Updated November 24, 2020:

Proprietary intellectual property can be extremely valuable to companies looking for a competitive edge in a market that is beginning to place more value on intangible assets.

What Is Intellectual Property?

In simple terms, intellectual property is an ownership interest in creations that are a product of the human intellectual process. It can be held by a legal entity and receive certain legal protections. Intellectual property can take on many forms, such as:  

  • Manufacturing processes  
  • Product launch plans  
  • Trade secrets  
  • Chemical formulas  
  • Lists of countries in which patents are registered.

In other words, intellectual property can be thought of as information related to intangible assets. According to the World Intellectual Property Organization, the formal definition of intellectual property is "creations of the mind." Intellectual properties encompass a wide range of concepts including, but not limited to:  

  • Inventions  
  • Literary works  
  • Artistic works  
  • Symbols  
  • Names  
  • Images  
  • Commercial designs.

In many cases, such as in pharmaceutical and software companies, intellectual property can be significantly more valuable than tangible assets. According to the Theft of Intellectual Property Commission, theft of intellectual property can cost companies in the United States up to $600 billion per year. 

In some cases, a simple idea may be considered intellectual property. The head of a company's research and development department, for example, may have a particularly useful idea come to mind, which he or she then applies to his or her work. In this case, his or her design has become intellectual property.

Categories of Intellectual Property: Patents

Patents provide a measure of legal protection for intellectual properties, such as discoveries and inventions, as well as for the individual or legal entity who owns the intellectual property in question. 

Patents generally cover physical pieces of technology that have been developed as a result of:

  • A discovery 
  • An invention. 

They will normally be applied to methods and designs that are specific to the invention, according to U.S.C. § 101.

It is important to note that a product or an idea needs to be something that doesn't already exist to receive protection from a patent. In other words, the item you are trying to patent cannot be reasonably similar to a currently available design or an intangible idea. 

Patents provide holders with the legal right to prevent any other individual or legal entity from marketing or producing their unique product or idea. Patents can also be registered in countries outside of the United States to prevent overseas competitors from discovering and exploiting your discovery or invention without your permission.

In simple terms, a patent is a license the government may grant. It allows the holder to form a limited monopoly on the item being patented. 

  • Patents can only be obtained by applying for and receiving approval from the necessary governmental authorities. They do not exist until they have been filed for and approved.
  • Trademarks and copyright protections are amplified when they are properly filed. However, they do not need to be filed to exist. They are created automatically, along with their respective intellectual properties.

Patent protection can be quite powerful. Patents effectively prevent reverse engineering of a protected innovation by third parties. They also protect "independent discovery" of reasonably similar innovation. No other individual or legal entity is permitted to produce patented items or utilize a patented process for as long as the patent remains active. 

If you are a patent owner, however, others can apply for a license to use, produce, or distribute your product with your approval. A patent normally lasts up to 20 years.

Categories of Intellectual Property: Trademarks and Service Marks

Trademarks and service marks encompass, but are not limited to, the following:  

  • Words  
  • Graphics  
  • Symbols.  

To be eligible for trademark or service mark protection, the intangible asset must identify or relate to:  

  • Corporate sources  
  • Products  
  • Producers of goods or services  
  • Distributors of goods or services.

Some examples of items that trademarks and service marks can apply to include:  

  • Slogans  
  • Company mottos  
  • Logos  
  • Goods  
  • Unique packaging. 

It is worth noting that intangible items of this nature need to be unique or easily distinguishable from others to receive trademark protection. This is since the very nature of trademarks is to prevent other companies from using any words or designs that can be considered "confusingly similar" to the trademarked asset. 

If you need help with proprietary intellectual property, 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.