Advantages and Disadvantages of Intellectual Property: Everything to Know
There are many advantages and disadvantages of intellectual property (IP). IP rights protect your company’s inventions, processes and concepts.3 min read
There are many advantages and disadvantages of intellectual property that businesses should be mindful of. Intellectual property (IP) rights protect your company’s inventions, processes, and concepts, which is crucial to maintaining your brand and competitive edge. While some IP rights are automatic, others require a formal application before you have such protection. For example, copyright protection is usually automatic. However, patent and trademark protection involves a formal, and at times complex, application. Copyright generally includes protection over literary works, paintings, photographs, and other artistic works. Patents can protect a design, process, or plant species. Trademarks protect marks like a brand name or logo.
But defining what intellectual property is can be difficult. Unlike traditional property, such as a home, intellectual property can be a method that is used by more than one company. Therefore, the question becomes, who is the actual holder and inventor of that method? If neither company has formal protection over the method, then several other factors are used to determine who the owner is.
Advantages of Intellectual Property
There are many advantages to IP, including the following:
- There are no fees associated with IP
- Ability to have a competitive edge over other similar businesses
- IP enhances your company’s value
- IP helps you market your company’s products and services
- You can more easily obtain financing for your business
- Greater export opportunities
There is no fee if you want to enhance or change your invention, particularly if it isn’t formally protected. With that said, you should consider applying for formal patent protection once you’ve finished developing your product.
If you have patent protection over your intellectual property, then you will inevitably have a competitive edge over the competition. This is because other businesses operating in the same industry cannot copy, manufacture, use, or sell your product.
Intellectual property can help generate even more income for your business through licensing agreements or the sale of your invention. If you sell your business, it will be worth more if you have intellectual property protection. Such a sale can occur through a partial sale, full sale, merger, or acquisition.
You can easily market your business’s products and services if you have patent or trademark protection over your intellectual property. This can include the design of your product or logo. It can help you differentiate your business over others to draw in potential consumers.
If you have intellectual property protection, you can more easily obtain financing from lenders and other financial institutions since it enhances your credibility with such protection.
Your business will have greater export opportunities since intellectual property can increase your competitive edge in the export markets. Therefore, you can use designs to market goods internationally. To do this, you can enter into franchising agreements with international businesses that are located in countries where you want to do business or export your patented products. This can help increase profits drastically by reaching the international market across several countries.
Disadvantages of Intellectual Property
While there are several advantages, there are some disadvantages of intellectual property, too, including the following:
- Additional costs
- Reduced quality
Protecting your intellectual property could cost a lot of money, particularly if you have a very complex product that involves designs, methods, and processes. Therefore, you could be filing several patent applications to protect one product. In addition, if you hire a lawyer to assist in the application process, you can expect to pay high legal costs. You’ll also need to pay filing fees and other costs associated with the patent application process.
When it comes to highly sought-after intellectual property, it is hard to stop consumers from taking such intellectual property. Furthermore, any attempt to enforce intellectual property rights could reduce a company’s customer base.
As intellectual property rights become reduced, so too will the quality of the product being created. That is because there is much less of an incentive to do the work and put the time and resources in, especially if the company knows that its intellectual property rights aren’t absolute.
If you need help learning more about the advantages and disadvantages of intellectual property, or if you need help entering into an intellectual property licensing agreement, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5-percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.