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Knowing How Intellectual Property Profits Business

Big business has long known how intellectual property affects profit. But smaller business need not be excluded from this knowledge.

Business (and their advisers) has generally had an uncertain relationship with intellectual property, due to unfamiliarity with it, problems with its valuation and quantification on balance sheets, and the natural preference for business to focus on what they believe they are good at - product development and marketing, customer relationships, cost efficiencies and competitor surveillance.

Yet companies such as Microsoft, Pfizer and Sony owe their profitability in no small part to their intellectual property, to the securing and enforcement of legal rights in such property, and to the commercial exploitation of such property in their own business.

Without the legal monopoly protection afforded to computer software by copyright law and such protection afforded to pharmaceuticals and electronics by patent law, combined with the owner's ability to exploit such protection by preventing competitors from introducing copies, thereby flooding markets and reducing profit margins, the so-called market savvy for which such companies are known may well amount to little.

This legal monopoly and the owner's ability to exploit such protection is the hub of the profitability of companies who invest in research, development, introduction and marketing of new products or processes and who have watchful competitors seeking to exploit for themselves such technological advances without themselves so investing.

There are five main types of intellectual property, being patents, copyright, trade secrets, trade marks and industrial designs, all of which assist businesses in different ways. Being aware of them, knowing how to protect, use and value them is the key to their optimal and profitable exploitation by business.

What is a Patent?

Legal protection granted to an invention, being a product, manufacturing process, business methodology, and some computer programs. Registration protection must be sought on a country-by-country basis. Ideas, without more, cannot be patented

What is copyright?

Legal protection for the original expression of ideas, in the form of literary works, artistic works, musical and dramatic works, sound recordings, films, television and radio broadcasts. Computer programs are considered literary works, while blueprints are considered artistic works.
As with patents, there is no copyright protection in an idea except as how it is expressed.

What are trade secrets?

Any information, including experimental methods, computer software, formulae, ideas, prototypes, processes, recipes, drawings, specifications, customer lists, business strategies and sales/marketing information, that is not known by a owner's competitors, provides the owner with a competitive advantage, and is treated by the owner in a way to prevent the public or competitors learning about it (other than by improper acquisition or theft).

It is the relationship of confidence between the information owner and the recipient which receives legal protection, not the information itself. Consequently, it remains of value only while it remains a secret.

What is an industrial design?

The pattern, shape, ornamentation or configuration (ie. the appearance) of mass produced products may be registered in the same way as a patent, the tests of registrability are similar to that for patents and the legal rights afforded to a registered design are similar.

What is a trade mark?

A trade mark is any word, logo, smell sound or colour which indicates the trade origin of goods or services. A trade mark distinguishes the products/services of one company from the similar products/services of other companies, assisting in the creation of goodwill and marketplace recognition of the business and of the products/services they market.

Trade marks can be unregistered or registered. Generic words, geographical names, surnames, highly descriptive or complimentary words are generally difficult to protect.

Obtain professional advice

Once a business decides it has intellectual property which it wishes to profit from, or it wishes to avoid the legal liability it may assume in breaching some else's intellectual property rights, it should obtain advice from suitably qualified and experienced lawyers or patent/trademark attorneys in the securing and enforcement of legal rights, and from suitably qualified and experienced business consultants in the valuation and possible exploitation of such rights.

Next Step

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