If you’re a business owner, it’s important to know the basics of Intellectual Property Law. This will help protect your ideas and inventions from being stolen or copied. In this post, we’ll discuss the most common types of intellectual property protection _ copyrights, trademarks, and patents _ and when you should use them. powerpacplus.org also covers some of the basic concepts of intellectual property law, so you can be better informed about how it applies to your commerce.
What is Intellectual Property Law?
Intellectual property law is a broad term for the collection of intangible assets owned and legally protected by a company or individual from unauthorized use or implementation. An intangible asset is a non-physical asset owned by a company or individual. It is one of the areas of commercial law
The concept of intellectual property refers to the idea that certain products of human intellect should be protected in the same way that physical property, also known as tangible assets, is. The majority of developed economies have legal safeguards in place to protect both types of property.
Type of Intellectual Property Law
Intellectual property can include a variety of intangibles, some of which are listed below.
A patent is a property right granted to an investor by a government agency such as the United States Patent and Trademark Office. The patent gives the inventor exclusive rights to his or her invention, which could be a design, process, improvement, or physical invention such as a machine. Patents for designs are frequently held by technology and software companies. For example, Steve Jobs and three other Apple Inc. colleagues filed the patent for the personal computer in 1980.
Authors and creators of original material have the exclusive right to use, copy, or duplicate their work under copyright. Authors of books, as well as musicians, have copyrighted works. A copyright also states that the original creators can grant anyone permission to use the work through a licensing agreement.
A trademark is a recognizable symbol, phrase, or insignia that represents a product and legally distinguishes it from other products. A trademark is assigned to a company exclusively, which means that the company owns the trademark and no one else may use or copy it.
A trademark is frequently linked to a company’s brand. The Coca-Cola Company, for example, owns the logo and brand name “Coca Cola” (KO).
A franchise is a license that a company, individual, or party–referred to as the franchisee–purchases that allows them to use the name, trademark, proprietary knowledge, and processes of another company–the franchisor.
The store or franchise is typically operated by a small business owner or entrepreneur. The franchisee is authorized to sell a product or provide a service in the company’s name. In exchange, the franchisee pays the franchisor a start-up fee as well as ongoing licensing fees. United Parcel Service (UPS) and McDonald’s Corporation are two companies that use the franchise sale model (MCD).
A trade secret is a company’s process or practice that is not public knowledge and provides an economic benefit or advantage to the company or trade secret holder. Trade secrets, which are typically the result of a company’s research and development, must be actively protected by the company.
A design, pattern, recipe, formula, or proprietary process are all examples of trade secrets. Trade secrets are used to develop a commerce model that differentiates the company’s offerings to its customers while also providing a competitive advantage.
How does Intellectual Property Law work?
Because intellectual property is so valuable in today’s increasingly knowledge-based economy, businesses are diligent in identifying and protecting it. Furthermore, creating valuable intellectual property necessitates significant investments in both brainpower and skilled labor time. This translates into significant investments by organizations and individuals that should not be accessed by others with no rights.
Extracting value from intellectual property and preventing others from doing so is a critical responsibility for any commerce. Intellectual property can come in a variety of forms. Intellectual property, despite being an intangible asset, can be far more valuable than a company’s physical assets. Intellectual property can provide a competitive advantage, so it is fiercely guarded and protected by the companies that own it.
Many types of intellectual property cannot be listed as assets on the balance sheet because there are no specific accounting principles for valuing each asset. However, because market participants are aware of the existence of the intellectual property, the value of the property tends to be reflected in the price of the stock.
Some intangible assets, such as patents, are recorded as property because they have an expiration date. These assets are assigned a numerical value through the amortization process. Amortization is a method of accounting that reduces the value of an intangible asset over a set period of time. This process assists the company in lowering its income by deducting a fixed amount each year for tax purposes as the useful life of the intangible asset approaches its end.
For example, a patent may only be valid for 25 years before it is declared public domain. The patent would be assigned a total value by a company. The patent would be expensed or amortized by the same amount each year for 25 years by dividing the total value by 25 years. For tax purposes, the amortized asset amount would reduce the company’s net income or profit each year. However, intellectual property with a perpetual life, such as a trademark, is not amortized because it does not expire.
We hope this article has been helpful in introducing you to some of the basics of intellectual property law. As always, if you have any questions or need more information on a specific topic, please do not hesitate to contact us. Our team is happy to help!