esq.
Ginny Cascio Bonifacino, Esq.