One of the more difficult concepts to get across in the discussions on intangibles concerns the breath of the asset class. What comes to mind most often and most easily is intellectual property -- that catch-all phrase we use for patents, copyrights, trademarks and trade secrets. Yet, the list of intangible assets is much, much longer. At one point, the AICPA (American Institute for Certified Public Accountants) listed about 90 specific types of intangible assets -- ranging from "Airport gates and slots" to "Use rights (air, water, and land)" with everything in between (like employment contracts, FCC licensees, Laboratory notebook, Subscription list and Training Manuals). The Financial Accounting Standards Board--SFAS 141 lists the following:
a. Marketing-related intangible assets
(1) Trademarks, tradenames
(2) Service marks, collective marks, certification marks
(3) Trade dress (unique color, shape, or package design)
(4) Newspaper mastheads
(5) Internet domain names
(6) Noncompetition agreements.
b. Customer-related intangible assets
(1) Customer lists
(2) Order or production backlog
(3) Customer contracts and related customer relationships
(4) Noncontractual customer relationships.
c. Artistic-related intangible assets
(1) Plays, operas, ballets
(2) Books, magazines, newspapers, other literary works
(3) Musical works such as compositions, song lyrics, advertising jingles
(4) Pictures, photographs
(5) Video and audiovisual material, including motion pictures, music videos, television programs.
d. Contract-based intangible assets
(1) Licensing, royalty, standstill agreements
(2) Advertising, construction, management, service or supply contracts
(3) Lease agreements
(4) Construction permits
(5) Franchise agreements
(6) Operating and broadcast rights
(7) Use rights such as drilling, water, air, mineral, timber cutting, and route authorities
(8) Servicing contracts such as mortgage servicing contracts
(9) Employment contracts.
e. Technology-based intangible assets
(1) Patented technology
(2) Computer software and mask works
(3) Unpatented technology
(4) Databases, including title plants
(5) Trade secrets, such as secret formulas, processes, recipes.
All of these are assets which can make money for their "owners". Therein is often times the catch: who is the "owner"? Multimillion dollar decisions hang in the answer, as we have seen from patent battles over ownership. But the same battles hold true with respect to the rest of the asset class. And public policy often determines the answer.
Take for example, the issue of your medical data. Who owns that data -- you or the health providers who collected that data? This question is at the core of a fight buried in the middle of the stimulus package over medical data privacy. As story in today's Washington Post (Lobbying War Ensues Over Digital Health Data) points out:
At the heart of the debate is how to strike a balance between protecting patient privacy and expanding the health industry's access to vast and growing databases of information on the health status and medical care of every American. Insurers and providers say the House's proposed protections would hobble efforts to improve the quality and efficiency of health care, but privacy advocates fear that the industry would use the personal data to discriminate against patients in employment and health care as well as to market the information, often through third parties, to generate profits.
Those profits, made by selling patient data, can be large. And they constitute an intangible asset. How that asset is treated should be a consideration in the debate.
There are a number of issues all jumbled up in the debate, including whether sold data would be used to discriminate and whether the data can be used to send marketing and our promotional materials. Right now, the emphasis in the debate seems to be on the right of the collector to collect and sell that data versus the patient's privacy rights. The health care industry argues that excessive privacy restrictions would drive up administrative costs. Privacy advocates argue that the industry simply wants to protect its profit stream.
What seem to be missing in the discussion of managing this asset, however, are two things. First, this is not the only information asset collected from individuals. There are policies in place for a number of areas. For example, how do the proposed privacy restrictions compare with other data privacy restrictions, such as credit and other financial information? Surely we can learn from those areas as to how sensitive information is handled.
Second, the discussion does not address the point that the value of the data is tied to its use. The value of anonymous medical data for research purposes is incalculable. It seems to me that such data with appropriate anonymity safeguards should be available - with no patient opt-out provision (just like Census data or data provided to financial regulators). Such data could be sold and manipulated as a private information service.
Data that is used for improved customer services, such as flagging drug interaction problems, is also valuable. Here, a strict usage provision might be in order, i.e. can not be shared with outside providers without permission. And an opt-out provision might be in order.
Data that is used for marketing purposes has a diminished value. Such marketing information, even if targeted to a specific audience based on their medical conditions, runs the risk of becoming just that much more junk mail. That is not to say that what we call junk mail doesn't have some value to marketer. But its value is not as great as in other uses. For such uses, an opt-in provision is probably most appropriate.
It seems to me that both sides would benefit from strong protection of the data - with the protection tied to the value. By looking at the use and value of the data as an intangible asset, a more nuanced and appropriate level of protection could be crafted.