What is Intellectual Property?
Intellectual property (IP) refers to intangible assets that are creations of the mind, such as inventions, new technologies or brands, improvements upon existing IP, unique designs and processes, and more.
IP has legal protections to safeguard the owner via patents, copyrights, and trademarks, which discourages competitors from infringement. For most IP, these legal protections expire after a set period, usually 20 years (such as with patents), but in some cases, like trademarks, they can last forever.
Interestingly, many types of IP cannot be listed as assets on a balance sheet because it’s difficult or impossible to calculate economic principles for each asset, but this can be compensated with accurate IP valuation and stock prices.
Types of Intellectual Property
Intellectual property (IP) can be protected in most countries under four categories:
- Trade secrets
Each type of intellectual property has its own characteristics, requirements, and associated costs. Sometimes intellectual property can even be more valuable than physical assets for a company. In fact, recent data shows intangible assets (such as those listed above) account for 90% of the S&P 500’s total assets
Why is Intellectual Property for Research and Development Important?
Intellectual property is important for research and development (R&D) because it offers a balanced counterweight to pursuing innovation and increasing revenue. Those working in R&D tend to be risk-takers because they’re limited mostly by their ideas, while those working in IP are more risk-averse so as to maximize efficiency in all areas of business.
It’s also important because it encourages innovation and growth, while still being protected from infringement and setbacks. IP is found in every industry, from technical and precise life sciences to more freewheeling artistic endeavors. Creating and protecting IP is crucial for businesses in each field to be successful in today’s knowledge-based world, as the IP offers a concrete competitive advantage over others.
One element of IP success is the beginning foundation, which is established with a detailed and thorough search of existing IP to filter for viability. Because IP’s legal protections so heavily discourage infringement, conducting a solid search helps lay the groundwork for continuing with innovation and ensuring the IP is maximally exploited.