What Is Intellectual Property?

Intellectual property rights are given to people and corporations for works they created with their minds. Their creations are defined as intellectual property. The term intellectual property can apply to a wide variety of works, but the rights given to creators vary depending on the country. Intellectual property includes intangible creations, such as automated processes, designs, and names, and tangible products, like industrial designs. Intellectual property is protected by law, just like physical property.

What Are Intellectual Property Laws?

Intellectual property laws protect, enforce and secure legal rights to inventions, designs, and creative works. Personal property and real estate are protected by law, but the same is true of intangible assets. These laws give creators an incentive to develop creative works that benefit society because they can profit from their works without being concerned about others appropriating them.

Specifically, section 8 of Article I of the U.S. Constitution grants Congress explicit authority to grant exclusive rights to authors, inventors, and other creators. In addition, Section 8 gives Congress the power to regulate interstate and foreign commerce, which provides additional support to these rights. Congress passes intellectual property laws administered by two government agencies: the U.S. Patent and Trademark Office and the U.S. Copyright Office.

Types of Intellectual Property

There are many types of intellectual property, which can be defined differently depending on the country the work was created in. The World Trade Organization divides the intellectual property into two main areas: copyrights and industrial property, which is further subdivided into other areas. Here are common types of intellectual property.

Copyrights

The term copyright refers to the legal right of intellectual property owners. It is simply the right to copy. Those who created the product and anyone authorized to use it have the exclusive right to reproduce it. For a limited period, the creators of copyrighted material may use and duplicate that material exclusively. Afterward, the copyrighted item becomes part of the public domain.

When a person creates something that requires a significant amount of creative thinking and is considered original, the product is designated intellectual property and is protected from unauthorized duplication. Types of unique creations include:

  • Musical lyrics
  • Musical compositions
  • Computer software
  • Novels and other writing
  • Website content
  • Architectural designs
  • Films
  • Graphic Designs
  • Art
  • Poetry

Anyone who creates an original work from independent thinking free of duplication automatically has copyright to that work, preventing anyone else from using it or duplicating it. Copyrights can also get registered for added security.

Not everything someone has created can be copyrighted. Ideas, theories, concepts, and discoveries cannot be protected by copyright; logos, slogans, brand names, domain names, and the like can't be copyrighted either. For a work to be copyrighted, it must be reproducible in a tangible form.

Copyright protection varies from country to country, but in the United States, copyright laws protect an original work for the creator's plus 70 years. This originally was only the creator's life plus 50 years but was increased in 1998 by the Copyright Term Extension Act. For corporations, copyright protection lasts 95 years from publication or 120 years from creation, whichever is shorter.

Copyright can get transferred from one owner to another. For example, a musician may sign a contract with a record company. The copyright owner doesn't need to license the complete rights to a work away. It could be limited to a specific period or geographic region. It could also be a non-exclusive license or limited to one media type.

Patents

An inventor receives a patent when a sovereign authority grants him a property right. In exchange for a comprehensive disclosure of the invention, the grant gives the inventor exclusive rights to the patented process, design, or invention for a defined period, a form of incorporeal right.

Government agencies generally handle and approve applications for patents. As part of the Department of Commerce, the U.S. Trademark and Patent Office (USPTO) handles applications. Most patents in the United States are valid for 20 years from the date the application was filed with the USPTO or 17 years from the patent's issuance, whichever is longer, though some circumstances can extend the term of a patent. Patents obtained in the U.S. are only valid in the U.S. and its territories. To obtain patent protection in other countries, it is vital to research the intellectual property laws of these countries.

The patent system encourages companies and individuals to develop innovative products and services without the threat of infringement. Pharmaceutical companies, for instance, can spend millions of dollars on research and development. If they didn't have patents, their drugs and medicines could be replicated and sold by companies that didn't invest in R & D.

In the U.S., there are three types of patents:

Utility

Patents for invention, or utility patents, give legal protection to inventors of new and useful processes, articles of manufacture, machines, or compositions of matter. Patents issued by the U.S. government mostly represent utility patents, accounting for more than 90% of all patents. A utility patent is valid for 20 years from the date filed, as long as the applicant pays the maintenance fees. Maintenance fees must be met for patents filed after December 12, 1980.

Design

A design patent is issued for an original, new, and ornamental design for a manufactured product. These patents protect an item's appearance. To receive a patent, the invention must be original and useful. For applications filed after May 13, 2015, design patents last for 15 years. Before May 13, 2015, patents lasted for 14 years from the filing date. Design patents are not subject to maintenance fees.

Plant

Any person or company who produces, discovers, or invents a new plant kind capable of reproduction can obtain a plant patent. Patents granted under this law are valid for 20 years from the filing date, and there is no maintenance fee.

Trademarks

A trademark is a recognizable insignia, phrase, word or symbol that identifies a product and legally distinguishes it from other products of the same type. A trademark identifies a product as belonging to a specific company and acknowledges its ownership of the brand. A trademark may or may not be registered.
Using a trademark benefits both the company or individual producing the goods or supplying the service and the consumers of those goods and services. By preventing another company from using the trademark without permission, consumers can be sure to get the product or service they are expecting, and the producer prevents counterfeits from flooding the market. Trademark laws also protect against symbols or brand names that can be confused with existing trademarks, especially when the product and service are related.

The U.S. Patent and Trademark Office (USPTO) registers trademarks in the country and identifies them with the ® symbol. However, trademarks don't have to be registered to give the company or individual protection. An unregistered trademark can be identified by the ™ symbol. Using this symbol, trademark users indicate that they are using common law to protect their rights.

Trademark laws never expire. In other words, the trademark holder has a perpetual right to use it. Some exceptions apply, however. For trademark law to be applicable, the user must continuously, lawfully, use the trademark. To be enforceable, a company or individual must regularly manufacture, produce, market, and sell products bearing a trademark. This can get carried out by filing a section 8 declaration with the USPTO every five years. Failure to do so could result in the loss of registration.

These are the steps to get a registered trademark in the United States:

  • Apply for a trademark and decide what types of goods and services you want to use it for.
  • An examiner reviews the trademark application to determine if someone else has already registered the same or similar mark. If not, the trademark is listed in a public register so anyone can object.
  • The trademark is approved if there is no objection.

Trade Secrets

Trade secrets are also known as confidential information. They include formulas, practices, processes, designs, instruments, patterns, or compilations of information that have inherent economic value, are not generally known or available to others, and which the owner takes reasonable steps to protect.

The main difference between trade secrets and many other types of intellectual property is that trade secrets aren't registered because they remain protected by staying secret. They stay commonly protected by non-disclosure agreements (NDAs), work-for-hire clauses, and non-compete clauses. The prospective employee may sign agreements providing that they will not reveal their prospective employer's proprietary information, surrender or assign their employer ownership rights to intellectual work and work-products generated during employment, and not work for a competitor for a set period or within a defined geographic area.

The person who signs one of these contracts will usually be subject to a heavy financial penalty if they reveal the protected trade secrets. However, proving that one of these contracts has been breached can be hard once legal action is taken. NDAs, work-for-hire clauses and non-compete clauses must also be limited by time or geographic area to prevent a perpetual monopoly on the information. So, a common tactic to protect trade secrets is simply limiting knowledge of the secrets to a few key individuals in an organization.

Trade Dress

Trade dress is the visual appearance of a product or packaging (or the design of a building) that indicates its source to consumers. Trade dress is an aspect of trademark law. It is possible to register a trade dress as a trademark, but most trade dress is already protected without registration by the Lanham Act in the United States.
An example of product configuration is how a product is seen within the packaging. An example is toy cars sold in packaging that works as shadow boxes for commercial display. Together, they create a unique look. In other cases, the packaging is the product itself. A soft drink bottle and visible contents are trade dress, and the bottle remains valuable to the consumer as long as its contents last. Trade dress can't be applied to the functional features of a product, only the visual appearance that sets it apart from similar products.

Franchises

Franchises give franchisees access to a franchisor's proprietary business knowledge, processes, and trademarks, enabling them to sell a product or service under the franchisor's name. Franchisees typically pay the franchisor an initial start-up fee and annual licensing fees in exchange for acquiring a franchise.

Franchises are a low-cost way for a company to increase its market share or geographical reach and a popular way for entrepreneurs to start a business, especially in a competitive industry. A franchise gives the new business owner access to an established company's brand name, processes, trademarks, and a better chance for success.

Two of the earliest franchises were the McCormick Harvesting Machine Company and the I.M. Singer Company in the mid-1800s. The most common industries for franchises in modern times are in the food and hospitality industries. Well-known franchises include McDonald's, Taco Bell, Day's Inn, Dairy Queen, Denny's, 7-Eleven, Jimmy John's, and Dunkin' Donuts.

Why Intellectual Property Rights Are Important

Because intellectual property rights protect intangible property, these rights present some difficulties. Because the property is intangible, it can't be subdivided, but it can be consumed by an unlimited number of individuals without ever being used up. With tangible property, like land, the owner can put a fence around the property to prevent others from using or stealing it. But with ideas, the owner can do little to prevent someone from stealing it and producing the product at a lower price.
Patent, trademark, and other intellectual property rights processes allow creators and inventors to exchange the limited rights of disclosure of the details of the idea for protection from the theft of that idea. This type of protection treats intellectual property the same as tangible property.

Financial Incentives

Article I Section 8 Clause 8 of the United States Constitution reads: "The Congress shall have power 'To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.'" Because patents, trademarks, and other intellectual property rights give the creator of work or invention exclusive rights to do whatever they want with their ideas, including making money off them, they also provide a financial incentive to create these new ideas. The owner of the intellectual property rights can start a company to sell his idea to consumers, license it to an existing company, or, in the case of copyright, sell limited rights to reproduce the work to multiple companies.

Morals

Article 27 of the Universal Declaration of Human Rights states that "everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author," showing the connection between intellectual property rights and basic human rights. There are a few arguments that are used to make this claim:

  • Intellectual property rights are an extension of the individual who created it and display part of their personality.
  • Intellectual property rights stimulate social progress, help people create more innovation in the world, and, therefore, promote public welfare.
  • Intellectual property rights are the reward for the hard work done to invent the new idea and should belong to the creator.

Economic Growth

Unprotected creative ideas can be used by business rivals to take away the market share a business has and slow down its growth. Patents and trademarks can shield a business's exclusive services and goods that they spent time and money developing from being duplicated by another business that hasn't invested time and effort.

Market Value

Having intellectual property assets registered and protected can increase the goodwill of a company. Intangible assets such as goodwill add to the overall value of the business. Goodwill includes a company's brand name value, strong customer base and relationships, patents, and solid employee relations.

Solutions to Global Challenges

The solutions to many of the world's problems are made possible through intellectual property rights. Many of these solutions require millions of dollars of research and development that companies would not invest in if they could not profit from the results. Because companies can own the exclusive rights to the solution they developed, they can recoup the money they spent on R&D and make a profit.

Consumer Protection

Consumers can make the right choice about the reliability, safety, and effectiveness of their product purchases with the help of strong intellectual property laws. By enforcing intellectual property rights, the producers can ensure the authenticity and quality of their products, and consumers can enjoy an improved level of confidence and ease of mind.

Objections to Intellectual Property

Despite the benefits that strong intellectual property rights bring, many people criticize certain aspects of intellectual property laws. While they see the need for these rights, their opinion is that their application could improve. Here are some objections and disadvantages to modern intellectual property rights.

The Name "Intellectual Property"

Some people object to the term "intellectual property rights," claiming that it is too vague or that the words "property" and "rights" used in this fashion don't match the definition used in other laws. Others think that the term should be "intellectual monopoly." They claim that intellectual property rights allow companies to create market monopolies and restrict innovation. Another problem people have with the term is that if intellectual property rights were rights, they wouldn't expire.

Harmful to the Public

Some critics of intellectual property claim that intellectual monopolies can be harmful to health, stop progress or benefit the owner of the rights while hurting the general public. Life-saving medicines are subject to patent. And while pharmaceutical companies do need to recoup their research and development costs, these patents give them the ability to charge whatever they want for drugs until the patent expires because they won't have any competition.

Expansion of Scope

The scope of intellectual property rights has increased since first recognized, and some critics don't see these as good changes. Patents can now get granted for living organisms with plant breeder rights that give a breeder exclusive control over seeds, cuttings, and tissue culture, which can restrict a farmer's use of the plant. Also, when there is no need for registration or copyright notices, there is an increase in copyrighted works where the copyright owner can't be contacted.

Corporate Tax Avoidance

Intellectual property is also a tool that corporations use to avoid taxes. They do this by transferring their intellectual property rights to a tax haven country, so they do not have to pay higher taxes on them.

Cost of Defending Intellectual Property Rights

The advantages of owning the intellectual property rights to your works outweigh the disadvantages, but there still are disadvantages. The major disadvantage is that getting a patent, registering a trademark, and protecting these rights can be expensive. These costs can include lawyer fees, court costs, filing fees, registration fees, and settlement fees.

Intellectual Property Infringement

Intellectual property infringement is also commonly known as intellectual property theft or I.P. theft. There are many types of I.P. theft, relating to the type of intellectual property rights infringed.

Types of I.P. Infringement

Copyright Infringement

Copyright infringement occurs when a novel, film, song, or other work protected by copyright is reproduced, distributed, performed, or displayed in part or in whole or if major parts of the work get used in another derivative work. This is also known by other slang terms depending on the media used to create the work. The term “piracy” is often used for software, video files, and other electronically distributed media, especially when the theft occurs through the use of torrents. "Freebooting" is the term used for the unauthorized copying of online media on websites like YouTube, Twitter, and Facebook.

Patent Infringement

Patent infringement occurs when a person other than the patent holder or someone licensed by the patent holder of a work manufactures, sells, imports, uses, or offers for sale technology that is patented. Patents are limited by time and geographical location, and the definition of patent infringement can vary from country to country. In the U.S., a patent must be registered with the U.S. Patent and Trademark Office for patent infringement to occur.

Trademark Infringement

A person or company commits trademark infringement when, in the course of their trade, they make unlicensed use of a mark that is the same as the trademark that is registered. If the trademark is so similar to the registered trademark that consumers may be misled as to the source of the goods, this could also be considered trademark infringement. An example of trademark infringement would be another shoe company adding the Nike Swoosh or the Nike brand name to their own shoes.

Trade Secret Violation

Although trade secrets are not often protected directly by legislation, they stay typically protected by non-disclosure agreements between two parties. Consequently, if one party that has seen another party's trade secrets decides to make them public against an agreement or use them commercially without the information holder's permission, they have violated their NDA. The essence of an NDA is the definition of “confidential information.” Trade secret infringement happens when confidential information gets disclosed.

Counterfeiting

Some jurisdictions do not distinguish between trademark infringement and counterfeit goods, while others have a clearer legal distinction between the two. Whenever such a difference exists, the definition of counterfeit goods is narrower than that of trademark infringement since counterfeit goods must constitute an infringement of intellectual property rights and be imitations of the authentic goods. This means that the actual counterfeit product must look like a fake to the consumer to be a counterfeit.

What Do Intellectual Property Lawyers Do?

Intellectual property lawyers handle three phases of the intellectual property process: consulting, protection, and enforcement.

During the counseling phase, they conduct searches to determine if a new trademark is similar to any existing trademarks. If similarities are found, they could advise the client on making changes. When dealing with copyrights, they may have to have the technical knowledge to understand the patent and determine if it infringes on any existing patents.

During the protection phase, an intellectual property lawyer will register the trademark, patent, or copyright. They will apply to the U.S. Patent and Trademark Office or the U.S. Copyright Office and handle any issues during registration.

After that, an intellectual property lawyer will handle enforcing intellectual property law, including issuing take-down orders, contacting parties infringing on the I.P., and litigating in court if it comes to that.

What Are the Consequences of I.P. Infringement?

The consequences for I.P. infringement vary widely depending on the type of infringement and the country in which the infringement happened. In the case of trade secret violation, the terms of the non-disclosure agreements (NDAs), work-for-hire clauses, and non-compete clauses signed by both parties involved will dictate the consequences. For other cases of I.P. infringement, financial penalties sometimes get awarded, but often the plaintiff must prove that the infringement caused significant financial loss. Often, the I.P. owner only wants the infringement to stop and will settle for an injunction to stop it.

Conclusion

Intellectual property represents the intangible works that people create with their minds. This could be a song or a novel in the case of copyright, a logo in the case of a trademark, a new generator design in the case of a patent, or the recipe to a soda in the case of trade secrets. Intellectual property laws protect the people and companies who create such works from theft by others. This protection encourages more people and companies to create new things, improve the world, and profit from their work.