Pros and Cons of Intellectual Property: Everything You Need to Know
Intellectual property allows you to build and strengthen your brand, but securing IP rights can be expensive.3 min read
2. Types of Intellectual Property
3. Intellectual Property Rights - Pros
4. Intellectual Property Rights - Cons
There are many pros and cons of intellectual property rights to consider. Intellectual property allows you to build and strengthen your brand, but securing IP rights can be expensive.
Intellectual Property Rights
All businesses have information that is critical to their success. This information is referred to as “intellectual property,” and it's just as valuable as money or personal property.
Intellectual property includes a company's:
The company owns the rights to this property, and still, it's easy for another company or person to infringe on IP rights, even unintentionally. Naturally, it makes business sense to fight for your intellectual property rights when necessary.
Unfortunately, patent trolls take advantage of the legal system in order to get money from businesses for using the most basic technologies. So, how can a company protect itself and its intellectual property? That all depends on the type of IP you're talking about.
Demands for intellectual property reform have been on the rise due to system abuses, and recently-enacted laws such as the American Inventor's Protection Act (AIPA) may bring about increased protections for businesses.
Types of Intellectual Property
Intellectual property (IP) is classified various ways, such as valuable business information and patentable ideas. By law, a patentable invention or idea is one that is:
This definition would include new machines, products, and manufacturing processes. For instance, the digital age has seen a surge in computer software, internet-related business methods, and network signaling patents.
Even if a piece of intellectual property is not patentable, it isn't necessarily less valuable. In many cases, even a non-patentable IP is protected under trade secret laws. Trade secrets are any type of secret information used in business that gives its company an advantage.
Trade secrets include:
- Customer lists
- Business methods
- Manufacturing processes
Patents and trade secrets can overlap, but companies need to choose which protection is more beneficial based on its business goals.
Intellectual Property Rights - Pros
There are numerous benefits to patenting your intellectual property. Patents, copyrights, and trademarks all provide important incentives and protections for both your original ideas and your business. IP rights also foster innovation and invention because they encourage individuals to come up with new ideas.
For starters, a patent can prevent competitors from making, selling, or using your invention for a limited time. You won't have to worry about someone else stealing your product and passing it off as their own, and if they do, you can pursue legal action.
Copyright laws protect artistic creations such as:
- Graphic design work
- Musical compositions
You aren't required to file for copyright protection although you can register your work with the U.S. Copyright Office. Moreover, companies can enjoy indefinite trade secret protection automatically without having to formally register. Trade secret protection is especially important for preventing former employees from disclosing key information about the company and its processes.
Some benefits to protecting your intellectual property are not as obvious. For instance, some countries offer tax breaks on profits generated by registered IP. In these cases, the costs associated with securing the protection is small compared to the financial benefits of reduced taxation.
Securing IP protections is also important for proving your company's worth to potential investors. You're more likely to generate capital when you already have a patent.
Intellectual Property Rights - Cons
While the benefits generally outweigh any drawbacks, it's important to note the disadvantages of securing IP rights. The main con is that obtaining a patent, registering a trademark, and maintaining those protections can be expensive.
Costs associated with protecting your IP rights include:
- Lawyer fees
- Court costs
- Filing fees
- Settlement fees
- Registration fees
These costs can add up quickly, especially for a small business. Plus, the cost of getting a single patent can exceed $10,000 in administrative and legal fees, which is money you may not have.
IP opponents also argue that ideas cannot be owned. The whole idea of intellectual property stems from physical property, so ideas are treated as tangible objects when, in fact, they are intangible.
Because of this issue, copyright protections can be granted to those who don't deserve protection. For instance, Amazon patented “pictures on a white background,” which is a prime example or patent frivolity.
If you need help understanding the pros and cons of intellectual property rights, post your job 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.