The Trump Blog

Is your company protecting its most valuable asset - its intellectual property?

Does your enterprise have intellectual property? You might not think so, but it probably does. Intellectual property is made up of copyrights (books, software or music), patents (inventions) and trademarks (symbols or logos).

Why does intellectual property deserve special protection? Let me tell you a story that illustrates the point.

Suppose someone walks into a small one-room office of a company that has no apparent assets: no vehicles, minimal office equipment, small inventory and so forth. Let’s also say that individual slips and falls when heading out the door. Chances are that if that person isn’t actually hurt, he or she will probably just get up and leave. How much is there to gain by suing a company with a simple one-room office and no assets?

But suppose that the business is one that just happens to hold the publishing rights to the entire catalog of the Beatles. Do you think that slip-and-fall victim will wake up tomorrow with a serious injury? Chances are he’ll try to get his hands on those publishing rights with “a little help from his friends” - in this case, lawyers.

Now that you realize what a huge asset intellectual property can be, how do you protect it?

If your company is in the business of selling a form of intellectual property, such as a copyrighted book or software program you’ve written or developed, that property should be owned by a separate holding LLC that can then enter into a nonexclusive licensing agreement with your primary company, granting it the right to publish and sell the book or software program.

Suppose that accident-prone person then decides to sue your primary company and get all of its assets. Would he or she obtain ownership rights over your book or software program? No! All the judgment creditor would stand to receive would be the right to publish and sell your product - and you can easily have a termination clause in the licensing agreement that would terminate the agreement in the event that the primary company lost all of its assets.

The key is to apply the strategy of isolation and insulation, in which you isolate individual assets into separate legal entities to insulate them from the liability associated with any other entity.

It is a terrific strategy that can be applied to real estate and in many other areas of your life. To learn more about using it to protect your assets, I’d encourage you to read my new book Trump University Asset Protection 101, the latest in the bestselling series of Trump University 101 books.

To protect the assets you have worked so hard to build, you need all the defenses you can get.