What is intellectual property and what types of intellectual property are there?
What is intellectual property?
Intellectual Property (IP) – is a broad categorical description of a set of intangible assets owned by a company or individual that is legally protected from unauthorized use or sale without the consent of the intellectual property owner.
The concept of intellectual property is related to the fact that certain products of human intellect should be granted the same protection rights that apply to physical property, called tangible assets. Most developed countries have adopted legal measures to protect both forms of property.
Brief summary:
Intellectual property is a general term for a set of intangible assets, or assets that are not physical in nature.
Intellectual property is owned and legally protected from external use and sale by an individual or legal entity without the consent of the intellectual property owner.
Intellectual property can consist of many types of assets, including trademarks, patents, and copyrights.
Intellectual property infringement occurs when another party engages in unauthorized use of an asset.
Legal protection for most intellectual property expires after a certain period of time, but for others it can last forever.
The concept of intellectual property
Intellectual property is a category of intangible assets that are created using human intelligence, and can take many forms, including software code, artwork, symbols, logos, brand names, and designs. Companies are particularly careful when it comes to identifying and protecting intellectual property because it is of high value in an increasingly knowledge-based economy. Creating intellectual property requires a company to make a significant investment in intellectual resources, so it should not be accessible to others who do not have the rights. Intellectual property is an intangible asset, but it can be much more valuable than a company’s physical assets, it can represent a competitive advantage, and as a result, it is closely guarded and protected by the companies that own it.
Note
Many forms of intellectual property cannot be reported as assets on the balance sheet because they are difficult to value objectively. However, the value of the property is usually reflected in the company's stock price because market participants are aware of the intellectual property's existence. Some intangible assets, such as patents, are recorded as property if they meet certain accounting criteria, such as an objective measure of their value and probable economic benefits. They are reported as assets and then written off to income over their useful lives. This expense is called depreciation. This process helps a company reduce its income by writing off a certain amount each year for tax purposes as the intangible asset reaches the end of its useful life.
Example:
A patent may have only 20 years left before it is registered in the public domain. The company assigns a total cost to the patent. The patent will be expensed or depreciated by the same amount each year for 20 years by dividing the total cost by 20 years. The depreciated amount of the asset will reduce the company's net income or profit for tax purposes each year.
Intellectual property that is considered perpetual, such as a trademark, is not amortized because it does not expire.
Explanation:
A registered trademark is valid for 10 years throughout Russia. The trademark can be extended for another 10 years indefinitely.
The term of exclusive rights to an invention is 20 years from the date of filing the application. This term may be extended for inventions related to a medicinal product, pesticide or agrochemical, the use of which requires obtaining permission, by no more than 5 years.
Types of Intellectual Property
Intellectual property can consist of many types of intangible assets.
Patents
A patent is a property right that is usually granted by a government agency such as Federal Institute of Industrial Property And United States Patent and Trademark OfficeA patent gives the inventor exclusive rights to an invention, which may be a design, process, improvement, or physical invention such as a machine. Technology and software companies often have patents for their designs.
Example:
Patent for a personal computer was filed in 1980 by Steve Jobs and three other Apple colleagues.
Copyright
Copyrights give authors and creators of original material the exclusive right to use, copy, or duplicate their material. Book authors' works are protected by copyright, just like musical performers. Copyright also states that the original creators can grant anyone permission to use the work through a licensing agreement.
Trademarks
A trademark is a recognizable symbol, phrase, or sign that represents a product and legally distinguishes it from other products. A trademark is assigned exclusively to a company. It owns the trademark, so no one else can use or copy it. A trademark is often associated with a company's brand.
Example:
The Coca-Cola logo and trademark are owned by The Coca-Cola Company.
Franchises
A franchise is a license purchased by a company, individual, or party called a franchisee. It allows them to use the franchisor's name, trademark, proprietary knowledge, and processes.
A franchisee is typically a small business owner or entrepreneur who operates a store or franchise. The license allows the franchisee to sell a product or provide a service on behalf of the company. In return, the franchisor is paid an initial fee, as well as ongoing licensing fees for the franchisee.
Example:
Companies that use the franchising business model include United Parcel Service and McDonald's.
trade secret
A trade secret is a process or practice of a company that is not publicly known and provides an economic benefit or advantage to the company or the owner of the trade secret. Trade secrets are actively protected by the company and are usually the result of the company's research and development (R&D) work. This is why some employers require non-disclosure agreements.
Example:
A trade secret can be a design, a pattern, a recipe, a formula, or a patented process. Trade secrets are used to create a business model that differentiates a company's offerings to its customers, providing a competitive advantage.
Digital assets
Digital assets are also increasingly recognized as intellectual property. These include proprietary software code or algorithms, as well as digital online content.
Violation of intellectual property rights
Intellectual property comes with certain rights, known as intellectual property rights. They cannot be infringed by anyone who does not have permission to use them. Intellectual property rights give owners the power to prevent others from recreating, imitating, and using their work.
Patent infringement occurs when a legally protected patent is used by another person or entity without permission.
Copyright infringement occurs when an unauthorized party recreates an original work, such as a work of art, music, or a novel, in whole or in part. The duplicated content does not have to be an exact copy of the original to qualify as infringement.
Trademark infringement occurs when an unauthorized party uses a licensed trademark or a mark that is similar to a licensed trademark.
Trade secrets are often protected by non-disclosure agreements; if a party to the agreement discloses a trade secret in whole or in part to disinterested parties, it breaches the agreement and infringes the trade secret.
Penalties for intellectual property infringement range from fines before imprisonment.
Preventing Intellectual Property Violations
Infringement is often done unintentionally. Make sure your business does not use copyrighted or trademarked materials to avoid being sued for intellectual property infringement. Make sure your brand or logo is not so similar to others that it could mislead someone into thinking it is a different brand.
It’s also a good idea to conduct a patent search to ensure that any ideas are your own. You may be able to find ways to license them through the appropriate channels if they are not. Intellectual property lawyers specialize in this process to ensure that you are not using someone else’s protected intellectual property.
Make sure the contract clearly states that any creative work created becomes the property of the company, not the person you hired, if you hire someone to do creative work for you or your company.
Summing up
Assets come in all shapes and sizes, but some are intangible. Intellectual property, often referred to as intangible assets, is as valuable to corporations as tangible assets. Logos and brand names, which can be patented and trademarked, help consumers recognize popular companies and their products. Companies must take the necessary steps to protect these assets so that they are not misused or infringed upon by others.
Author of the publication
Lyukshin Denis Alexandrovich – https://orcid.org/0009-0001-0378-7916.
E-mail: luksindenis@gmail.com.
