Intellectual property – What is intellectual property?
Intellectual property, or IP, refers to the ownership of unique intellectual goods such as inventions, logos, brand names, and product designs.
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IP only refers to something that you’ve created; as such, ideas themselves are not intellectual property. To be considered intellectual property, they must be realised in a more physical way. For example, an idea for an invention isn’t intellectual property, but the patent would be.
Intellectual property can:
be sold or transferred to another owner
have more than one owner
belong to individuals or businesses
The main purpose of IP law is to encourage the creation of intellectual goods and prevent ideas or inventions from being copied or stolen.
Because individuals and businesses are given rights to their ideas and inventions, they’re able to profit from them. Therefore, this gives an economic incentive to create and develop a range of intellectual goods.
Some kinds of protection for IP are given automatically, but you’ll need to apply for other kinds. For example, any art, photography, music and web content you create is automatically protected by copyright, whilst you’ll need to apply for trademarks or patents to protect inventions, products, product names, and logos.
If you create intellectual property whilst you’re self-employed, you usually have the rights to your work, even if it was commissioned by another person. The only exception is if you have a contract that explicitly states that your employer has the rights.
If you’re an employee and permanently work for someone else, you normally wouldn’t own the rights to IP you created as part of your job.
In accounting, intellectual property is considered an intangible asset, and, when possible, should be recorded as such on the balance sheet.
Copyrights, trade marks and patents should be recorded on the balance sheet and other financial statements at or below, cost price. They should be amortised over their useful life and should be recorded separately from goodwill. Although goodwill is also a type of intangible asset, it’s not classified as intellectual property.
Internally developed IP (such as trade secrets) shouldn’t be recorded on the balance sheet as they don’t have direct costs or a clear market value.
Some of the most common types of intellectual property include patents, trade marks, trade secrets, industrial designs, and copyrights.
A patent is a form of intellectual property rights granted to an inventor by a government. If a patent is granted, an inventor can stop others from recreating, using, leasing, or selling the invention without their permission. A patent is only valid for a limited period of time and within a specific territory.
A trade mark identifies products and services and can take many forms, including logos, colours, words or designs. If you’re granted a trade mark, you can take legal action against anyone who uses or copies your brand without permission.
Copyright is a legal right that gives the owner of certain types of intellectual property control over their work. Copyright covers intellectual property such as artistic or literary works, films and computer programmes.