TRADE SECRET RISK MANAGEMENT IN 2023
R&C: How would you characterise the rising importance of trade secrets to company value?
Guzman: In today’s digital and artificial intelligence (AI) economy, up to 90 percent of the value of the S&P 500 is in intangible assets. Though not all intangible assets are trade secrets, trillions of dollars of that value may qualify as such. Trade secrets can be the most valuable asset or combinations of assets a company has, as many intangible assets in today’s economy are either not patentable from a practical or legal standpoint, or are better left ‘secret’. For earlier stage companies that are banking on a critical innovation to get them funding or a buyer, they can be the main driver of that value. Although these assets are, in the US, lumped into ‘goodwill’, having them valued by an independent third party can increase the value of a company overnight. In an economy run on software code, designs, formulas, business processes, algorithms and AI, it is easy to see that the value of these assets is critical.
O’Connor: Trade secrets and proprietary information are a vital component of an organisation’s value in today’s business and technology landscape. Trade secrets can provide a significant competitive advantage by offering exclusive knowledge, techniques, processes or formulas that are not readily available to competitors. Organisations can leverage trade secrets to differentiate their products or services, enhance operational efficiency and gain market leadership. Additionally, trade secrets often result from extensive R&D efforts. Organisations invest resources into creating and refining trade secrets and proprietary information that gives an edge in the market. Finally, as organisations operate in global markets, concerns regarding trade secret and proprietary information theft and misappropriation have increased. Protecting trade secrets from foreign governments and industries has become crucial to safeguard.
Jul-Sep 2023 Issue
Crown Jewel Insurance
Fortalice Solutions LLC
Saul Ewing LLP