What Is Intellectual Property?
Intellectual property is a broad categorical description for the set of intangible assets owned and legally protected by a company or individual from outside use or implementation without consent. An intangible asset is a non-physical asset that a company or person owns.
The concept of intellectual property relates to the fact that certain products of human intellect should be afforded the same protective rights that apply to physical property, which are called tangible assets. Most developed economies have legal measures in place to protect both forms of property.
Key Takeaways
- Intellectual property is an umbrella term for a set of intangible assets or assets that are not physical in nature.
- Intellectual property is owned and legally protected by a person or company from outside use or implementation without consent.
- Intellectual property can consist of many types of assets, including trademarks, patents, and copyrights.
- Intellectual property infringement occurs when a third party engages in the unauthorized use of the asset.
- Legal protections for most intellectual property expire after some time; however, for some (e.g., trademarks), they last forever.
Understanding Intellectual Property
Companies are diligent when it comes to identifying and protecting intellectual property because it holds such high value in today's increasingly knowledge-based economy. Also, producing value intellectual property requires heavy investments in brainpower and time of skilled labor. This translates into heavy investments by organizations and individuals that should not be accessed with no rights by others.
Extracting value from intellectual property and preventing others from deriving value from it is an important responsibility for any company. Intellectual property can take many forms. Although it's an intangible asset, intellectual property can be far more valuable than a company's physical assets. Intellectual property can represent a competitive advantage and as a result, is fiercely guarded and protected by the companies that own the property.
Types of Intellectual Property
Intellectual property can consist of many types of intangibles, and some of the most common are listed below.
Patents
A patent is a property right for an investor that's typically granted by a government agency, such as the U.S. Patent and Trademark Office. The patent allows the inventor exclusive rights to the invention, which could be a design, process, an improvement, or physical invention such as a machine. Technology and software companies often have patents for their designs. For example, the patent for the personal computer wasfiled in 1980by Steve Jobs and three other colleagues at Apple Inc.
Copyrights
Copyrights provide authors and creators of original material the exclusive right to use, copy, or duplicate their material. Authors of books have their works copyrighted as do musical artists. A copyright also states that the original creators can grantanyone authorization through a licensing agreement to use the work.
Trademarks
A trademark is a symbol, phrase, or insignia that is recognizable and represents a product that legally separates it from other products. A trademark is exclusively assigned to a company, meaning the company owns the trademark so that no others may use or copy it. A trademark is often associated with a company's brand. For example, the logo and brand name of "Coca-Cola," is owned by the Coca-Cola Company (KO).
Franchises
A franchise is a license that a company, individual, or party–called the franchisee–purchases allowing them to use a company's–the franchisor–name, trademark, proprietary knowledge, and processes.
The franchisee is typically a small business owner or entrepreneur who operates thestore or franchise. The license allows the franchisee to sell a product or provide a service under the company's name. In return, the franchisor is paid a start-up fee and ongoinglicensing fees by the franchisee. Examples of companies that use the franchise business model includeUnited Parcel Service (UPS) and McDonald's Corporation (MCD).
Trade Secrets
A trade secret is a company's process or practice that is not public information, which provides an economic benefit or advantage to the company or holder of the trade secret. Trade secrets must be actively protected by the company and are typically the result of a company's research and development (which is why some employers require the signing of non-disclosure agreements, or NDAs).
Examples of trade secrets could be a design, pattern, recipe, formula, or proprietary process. Trade secrets are used to create a business model that differentiates the company's offerings to its customers by providing a competitive advantage.
Digital Assets
Digital assets are also increasingly recognized as IP. These would include proprietary software code or algorithms, and online digital content.
| Type of IP | ||
|---|---|---|
| IP | Protection | Duration (in the U.S) |
| Patents | Inventions, industrial designs, computer code | 20 years |
| Trademarks | Unique identifiers for a business or its products or services (e.g., logos, brand names) | As long as the trademarked material remains active |
| Copyrights | Works of authorship, including books, poems, films, music, photographs, online content | 70 years after the author dies |
Intellectual Property Infringement
Attached to intellectual property are certain rights, known as Intellectual Property Rights (IPR), that cannot be infringed upon by those without authorization to use them. IPRs give owners the ability to bar others from recreating, mimicking, and exploiting their work.
Patents infringement occurs when a legally-protected patent is used by another person or company without permission. Patents filed before June 8, 1995, are valid for 17 years, whereas patents filed after this date are valid for 20 years. After the expiration date, the details of the patent are made public.
Copyright violations occur when an unauthorized party recreates all or a portion of an original work, such as a work of art, music, or a novel. The duplicated content need not be an exact replica of the original to qualify as an infringement.
Similarly, trademark infringement occurs when an unauthorized party uses a licensed trademark or a mark resembling the licensed trademark. For example, a competitor might use a mark similar to its rival's to disrupt business and attract their customer base. Also, businesses in unrelated industries may use identical or similar marks in an effort to capitalize on other companies' strong brand images.
Trade secrets are often protected by non-disclosure agreements (NDA). When a party to the agreement discloses all or parts of a trade secret to uninterested parties, they have violated the agreement and infringed upon the trade secret. It is possible to be guilty of trade secret infringement when an NDA is not present.
Penalties for intellectual property infringement range from fines to prison sentences.
Tips to Avoid IP Infringement
Many times, infringement is done unwittingly. To avoid being sued for infringement on intellectual property, make sure that your business is not using copyrighted or trademarked material, and be sure your brand or logo is not too similar to that of others that it could reasonably mislead somebody to think it was the other brand. Also, do a patent search to ensure that any ideas are your own, and if not that you are able to license them through the proper channels. There are IP lawyers that specialize in this process to make sure that you are not using anybody else's protected IP.
If you hire somebody to do creative work for you or your company, make sure the contract explicitly states that any creative works generated would become the property of the company and not the person you hired.
Special Considerations
Many forms of intellectual property cannot be listed on the balance sheet as assets since there aren't specific accounting principles to value each asset. However, the value of the property tends to be reflected in the price of the stock since market participants are aware of the existence of the intellectual property.
Some intangible assets are recorded as property, such as patents because they have an expiration date. These assets are recognized by a numerical value through the process of amortization. Amortization is an accounting method that decreases the value of anintangible assetover a set period of time.This process helps the company to reduce its income by expensing a set amount each year for tax purposes as the useful life of the intangible asset winds down.
For example, a patent might only have 20 years before it's registered as public domain. A company would assign a total value to the patent. Each year for 20 years, the patent would be expensed or amortized by the same amount by dividing the total value by 20 years. Each year the amortized asset amount would reduce the company's net income or profit for tax purposes. However, intellectual property that is considered to have a perpetual life, such as a trademark, is not amortized since it doesn't expire.
Real-World Example
In 2017, there was a widely publicized intellectual property case in which a company called Waymo sued Uber over alleged stealing and implementation of technology relating to Waymo's self-driving car program. The plans for the technology, although not yet completely viable, constituted significant intellectual property for Waymo. When they alleged that Uber had obtained their intellectual property, they were able to take action through the court system to attempt to keep Uber from utilizing the information to enhance their own self-driving car program.
What Are the 4 Main Types of Intellectual Property?
The four main types of intellectual property are patents, trademarks, copyrights, and trade secrets.
Who Owns Intellectual Property?
Generally, the creator of a work is deemed its owner. However, intellectual property ownership can be determined differently for different types of property and under varying circumstances. For example, if work is created for an employer, the employer is the owner of that intellectual property. Also, ownership rights can also be transferred to other parties.
What Is Intellectual Property Used for?
Intellectual property can be used for various reasons, such as branding and marketing, as well as to protect assets that give a competitive advantage.
Article Sources
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United States Patent and Trademark Office. "Patent Basics."
Google Patents. "USDD268584 United States"
Copyright.gov. "What Is Copyright?"
United States Patent and Trademark Office. "What Is a Trademark?"
(Video) Intellectual PropertyInternational Trade Administration. "How Long Does Patent, Trademark or Copyright Protection Last?"
Dennemeyer. "What Is Intellectual Property 'Theft' and How to Avoid It?"
LegalMatch. "Patent Duration."
FAQs
What is intellectual property and what are some types of intellectual property? ›
Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.
What is are the type types of intellectual property? ›The four main types of intellectual property are patents, trademarks, copyrights, and trade secrets.
What are the 4 types of intellectual property explain and give examples? ›There are four main types of intellectual property rights, including patents, trademarks, copyrights, and trade secrets. Owners of intellectual property frequently use more than one of these types of intellectual property law to protect the same intangible assets.
What is intellectual property * your answer? ›Intellectual property refers to creations of the mind. It can be an invention (patent / utility model), a design (industrial design), a brand name (trademark, or a literary and artistic work (copyright).
What are the 7 types of intellectual property? ›Intellectual property rights include patents, copyright, industrial design rights, trademarks, plant variety rights, trade dress, geographical indications, and in some jurisdictions trade secrets.
What is the most important type of intellectual property? ›Patent. A patent is used to prevent an invention from being created, sold, or used by another party without permission. Patents are the most common type of intellectual property rights that come to people's minds when they think of intellectual property rights protection.
What are the 4 main types of intellectual property? ›Patents, trademarks, copyrights, and trade secrets are valuable assets of the company and understanding how they work and how they are created is critical to knowing how to protect them.
What is intellectual property and its importance? ›IP ensures you are recognised as the creator of such things as an invention; literary and artistic works; designs and software. To protect these types of IP there are: registrable rights - IP Rights (IPRs) such as patents, trademarks and design rights; and. unregistered rights such as copyright.
What is an intellectual property right? ›Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.
What is intellectual property rights PDF? › Intellectual property rights (IPR) can be defined as the rights given to people over the. creation of their minds. They usually give the creator an exclusive right over the use of. his/her creations for a certain period of time.
What are the two kinds of intellectual property? ›
Intellectual property has two categories: industrial property and copyright and neighboring rights. Industrial property includes patents, trademarks and other marks, geographic indications, utility models, industrial designs, topographies of integrated circuits and trade secrets.
What is another word for intellectual property? ›- IP.
- copyright.
- patent.
- trade secret.
- trademark.
Generally speaking, the creator or originator of an idea, work, or novel invention is presumed to own the copyright to their creations. However, if the work was created as a part of a work-made-for-hire agreement, or in an employer-employee agreement, the copyright belongs to the employer.
Why is intellectual property important to business? ›It gives the owner of the property the opportunity to share their creations with limited competition and protects the company's competitive point of differentiation. Intellectual property rights can sometimes be an extremely valuable bargaining tool rights, and it can be sold for financial gain.
Which is not a type of intellectual property? ›Certain examples of Intellectual property are patents, copyrights and trademark, and it does not include physical property of an intellectual. Hence the correct answer is D.
What are the 3 main types of intellectual property? ›Types of intellectual property rights
patents. trade marks. copyright.
There are three primary types of Intellectual Property: copyrights, trademarks, and patents. A copyright is a legal term that is used to describe a person's ownership rights to an original expression of creativity.
How do you protect intellectual property? ›- Register copyrights, trademarks, and patents. ...
- Register business, product or domain names. ...
- Create confidentiality, non-disclosure or licensing contracts for employees and partners. ...
- Implement security measures. ...
- Avoid joint ownership.
Copyrights, Patents, Trademarks, and Trade Secrets – Four Types of Intellectual Properties.
What are the different types of intellectual property risk? ›...
What Is Intellectual Property?
- Copyright pirates.
- Patent flouters.
- Brand impersonators.
- Trade secret thieves.
What are the roles of intellectual property? ›
IPR provide certain exclusive rights to the inventors or creators of that property, in order to enable them to reap commercial benefits from their creative efforts or reputation. There are several types of intellectual property protection like patent, copyright, trademark, etc.
What are the benefits of intellectual property rights? ›- Enabling indirect revenues. ...
- Promotion of culture. ...
- Dissemination of technical information. ...
- Facilitating technology transfer. ...
- 'Open source' relies on IPR. ...
- Collateral to obtain financing. ...
- Providing guarantees regarding the quality and safety of products.
For many businesses, intellectual property protects more than just an idea or a concept – it protects genuine business assets that may be integral to the core services of the business and overall long-term viability.
What is intellectual property essay? ›Intellectual Property Rights Essay
Means that the works must independently develop by the authors, the creativity must be involved in the creation. Article 5(2) of the Berne Convention explicitly states that the enjoyment and the exercise of copyright shall not be subject to any formality.
Intellectual property – intangible assets such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs.
Which act is intellectual property law? ›Intellectual properties rights in India is governed under the following Acts: Trade Marks Act, 1999. The Patents Act, 1970 (amended in 2005) The Copyright Act, 1957.
What is the history of intellectual property rights? ›The earliest records relating to Intellectual Property dates back to the 6th century BCE, from Sybaris in Ancient Greece. It supposedly granted a yearlong exclusivity for bakers to make their culinary invention. In a manner of speaking, the rise of Intellectual Property originated from the rising of bread.
What is intellectual property and its importance PDF? ›The intellectual property rights (IPR) are intangible in nature and gives exclusive rights to inventor or creator for their valuable invention or creation. In present scenario of globalization, IPR is the focal point in global trade practices and livelihood across the world.
What is intellectual ownership? ›You own intellectual property if you: created it (and it meets the requirements for copyright, a patent or a design) bought intellectual property rights from the creator or a previous owner. have a brand that could be a trade mark, for example, a well-known product name.
What is another name for an IP address? ›| address | URL |
|---|---|
| addy | website |
| web address |
What is another word for copyright? ›
| intellectual property | IP |
|---|---|
| patent | trademark |
| trade secret |
The US patents database is available online. Visit USPTO's homepage, and under the left-hand column called “Patents,” click on “Search.” For a more detailed search, consider using the Patent Application Information Retrieval (PAIR) database.
Can intellectual property be shared? ›In Intellectual property law, all types of protected subject matter can be owned jointly.
How do you value intellectual property? ›Valuing Intellectual Property—Methodology
There are three methods of valuing intellectual property: cost-based, market–based, and income-based valuations. Cost-based valuation takes into consideration both how much it cost to create the asset historically and how much it would cost to recreate it given current rates.
- Identify what IP rights may exist.
- Subsistence of IP rights.
- (i) Trade Marks.
- (ii) Patents.
- (iii) Registered Designs.
- (iv) Copyright.
- The process of IP protection.
- Protecting copyright and unregistered designs.
Intellectual property, or IP as it is commonly referred to, consists of all the pieces of your business that you or your employees have thought of. It's the things that differentiate you from the competition that you came up with using your intellect – your brain.
What are the 4 types of intellectual property? ›Patents, trademarks, copyrights, and trade secrets are valuable assets of the company and understanding how they work and how they are created is critical to knowing how to protect them.
What are some examples of intellectual property? ›Utility patents: for tangible inventions, such as products, machines, devices, and composite materials, as well as new and useful processes. Design patents: the ornamental designs on manufactured products. Plant patents: new varieties of plants.
What is an intellectual property right? ›Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.
What is intellectual property in computer? ›What Is Software IP? Software intellectual property, also known as software IP, is a computer code or program that is protected by law against copying, theft, or other use that is not permitted by the owner. Software IP belongs to the company that either created or purchased the rights to that code or software.
What is intellectual property and its importance? ›
IP ensures you are recognised as the creator of such things as an invention; literary and artistic works; designs and software. To protect these types of IP there are: registrable rights - IP Rights (IPRs) such as patents, trademarks and design rights; and. unregistered rights such as copyright.
What is intellectual property rights PDF? › Intellectual property rights (IPR) can be defined as the rights given to people over the. creation of their minds. They usually give the creator an exclusive right over the use of. his/her creations for a certain period of time.
What are the two kinds of intellectual property? ›Intellectual property has two categories: industrial property and copyright and neighboring rights. Industrial property includes patents, trademarks and other marks, geographic indications, utility models, industrial designs, topographies of integrated circuits and trade secrets.
What is another word for intellectual property? ›- IP.
- copyright.
- patent.
- trade secret.
- trademark.
Generally speaking, the creator or originator of an idea, work, or novel invention is presumed to own the copyright to their creations. However, if the work was created as a part of a work-made-for-hire agreement, or in an employer-employee agreement, the copyright belongs to the employer.
Why is intellectual property important to business? ›It gives the owner of the property the opportunity to share their creations with limited competition and protects the company's competitive point of differentiation. Intellectual property rights can sometimes be an extremely valuable bargaining tool rights, and it can be sold for financial gain.
What is intellectual property essay? ›Intellectual Property Rights Essay
Means that the works must independently develop by the authors, the creativity must be involved in the creation. Article 5(2) of the Berne Convention explicitly states that the enjoyment and the exercise of copyright shall not be subject to any formality.
Inventors, designers, developers and authors can protect the ideas they have developed, for instance by means of copyright or patents. The aim is to prevent others from wrongly profiting from their creations or inventions. It also gives them an opportunity to earn back the money they invested in developing a product.
What is intellectual property Wikipedia? ›Intellectual property – intangible assets such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs.
What are three forms of intellectual property? ›Intellectual Property can be easily understood as creations of the mind. There are three primary types of Intellectual Property: copyrights, trademarks, and patents. A copyright is a legal term that is used to describe a person's ownership rights to an original expression of creativity.
Why is it important to protect intellectual property rights? ›
Why is IPR Important? Intellectual property protection is critical to fostering innovation. Without protection of ideas, businesses and individuals would not reap the full benefits of their inventions and would focus less on research and development.