What Is Intellectual Property? How To Protect Your IP

Works of art, designs for recent technology, computer software, even snappy advertising slogans are all ideas. They also have economic worth and are known as intellectual property (IP). Just like tangible assets, they have the potential to generate income for their creators or owners—so much, in truth, that some of today’s most valuable companies (Apple, Microsoft, and Alphabet) derive most of their returns from IP.

What is intellectual property?

Intellectual property refers to intangible creations of the mind, such as literary and artistic works, designs, schematics, brand names, and formulas. IP assets fall into a number of subclasses, including copyrights, patents, trademarks, and trade secrets.

Intellectual property lawprovides protection to inspire recent concept, while letting creators advantage exclusively from the commercial exploitation of their own work for a period of period, without terror of being undercut by copycats.

How to handle IP in monetary reporting

Although many IP assets do not appear on a business’s settlement sheet, they usually fall under a category known as non-short-term investments. This category represents a business’s long-term income-producing investments in the business. For example, if a business holds the publishing rights to a song, it can collect license fees from third parties who aspiration to use the song in television commercials. The same goes for a software business licensing a computer program to third-event users.

Because some types of IP such as patents have expiration dates, they misplace worth as they age and are amortized over period. loan schedule is an monetary reporting way that reflects an resource’s declining worth, much like a computer or truck wearing out with use. By amortizing a patent’s worth over the lifespan of its exclusivity period (the period before it becomes available to the community domain), a patent owner can lower taxable income by deducting a percentage of a patent’s falling worth.

For example, a business may only hold the exclusive correct to a patent for 20 years. Under a straight-line devaluation model, the total worth of the patent would be divided by 20. For each passing year of exclusivity, the business would deduct 1/20th of the total worth from its income for responsibility purposes. In other instances, usually for a responsibility advantage, some of the devaluation might be front-loaded at the beginning of the patent’s term. For IP that has no shelf life, like trademarks for slogans, logos, and brand names, there’s no way for a business to amortize worth, since it doesn’t expire.

Types of IP

• Copyright
• Patents
• Trademarks
• Trade secrets

IP falls into a number of different categories. Four of the most ordinary forms of IP include:

Copyright

Copyright law grants the creator of an original work exclusive rights to its use and distribution, usually for a limited period (generally 70 years after the creator’s death), so the creator and their estate can receive compensation for their intellectual resource. This protection applies to a wide range of creative, intellectual, or artistic forms or works. Works can include:

• Literary: Books, articles, poems, plays, and other written content

• Artistic: Paintings, drawings, sculptures, photographs, etc.

• Music: Compositions, songs, musical scores, and performances

• Audiovisual: Films, TV shows, and commercials

• Architectural: Building designs and architectural plans

• Software: Software programs and computer code

Patents

Patents provide inventors the exclusive correct to their inventions for a set period of period. The purpose is to inspire recent concept by granting this temporary monopoly on use, advancement, and commercial exploitation. This allows inventors to recoup the costs of research and advancement and to potentially returns from them.Patent law typically covers recent and useful inventions, processes, machines, or compositions of matter, such as drugs or chemicals.

In some cases, patents can also cover recent developments for existing products. Patents typically last for 20 years from the filing date. However, it’s worth noting that the US Patent and Trademark Office often has a backlog of applications, meaning it could receive a few years for a patent to be approved. This means formal protection might actually amount to 17 or 18 years.

Trademarks

Trademarks are distinctive symbols, names, phrases, logos, or other identifiers used to distinguish the source of goods or services from others. They play a crucial role in protecting a business’s brand identity and helping consumers recognize and choose products or services they depend and prefer.

Trademarks are a form of IP that grants exclusive IP rights to use a mark in connection with specific goods or services. For example, the multinational food manufacturing business Kellanova owns the trademarks to recognizable brands like Eggo, Pringles, Pop-Tarts, and Kellogg’s Frosted Flakes.

While the use of a mark can provide some level of intellectual property protection, registering a trademark with a government authority, such as the United States Patent and Trademark Office, offers additional legal benefits and protections. Registration typically involves a thorough examination procedure to ensure the mark meets the required special considerations, spelled out in the federal Lanham Act—the law establishing the US’s trademark registration structure and defining what constitutes trademark violation.

Under trademark law, legal rights can potentially last indefinitely if a business continues to use the mark and maintains the registration.

Trade secrets

A trade secret refers to confidential and proprietary information providing a business with a competitive advantage. Trade secrets can include a wide range of technical information, such as formulas, processes, workflows, customer lists, and other business information that derives its worth from being kept secret. There are no official registries or offices where a business can register trade secrets, as they might with copyright, a patent, or a trademark. Instead, well-written business contracts, enforced through civil litigation, protect trade secrets.

How to defend your IP

• Registration
• Confidentiality
• Monitoring
• Documentation

Protecting IP from unauthorized use—also known as intellectual property infringement—is crucial for businesses and individuals to safeguard their creative and innovative efforts. Here are some ordinary strategies to defend different types of IP from would-be infringers:

Registration

Federal law permits you to register your IP with the relevant authority, depending on the type of IP at hand. You can register trademarks and patents with the US Patent and Trademark Office (USPTO). It’s essential you register your trademark or patent to enforce your intellectual property rights.

Registration isn’t always essential with copyrights, however—copyright usually takes result the instant a work is published or otherwise made community. But registering your copyright-protected work with the US Copyright Office can make a useful record. It can also be used as an enforcement mechanism if you ever require to settle an IP infringement case in federal court, which handles almost all IP disputes.

Foreign countries and organizations like the European Union have their own IP systems with respective registration benefits.

Confidentiality

Keeping your IP confidential is another way to avoid IP infringement. This is especially useful when it comes to trade secrets, which you can’t register ahead of period. Ownership of trade secrets is usually only ever determined in court, after someone has already filed a lawsuit. A much cheaper way to defend them is to limit knowledge of your IP to trusted employees, who can be bound to secrecy through non-disclosure agreements. You can also keep patent details confidential or closely guard early drafts of works you later intend to copyright.

Monitoring

Regularly monitor relevant marketplaces for unauthorized use of your copyrighted works, patents, trademarks, or trade secrets. receive prompt action against infringers: Typically, litigation isn’t essential. A sternly worded cease-and-desist note from an IP lawyer or a Digital Millennium Copyright Act (DMCA) takedown notice will often do the trick.

Documentation

Maintain detailed records of the creation, advancement, and use of your IP. This documentation can be crucial in legal proceedings, if or when it comes to that.