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Superior feelings on the Internet.

The explosion of the dotcom bubble has stabilised the Internet arena for superior virtual companies.

The dotcom companies with a long-term future are now coming to the fore, it believes.

Indeed, they are the ones that have protected their intangible assets like intellectual property, says Birmingham law firm Eversheds.

Mr Philip Atkinson, IP partner at Eversheds' Birmingham office, said: 'Wise investors will continue to be attracted by the enormous potential offered by dotcoms but should put intellectual property at the centre of new strategies for identifying the good ones which will continue to thrive.

'Investors must conduct an intellectual property healthcheck covering all areas of the business.

'This must involve identifying the relevant intangible assets relating to the business and then 'firming' them up.'

Important intangible assets for dotcoms include domain names, underlying software and the innovative new business methods that have characterised the Internet boom.

Companies should create a trademark as well as a domain name since trademarks are far easier to protect in the market place.

Software copyright issues, says Eversheds, must be clarified.

The international nature of the Internet means that companies should look at the potential for protection in other markets, for example, business methods can be patented in the US.

Changes in European legislation and practice may make this protection possible in the UK in the near future.

Although goodwill has long been accepted as an asset, brand value, which is much more tangible than goodwill, is still not accepted in the same way, says the firm. However, using the right communication programme will build the brand and, therefore, strengthen the goodwill.

Companies can also use intellectual property rights as a powerful tool for strengthening their market position since others can effectively be delayed from entering their sector.

In this context, dotcoms with a unique or easy-to-copy offering must consider mechanisms for preventing other companies from diluting their market share.

However, if there is nothing they can do, then these companies are probably over-valued and also extremely vulnerable.

Mr Atkinson said: 'Having completed the healthcheck, investors must make sure that the dotcoms have a process in place that supports the on-going management of intellectual property.

'Intangible assets are, by their very nature, volatile and need careful management to protect and enhance their value over time.

Companies with high intangible values and low tangible values must be certain that they are making the most of all the options for protection in line with legislation changes.
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Publication:The Birmingham Post (England)
Date:Jul 28, 2000
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