What Is Intellectual Property, and What Are Some Types? (2023)

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.

(Video) Understanding The 4 Types Of Intellectual Property

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
IPProtectionDuration (in the U.S)
PatentsInventions, industrial designs, computer code20 years
TrademarksUnique identifiers for a business or its products or services (e.g., logos, brand names)As long as the trademarked material remains active
CopyrightsWorks of authorship, including books, poems, films, music, photographs, online content70 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.

(Video) What is Intellectual Property, IP, IPR, it's types and benefits - Trademarks, patents, Copyrights

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.

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.

(Video) Understanding Intellectual Property (IP)

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

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.

(Video) Introduction to IP: Crash Course Intellectual Property #1

FAQs

What are the intellectual property types? ›

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 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 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 are the 5 types of intellectual property? ›

In this post, we will explain the basics of the most common types of intellectual property — copyrights, moral rights, trademarks, patents, and trade secrets.

What is 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 defines intellectual property? ›

Intellectual property (IP) refers to creations of the mind: inventions; literary and artistic works; and symbols, images, names and logos used in commerce. Businesses are often unaware that their business assets include IP rights.

What are the 3 main types of intellectual property? ›

Types of intellectual property rights

patents. trade marks. copyright.

What are the 4 keys of intellectual property rights? ›

The key forms of intellectual property protection are patents, copyrights, trademarks and trade secrets.

What are the two types of intellectual property? ›

Intellectual property has two categories: industrial property and copyright and neighboring rights.

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 types of intellectual property PDF? ›

intellectual Property right includes in Patent, Trademark, Trades crates, Industrial design, Layout design and Copyright oriented rights.

What is another word for intellectual property? ›

synonyms for intellectual property
  • IP.
  • copyright.
  • patent.
  • trade secret.
  • trademark.

What is intellectual property law and what is the main purpose of it? ›

It shall protect and secure the exclusive rights of scientists, inventors, artists and other gifted citizens to their intellectual property and creations, particularly when beneficial to the people, for such periods as provided in this Act.

What is the importance of intellectual property? ›

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.

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.

What is intellectual property and how is it protected? ›

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.

Where is intellectual property used? ›

Intellectual property can be used for various reasons, such as branding and marketing, as well as to protect assets that give a competitive advantage.

Is copyright intellectual property? ›

Copyright is a type of intellectual property that protects original works of authorship as soon as an author fixes the work in a tangible form of expression.

Who owns intellectual property? ›

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.

What is not intellectual property? ›

Works that are in the public domain are not protected by any intellectual property (IP) rights, because they are not eligible or because those rights have expired or been forfeited by the creator, either deliberately or through carelessness. Anyone is free to use public domain material.

What are the 3 ways to protect your intellectual property? ›

Copyright, trademark, and patent are three of the most common types of IP protection. These grant you the exclusive rights to your creations, especially when it comes to the commercial gains of its use.

What are the four 4 types of intellectual property in the ICT industry? ›

Types of IP rights
  • Patents - protect inventions and new processes.
  • Trade marks - protect logos, words and other branding.
  • Copyright - protects art, writing, music, film, and computer programs.
  • Registered designs - protects the visual design of a product.
19 Jul 2021

What are 3 examples of works that can be protected by copyright? ›

What are some examples of copyright works?
  • A novel.
  • A poem.
  • A photograph.
  • A movie.
  • Lyrics to a song.
  • A musical composition in the form of sheet music.
  • A sound recording.
  • A painting.

What is example of intellectual property? ›

Patents. Patents are granted for new, useful inventions, and they will give you the right to prevent others from making, using, or selling your invention. Examples: Utility patents: for tangible inventions, such as products, machines, devices, and composite materials, as well as new and useful processes.

What are the 3 elements of patents? ›

Patent applications must satisfy the following three criteria:
  • Novelty. This means that your invention must not have been made public – not even by yourself – before the date of the application.
  • Inventive step. This means that your product or process must be an inventive solution. ...
  • Industrial applicability.

What is the patent? ›

A patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application.

What are the main types of patents? ›

There are mainly three patent types – utility patents, design patents, and plant patents. Each type of patents has own specific eligibility criteria and protects a particular type of invention idea. In addition to this, it is possible for a particular filed of invention idea to have more than one patent.

What are the four 4 types of intellectual property in the ICT industry? ›

Types of IP rights
  • Patents - protect inventions and new processes.
  • Trade marks - protect logos, words and other branding.
  • Copyright - protects art, writing, music, film, and computer programs.
  • Registered designs - protects the visual design of a product.
19 Jul 2021

What are the 4 property rights? ›

The Bottom Line

As a property owner, you get the rights of possession, control, exclusion, enjoyment, and disposition once you close on the property.

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 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 are the 4 types of intellectual property PDF? ›

The four main types of intellectual property are patents, trademarks, copyrights, and trade secrets.

What are the 3 ways of protecting intellectual property? ›

There are only three ways to protect intellectual property in the United States: through the use patents, trademarks or copyrights. A patent applies to a specific product design; a trademark to a name, phrase or symbol; and a copyright to a written document.

What are the 3 property rights? ›

An efficient structure of property rights is said to have three characteristics: exclusivity (all the costs and benefits from owning a resource should accrue to the owner), transferability (all property rights should be transferable from one owner to another in a voluntary exchange) and enforceability (property rights ...

What is property rights law? ›

Property rights define the theoretical and legal ownership of resources and how they can be used. These resources can be both tangible or intangible and can be owned by individuals, businesses, and governments.

What are three examples of property rights? ›

Property rights provide individuals with protection from expropriation, the right to buy and sell the thing that is owned at a time of their own choosing, an asset that can be used to secure loans, the right to enjoy and enhance the benefits of that which is owned and the ability to exclude others from sharing those ...

What is another word for intellectual property? ›

synonyms for intellectual property
  • IP.
  • copyright.
  • patent.
  • trade secret.
  • trademark.

Why is intellectual property important? ›

Whether you're a start-up or a family business that's been trading for generations, recognising and protecting your intellectual property (IP) is critical to growth, protecting what's yours and maintaining a good reputation. IP is about protecting the time, money and effort you put into your business.

Who owns intellectual property? ›

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.

What is intellectual property law and what is the main purpose of it? ›

It shall protect and secure the exclusive rights of scientists, inventors, artists and other gifted citizens to their intellectual property and creations, particularly when beneficial to the people, for such periods as provided in this Act.

What is not a type of intellectual property? ›

These are the creations of human intellect such as ideas and concepts which are legally protected. 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.

Videos

1. Intellectual property|Intellectual property Rights|Types of Intellectual property
(Easy Tricks)
2. IP BASICS: What is Intellectual Property?
(Intellectual Property Office UK)
3. The 4 types of Intellectual Property
(BRASS)
4. Intellectual Property - Types
(VRR Academy)
5. What is Intellectual Property? | What are different Intellectual Property Rights? | IP Guru
(IP Guru )
6. Four Types of Intellectual Property: patents, trademarks, copyrights & trade secrets
(OC Patent Lawyer)
Top Articles
Latest Posts
Article information

Author: Rubie Ullrich

Last Updated: 03/15/2023

Views: 5708

Rating: 4.1 / 5 (72 voted)

Reviews: 87% of readers found this page helpful

Author information

Name: Rubie Ullrich

Birthday: 1998-02-02

Address: 743 Stoltenberg Center, Genovevaville, NJ 59925-3119

Phone: +2202978377583

Job: Administration Engineer

Hobby: Surfing, Sailing, Listening to music, Web surfing, Kitesurfing, Geocaching, Backpacking

Introduction: My name is Rubie Ullrich, I am a enthusiastic, perfect, tender, vivacious, talented, famous, delightful person who loves writing and wants to share my knowledge and understanding with you.