Many years ago, a man I met at a party asked me what kind of law I practiced. I told him I was an “intellectual property attorney,” adding, after a brief hesitation, “you know: patents, trademarks, copyrights, trade secrets and know-how.” He gave his cocktail a few swirls in his glass while swirling my response in his head. Then he said, “Do you get much call for that type of practice around here?”

The connection between the needs of a businesses and “intellectual property law” is tenuous for many. And, unfortunately, I made it worse by referring to my little list of intellectual property law areas of practice: patents, trademarks, copyrights, trade secrets and know-how. These terms are familiar, even if not well understood, but their connection with everyday business is remote, yet, studies show that 80% of the value of a typical business is intellectual property. For many business people, this fact seems to be at the very least an exaggeration.

If I use a different list, however, understanding of – and appreciation for – the connection between intellectual property and business success soars. My old list is simply wrong; the elements of that list are not types of intellectual property but, for the most part, references to bodies of law for those types, and they are in the wrong order. For example, “patents” is not a name for a type of intellectual property; it is the name of for the documents the government gives you for a certain type of ideas. This is also true of word “trademarks,” “copyrights” and “trade secrets,” but not true of the word “know-how.” Know-how is a form of intellectual property.  

If I focus on types of intellectual property, I can combine patents and tradesecrets by pointing out that they are two different ways of protecting innovation. Copyrights protect a type of intellectual property technically called works of authorship but I will use the term “message.” Trademarks are for protecting the integrity of the reputation of products and services.

So my new list, reordered, is know-how, message, innovation, and reputation.

What company can succeed without knowhow, message, innovation and reputation? Indeed, CEOs would do well to think about their job as one of increasing the quality and quantity of each of these in order to increase the value of the company for their shareholders and employees.  

I have moved know-how from last to first because it is essential. Furthermore, it is easily the type of intellectual property that is in greatest abundance. Most importantly, in the context of a business, the collective know-how of an assembled and trained work force is huge. In the movie “Miracle on Ice,” about the 1980 US Olympic hockey team’s upset win over the Soviet team, the coach of the US team pushes back against those who want to help him select the best hockey players by saying, “I don’t want the best players, I want the best team.” He understood that there was a difference between a skilled team and a group of skilled players. That difference in his case was victory. A classic example of knowhow and teamwork is Apple Computer. Note that Apple Computer’s fortunes began an upward juggernaut from iMac (1998), iPod (2004), iPhone (2007), to iPad (2010) beginning when Steve Jobs returned to lead Apple in 1996. That did not falter even when Jobs took a medical leave of absence in 2009: he had built a team that could carry on without him.

Message is the second type of intellectual property. How something is communicated is as important as what is communicated. Music and entertainment are found everywhere but the US entertainment industry is second only to the US aerospace industry in the value of its exports to the rest of the world, and could very well be the leading export industry if it weren’t so easy to pirate CDs and DVDs. J K Rowling, author of the Harry Potter series, is the first person to become a billionaire from writing books and went from being on welfare in the mid 1990’s to a woman of incredible wealth within ten years based on widely-appealing story of Harry Potter.

And across the internet, content is king and information is the currency of the Information Age. Content builds traffic and traffic generates sales of products, services and advertising. Google not only increased its market capitalization to $177 billion dollars since it started in 1998 but look what it has done for productivity of all businesses that need information. Moreover, it naturally exerts the pressure of competition on online sources of information for better quality information. Businesses must communicate with their customers and employees; the message in that communication must not only deliver information but shape these relationships.  

Innovation is the third type of intellectual property. A company with ideas stands apart from its competitors, and creates value for itself and its shareholders. Innovation drives progress and makes products and services better, safer, more reliable, more fun, more interesting, more convenient, and more affordable. In short, innovation improves the quality of our lives. Innovation can be found everywhere but particularly by a business that has significant knowhow and a clear message.  

Finally, reputation is what a company ultimately strives to build, that widespread belief by the public at large that its products and services are what people really want, that those products and services have the combination of quality, price, features, and terms that best meet customers’ needs. Reputation reduces consumer search costs and consumers will in turn pay a premium price for that savings. The products of a company with a great reputation can become a status symbol, like BMW, and help it overcome adversity, like TYLENOL. Importantly, reputation is the most scalable of any business asset when the business is ready to expand to new markets.

Know-how, message, innovation and reputation: these are the intellectual properties. They comprise the bulk of the value of a business rather than buildings, desks, file cabinets and machinery – that is clear. The fact that reputation may be embodied in trademarks, which can be registered, or that the message may be protected with copyrights, or innovations can be patented or kept as trade secrets only heightens the value assigned to the underlying intellectual property. Know-how can also be protected and grown by careful hiring, sound employee management practices, training and cross-training, mentoring, succession planning and documenting procedures.  

Think about your business, be it for-profit or not, large or small; think about just yourself as a business. Is there more know-how your business needs? Does your message get to your customers? Are you innovating? What is your reputation? How valuable is your business?