Intellectual property in information technology concerns how innovations in the IT field are protected in order to continue advancements and encourage even more innovation. 

About Intellectual Property

The term “intellectual property,” or IP, refers to a person's inventions that have legal protections in the following forms:

  • Trade secret
  • Patent
  • Trademark
  • Copyright

Today, IP is what ensures that future innovations are able to make it from the idea stage to the marketplace. These innovations can improve our quality of life as well as tackle some of society's challenges.

IP rights must keep up with recent advances in order to promote creativity and investment in that creativity. Secure patent rights contribute to innovation since they address the risks people face when they develop new technologies and worry their ideas will be stolen.

The level of success a technology company enjoys is highly dependent not only upon the innovations it develops but also the competitive advantage it creates. Both concepts are closely connected to how it develops and protects trade secrets.

Connection Between Intellectual Property and Information Technology

IP is extremely important to economic growth in the U.S., especially regarding exports. IP industries have the following characteristics:

  • They're the most important drivers of growth in the current economy.
  • They're vital to future economic growth in the U.S.
  • They're an essential contributor to the Gross Domestic Product.
  • The industry is one of the largest and highest-paying industries in the U.S.

Its contributions to the economy only continue to grow. There are various, complex reasons that economic growth and IP protection are connected, but cooperation and financing are worth exploring. The reasoning behind cooperation and financing are basic and utilitarian: people have adopted the mechanisms of property rights and markets simply because they work.

Many consider the U.S. to be a very individualistic, competitive society. While there's truth in this, the country is also incredibly cooperative as a whole. The individualism may be exercised alongside a cooperative framework.

Markets and property rights are often used to blend individual and cooperative efforts. These two rights themselves don't prohibit cooperation. They're often the very ways in which advanced societies achieve cooperation.

Markets and property rights are very flexible, which makes them immensely useful in promoting cooperative behavior because individuals work out ways to handle particular situations. These mechanisms are dynamic as well because people may adjust them over time to meet changing needs.

As a result of this dynamic flexibility, it's usually easy to keep arrangements simple. No one has to think about each contingency in advance, which would be an inefficient way to operate.

Why IP Is So Important in IT

IT is especially dependent on cooperation, since it's a rather fragmented field, with many different people producing many different products.

As a contrasting example, one hundred years ago, Henry Ford was able to set up an assembly line, where one product/ingredient entered one end and a final product — an automobile — emerged from the other end. This isn't an efficient form of organization since individual functions aren't structured at an optimal size.

The U.S. economy has only grown larger, and it's inefficient for someone in a single industry to try and do everything.

In IT, this is particularly true, since great gains are possible only from specialization in such a vast playing field. However, good boundaries must exist, called “definitions of property." The more cooperation is used in an industry, the more important proper coordination comes into play using contracts, markets, and property rights.

Property rights are vital to financing. Well over half of a company's value is often calculated based on its intangible property or intellectual property versus concrete assets. When you consider an intangible product, such as software, it doesn't really serve its intended purpose until legal protections give it more of a concrete value.

When financing is needed, people often rely on banks. Bankers have a hard reputation, but that's because they want some security in knowing their loans will be repaid.

Protecting intellectual property often promotes technological advancements because innovators are more likely to share their creations and products, knowing they'll maintain rights to their inventions. This benefits society as a whole, since more innovations lead to increased advancement.

If you need help with intellectual property rights, 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, Menlo Ventures, and Airbnb.