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Intellectual property (IP)

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What is Intellectual property (IP)?

Intellectual property (IP) refers to creations of the mind-such as inventions, literary and artistic works, designs, symbols, names, and images-used in commerce. IP is protected by law through a variety of rights that grant creators and owners exclusive control over the use, reproduction, and distribution of their intangible assets. These protections are essential for fostering innovation, supporting economic growth, and ensuring creators are rewarded for their contributions.

Key takeaways

1
Intangible asset

IP represents valuable, non-physical creations such as patented technologies, artistic works, and brand identities. These assets lack a physical form but carry significant economic and cultural value.

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Exclusive rights

IP rights grant creators and owners the legal authority to control, monetize, and license their creations, while preventing unauthorized use or duplication by others.

3
Territorial and time-bound protection

IP rights are generally enforceable only within the jurisdiction where they are granted and for a specific duration (e.g., patents for 20 years, copyrights for the creator’s life plus 60 years).

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Types of IP

The main types include patents, trademarks, copyrights, trade secrets, industrial designs, and geographical indications-each protecting different forms of creative and innovative output.

Why does IP matters?

Intellectual property (IP) rights foster innovation by rewarding creative efforts with exclusive benefits, encouraging investment in research and development. They also contribute to economic growth by enhancing business competitiveness and attracting investment in knowledge-driven sectors. Additionally, IP protections like trademarks build consumer trust by ensuring product authenticity and support fair competition in the marketplace.

The IP protection process

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1
Identification and creation

Recognize the intellectual asset-be it an invention, brand, artistic work, or trade secret.

2
Application and registration

File for protection with the relevant government agency (e.g., patents, trademarks, copyrights, designs). The process includes application, examination, publication, and grant stages.

3
Legal protection

Upon approval, the creator or owner receives exclusive rights for a defined period. Some rights, like copyright, may arise automatically upon creation in many jurisdictions.

4
Enforcement

IP owners can take legal action against infringement, including cease and desist orders, lawsuits, or seeking damages.

Impact on business and society

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Business value: IP can be a major driver of company value and competitive advantage.

Monetization: Owners may license, sell, or franchise their IP to create revenue.

Legal recourse: IP rights provide a framework for legal protection and dispute resolution.

Innovation culture: Strong IP systems encourage ongoing innovation and creativity.

Impact on financial statements

Real-world examples

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Case study: IP in the technology sector

A tech startup develops a novel software algorithm and secures a patent. With patent protection, the company attracts investors, licenses its technology to larger firms, and prevents competitors from copying its innovation. This exclusive control enables rapid business growth and strengthens its market position.

Frequently asked questions about intellectual property?

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Patents (inventions), copyrights (artistic/literary works), trademarks (brands/logos), trade secrets (confidential business information), industrial designs, and geographical indications.

It varies: patents typically last 20 years, copyrights for the creator’s life plus 60 years, and trademarks can be renewed indefinitely.

The owner can pursue legal action, including injunctions, damages, or settlements, to stop unauthorized use and recover losses.

Some rights, like copyright, are automatic upon creation, while others (patents, trademarks, designs) require formal registration.

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