Intellectual Property

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21 Aug, 2024

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Intellectual property (IP) is an intangible asset of a business that is difficult to be identified by physical parameters but by its unique characteristics. They represent the creations of the mind and include works of artistic nature, inventions, designs, signs, trademarks, and computer programs.

IP plays a major role in both cultural and economic aspects of life. Most importantly, it helps distinguish one business from another by protecting what is unique about them. These assets have immense value. Moreover, it aims to balance the rights and interests of various groups, including creators and consumers, businesses and their rivals, and high- and low-income countries.

What is intellectual property?

Intellectual property is an asset that is a creation of the mind. It includes inventions, works of literary and artistic nature, designs, symbols, names, and images used in trade. They are valuable and are offered the law's protection.
It is an intangible asset of businesses that cannot be easily identified by physical parameters but by its unique characteristics. They include patents, copyrights, trademarks, industrial design, geographical indications of goods, and trade secrets.
Developing innovations and creations take time, money, effort, and intellect. Therefore, creators need the opportunity to receive a reasonable return on their investment to be motivated to accomplish it.

Intellectual Property Explained

Intellectual property is an asset that is a creation of the mind. They are valuable and are offered the law's protection. With the incorporation of newer forms within the purview of intellectual property, the definition and scope of intellectual property are continually evolving. Intellectual property ownership inevitably creates a limited monopoly over protected property. It supports fair use and restricts unauthorized access.

The World Intellectual Property Organization (WIPO) was established to regulate them. It is a specialized agency of the United Nations committed to creating an equitable and open worldwide intellectual property system. It works to promote originality, foster innovation, and aid in economic growth while protecting the public welfare. The WIPO Convention founded WIPO in 1967 with a mission from its member governments to advance the protection of intellectual property (IP) around the world through cooperation between states and in partnership with other organizations and international agencies. Geneva, Switzerland, is home to its main office.

Types

Some of the significant types are the following:

1. Patents

Patents are a monopoly privilege granted by the government to an inventor, usually for 20 years. It is one of the first categories of IP to be recognized in modern-day legal systems. An investor who receives a patent is entitled to prevent others from creating, using, selling, importing, or presenting their invention for sale until the term is over.

Since patents are territorial rights, an invention is only shielded in the nations or areas where patent protection has been granted. In other words, if a patent is invalid in a certain nation, the invention will not be protected in that country, allowing anybody else to create, use, import, or sell it there.

A U.S. utility patent is typically issued for 20 years from the day the patent application is submitted; however, monthly fees are necessary to keep the patent's enforceability. The term of a U.S. design patent that results from an application submitted on or after May 13, 2015, is 15 years, but those submitted before May 13, 2015, are 14 years.

2. Copyrights

Copyright intellectual property is a bunch of rights that creators have over their work. The work for which the copyright is obtained can be literary, artistic, scientific, musical, cinematographic, or photographic. In addition, some rights protect the interests of those associated with the creation, such as performers, sound recorders, producers, broadcasters, etc. The fundamental aim of copyright law is to establish a fair balance between the interests of content creators, investors, and developers and the public's desire to access and use creative work.

The duration of copyright intellectual property protection is limited. Copyrights for works produced after January 1, 1978, remain in effect for 70 years following the author's demise. The copyright for "made for hire" works—the typical work owned by a small business—expires 95 years after the year of first publication or 120 years after the year of production, whichever comes first.

3. Trademarks

A trademark is a distinctive sign, symbol, or indicator used by individuals, business organizations, or other legal entities to identify their consumer products or services. An association may even own collective marks, and its members could use them (doctors and accountants). The legal protection offered to owners empowers them to control who uses them. Essentially, it gives them the power to promote their goods and services without worrying about countervailing prices. This way, consumers can identify genuine products and services.

Trademarks can be any symbol, letter, number, color, image, or sign with three dimensions. It also includes colors, holograms, sounds, and even the forms and packaging of flavors and smells. The fundamental rule for eligibility for registration is that a trademark cannot simply be a general summary and must be distinctive and unique. It should also not be identical to any previously registered trademarks. Generally, a U.S. trademark is valid for as long as it is utilized in commerce and protected from infringement.

4. Industrial Designs

Industrial design protection focuses on a product's look, feel aesthetics, or mechanical aspects. With the plethora of consumer goods available on the market with similar functionality, this becomes all the more essential. A design generally consists of three-dimensional features, including the product or article's shape and surface. It may otherwise be two-dimensional with features such as patterns, lines, or color. Similar to other properties, they must be original and possess individuality. However, since they are produced industrially, unique artworks are not covered.

5. Geographical Indications of Goods

A geographical indication is a tag used on products with a specific geographic origin and a reputation and certain characteristics due to that origin. These tags are mostly used as a mark of authenticity. It protects the product's reputation and signifies its quality through the standards it sets. The ownership of a geographical indication cannot be transferred.

6. Trade Secrets

Any valuable business information qualifies as a trade secret. The competitor is not to be aware of the business secrets. There is no restriction on the information that can be protected as trade secrets; for instance, recipes, marketing strategies, financial projections, and business operations qualify.

Even something as straightforward and non-technical as a customer list can be eligible as a trade secret as long as it gives its owner a competitive advantage and is not public knowledge. There is no requirement that a trade secret is unique or complex. As long as a trade secret has commercial worth, derives that value from being secret, and its owner takes reasonable steps to keep it that way, it can be protected permanently.

Examples

Some of the examples are the following:

Example #1

Nike is an American sportswear designer and retailer. The multibillion-dollar brand's famous logo, often called "swoosh," is one of the most recognizable logos. Although it appears simple, it conveys mobility and speed and is fluid. It is also said that the emblem represents the wing of the Greek goddess of triumph, Nike. The company protects its logo through a trademark. A business can stop unlawful usage of its intellectual property by registering a trademark.

Example #2

Apple and Samsung are giant companies in the mobile technology world. They were engaged in a war over patents. The fight was between two of the largest companies in the world's industries over one of history's most popular products. Apple initiated the suit against Samsung for copying the design of its product, the "iPhone." According to Apple Inc., the dispute is about playing by the rules, about a rival unfairly benefitting itself after spending a few months "copying" designs and features that took years to conceptualize. The company, in the end, won the suit.

It is an example of intellectual property infringement, and the company voiced out to protect what was innovatively created so that the future is secure for creators.

Intellectual Property Laws And Rights

The privileges granted to individuals over their creative works are known as intellectual property rights (IPR). They often grant the inventor the right to utilize their creativity for a predetermined time. Today's technology relies heavily on IPR. Due to high connectivity to the digital world, intellectual property rights are more crucial than ever.

Despite all the benefits that the development of the internet has brought about for exchanging knowledge and ideas, it has also made it more convenient for people to steal ideas and works, which can be detrimental to innovation and national economies. Moreover, as IP has grown in importance, incidents of intellectual property infringements have also increased and are now common in the digital age, sometimes even resulting in business failure. Without the creator's knowledge, there is a high chance of infringement on an idea or product. Intellectual property rights, thus, are essential.

Innovations and creations take time, money, effort, and intellect from inventors, artists, scientists, and corporations. They need the opportunity to receive a reasonable return on their investment to be motivated to accomplish it. It entails granting them legal protection for their intellectual property. Furthermore, customers focus on intellectual property to ensure they buy safe, reliable items, while businesses rely on effectively protecting their patents, trademarks, and copyrights. An IP is similar to other physical assets that provide organizations with benefits from their possession. It is easy to replicate any template, logo, or functionality in a web-based environment, so IP protection is now more important than ever.

Intellectual property protection laws and regulations safeguard IP, which also helps the economy of the state where they are in place. For intangible assets that are still accessible to the general public and easily replicable by anybody, intellectual property rights are one of the sources of protection. However, intellectual property law is complex since several national laws in various nations and regions of the world apply to multiple types of IP.

Advantages And Disadvantages

Advantages

Protecting assets with IPR gives the business a competitive edge over similar companies.
Intellectual property symbolizes authenticity and enhances the company's value.
It helps build a trustworthy, loyal community of users and a brand value based on that, and quality standards must be continually met.
Obtaining funding for expansion can be relatively easy with something like IPR to rely on confidently.
Greater and easier growth and expansion opportunities.
It gives better profits; some can be sold for profit.
For creators, it protects their work and allows them to profit from it.

Disadvantages

A competitive business may always look to tear the company down.
A continual quality standard must be met, which may consume a lot of time and energy for the business.
There may be a processing fee associated with registration, and the owners may have to incur it.
Rules may differ according to international laws and regulations, and owners must keep track of changes.
Registration and obtaining IPRs may not guarantee that they will not get pirated. However, registration helps in getting legal remedies for infringement.

Frequently Asked Questions (FAQs)

Why is intellectual property important?

IP is essential for promoting innovation. Without intellectual property protection, companies and individuals would not fully profit from their creations and would devote less time to further research and development. Similarly, artists would not receive adequate payment for their works, and as a result, cultural vitality would decrease.

Is intellectual property an asset?

Assets with an IP value are included in a company's non-physical property category. The law protects them. IP assets possess certain characteristics, such as independent identification, transferability, and economic longevity, and their protection is crucial.

Is intellectual property capitalized?

The cost of intangible assets determines whether they should be capitalized or expensed. Consequently, certain types of intellectual property considered assets can be capitalized at cost. Patents, trademarks, and copyrights are examples, as they have associated fees and are capitalized as assets on the balance sheet.