Read this post and you will learn to say “intellectual property” in three languages and you will look forward to the day when one language might suffice.  This post comments on terms relevant to commercialisation.

The first language comes from management consultants (others commonly using this language  are in IT and venture capital). They often say “intellectual capital” when referring to what lawyers prefer to call “intellectual property”.

The concept of intellectual capital, and increasing discussion of that concept in management literature (especially since the late 1980s), has given prominence to the role of processes and competencies in creating environments for creativity, invention, innovation, entrepreneurship, commercialisation and good management generally.

I cannot overstate how much I have gained from studying and defining the concept of intellectual capital. Surprisingly it seems few management consultants work with the concept. It is still not all that familiar despite being in common use in management literature since the early 1990s. The Wikipedia definition is here but I find it confused.

Two disciplines virtually ignore or shun the term. They certainly are unfamiliar with it but as I will note later there are other factors contributing to their blind spot. They are the disciplines of accounting and law. They stick with their preferred terms, respectively intellectual property in  the discipline of law and intangible assets in the discipline of accounting.

"markets"So now you can say intellectual property in three languages. But wait a moment, three terms or three languages used in three major professions to refer to roughly the same thing!  Surely there is redundancy? Indeed there is a problem.

Poor use of language and the consequent limits on communication impoverishes us all.

Before going to the next level, let’s confirm the basic lesson. In advising, speaking or writing about “intellectual property” (the legal concept) you can roughly refer to that term as:

  • “Intellectual Property” (IP) – that’s what lawyers call it;
    “Intellectual Capital” (IC) – that’s what management consultants call it; and
    “Intangible Assets” (IA) – that’s what accountants call it.

Certainly, there are conceptual differences between the terms. But there are also huge overlaps between the management concept of intellectual capital, the legal concept of “intellectual property” and the accounting concept of “intangible assets”. This overlap is reflected in the three terms being often used interchangeably in non-technical commentary by industry players and authors in popular and even academic papers and books.

There are differences between the concepts. Those differences are complex. In this lightbulb law blog post I want to focus on something else.  It is the serious point that language and terminology are important. They can join people, professions and knowledge areas or keep them separate. Out-of-date terms can pass on useless old stuff.

There is a long-standing need for synthesis in the language and frameworks used to define IP, IC and IA. The existence of the three terms hinders cross-disciplinary dialogue. It also robs clients of consultants, lawyers and accountants of insights and simplicity about what is really happening out there. Call it IP and people focus on law, call it IC and people think of the need for management processes and procedures, or call it IA and people reach for balance sheets. An integrated approach is better.

Rather than each profession pushing its own barrow, I believe there are ways to bring about greater integration and thereby make more money and create more value. I have spent about 15 years or so working on such integration albeit with emphasis on law. The work has produced clearer definitions for contracts and other documents and I have tested them with lawyers and non-lawyer alike. They produce better legal templates and documents for clients and advice of greater value generally. If this interests you I’d welcome comments to this post or your offline enquiries.

Inherited terminology and professional structures need to evolve to keep up with the times. For now the"silo" professional Tower of Babel rules with its three separate languages and structures associated with the concepts of IP, IC and IA. These inherited terms and structures perpetuate separate professional silos. Take the situation of lawyers as a case study of a silo in operation. Various factors keep lawyers in their silo using terms with which they are comfortable despite new learning outside of the law. The silo forces on lawyers include:

  • EDUCATION OF LAWYERS confined by the scope of university law course education which feeds new recruits into the silo;
  • RESTRICTED SELF-DEFINITIONS by lawyers of what lawyers do;
    REGULATION OF LAWYERS with dedicated Acts of parliament and also by their law societies (which act as an industry association, union and regulatory body); and
    INSURANCE FOR LAWYERS in which professional indemnity insurance policies cover “legal advice”; additional cover and costs apply for non-legal advice, eg management consultancy."lincoln_on_5_dollar_bill.jpg"

Similar silo confines exist for accountants, management consultants and other professions. Silos are useful, sometimes, not all the time. Unchecked they can maintain separate languages well past their respective used-by date.  I’m reminded here of a famous quote attributed to Abe Lincoln which appears in various versions:

  • “If you once forfeit the confidence of your fellow citizens, you can never regain their respect and esteem. You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.”

I rarely come across debate about the language anomaly confronting IP, IC and IA. When I do it mostly comes from those familiar with the term “intellectual capital”. I don’t see the anomaly of the IP, IC and IA distinctions reducing significantly soon. Meanwhile we each have to make the best of a bad situation with added complexity and cost for the regulation and management of legal, commercial and business affairs. There are solutions, but they involve working with, around or outside the silos.

Noric Dilanchian