If you think you haven't invented anything, you probably have intellectual property you don't recognize. Do you have a formula, method, or information that gives you a competitive advantage? It can be a manufacturing process, a "secret sauce," or products in development. Trade secrets also include customer lists, business plans and "negative know-how" - things that you tried that led nowhere. If so, you have a trade secret.

Here are three important steps to make sure you protect your trade secret IP:

The first step is to prioritize your proprietary information and categorize the results (see our special report "How to Identify Your Hidden IP Assets). At a minimum, you should have a reasonable policy that requires all proprietary material as just that -- with a big CONFIDENTIAL stamp on the document itself. Once the material has been labeled as secret, the next step is simply to keep it confidential.

When the IP is a process or formula, some companies fragment the process so that no one employee knows it from beginning to end. KFC, for instance, separately mixes parts of its "11 herbs and spices" at two locations.

The second step is a company policy (in writing and given to every employee) that clearly explains why keeping information confidential is important to the company.

And third, make sure you have a procedure to verify that employees leaving your company do not take any confidential information. It's important to remind them of their obligation (and signed agreement) not to disclose any trade secrets to their new employer.

Trade secrets could be your company's most important and valuable assets. If you haven't done so, make sure you put in place procedures to protect its confidentiality.

Your first step is to find out whether the IP rights are available. You can wind up wasting a lot of time and money if you enter negotiations only to learn the rights are not available or licensed to someone else.

The next step is to do a quick search to verify that the IP is properly registered. For patents and trademarks, you can search any number of the public database such as the USPTO or Google Patents.

If the licensor has other licensees, you'll want to verify that there are no conflicts with the rights already granted to other licensees. If the rights are non-exclusive, you'll want to find out if there are other licensees with the same or competing products.

Depending on the type of IP, you will need to determine the strength of the IP. Does it stand out, or is it a short term fad? For example, movies can be very short term IP opportunities and may only have a short lifespan in the market.

It's also important to evaluate the IP owner's reputation or stability and how it's viewed in the marketplace. Are there any licensees whose actions have damaged the image of the IP? For example, sports figures and celebrities are often prone to problems from things they say or do which lessen their standing with the public.

The final step is to verify the commercial viability of the intellectual property. In some cases, such as a technology IP, this can be a substantial effort. An unknown or untested IP will take more time and resources to commercialize then one that is already in the market. Interest and demand by the consumer or buyers of the IP will determine the potential upside. One example of this is licensing well known brands which are less risky than up-and-coming brands.

One of the biggest mistakes in licensing is not doing due diligence before signing the licensing deal. Don't assume that a licensing agreement will take care of any problems that "pop-up". Nothing is more draining in both time and money than having to litigate your way out of a licensing agreement. A little research before signing an agreement will go a long way in making sure you form the right licensing partnership.

Yet most small and midsize businesses remain unaware of the economic value their intellectual property assets can have in today's marketplace. In this environment, IP is no longer just a means of protecting innovation. It's also a potent business asset that increases company valuation and net worth. IP assets are more highly valued than traditional tangible assets such as materials and inventory. 

Join me and Mitch Axelrod, co-founder of the IP Licensing Academy, on Tuesday, Sept. 10th at 2PM Pacific/5PM Eastern for an exciting discussion on how to use your IP to significantly multiply your business value. Discover why IP is your most important business asset, how licensing IP increases revenue and company value, and why IP is now a key component for buying or selling a business.

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