Why is Intellectual Property so valuable?
It could be argued that the covid pandemic has been instrumental in accelerating high-profile acquisitions, mergers, and litigation over the last year, think Thomas Cook or more recently Debenhams and the millions of business owners seeking redress from their Insurance providers, due to loss of revenue.
Intellectual Property (IP) is moving towards an increasingly critical position in global economics. Unfortunately, many organisations do not realise the value of, and risks to, their IP, even when their IP is responsible for a significant percentage of the organisation’s overall value.
With such a spotlight, for example, on the technology pertinent to the Healthcare Sector surrounding the covid pandemic, there has never been a better time to monetise, protect IP and invest in IP.
What is Intellectual Property?
Intellectual Property (IP) is a term used to describe intangible assets owned and legally protected by a company from outside use, or implementation, without consent. IP provides companies with a competitive edge and by defining IP as an asset, ensures that it has the same protective rights as physical property. Obtaining protective rights for IP is crucial to prevent competitors copying ideas – of which there is a serious threat within the mobile technology and web-based environment, for example.
A company that owns IP can realise value from it in many ways, the most obvious is by using it internally within the organisation for its own purposes or processes such as the provision of goods and services to customers - or by sharing it externally. The IP can be shared externally using legal vehicles such as royalty rights.
There is an extensive global system for defining, protecting, and enforcing IP rights including both multilateral treaty schemes and international organisations. An example of these are the World Intellectual Property Organisation (WIPO) and the United Nations Commission on International Trade Law (UNCITRAL). It should be noted here, however, that there are many variations with regards to the respect for and enforcement of rights at local levels.
Types of Intellectual Property
There are four distinct types of IP – Trade Secrets, Trademarks, Copyrights and Patents.
Any idea, or fact, that is undisclosed by a company can be described as a trade secret. A trade secret is a unique form of IP, it could be secret only whilst a patent is pending, or it could remain a closely guarded secret for eternity (e.g., Heinz beans recipe).
By definition, a trade secret, is information that a company or individual uses or has exclusive rights. To qualify to be a trade secret, the information must meet several requirements: it is genuine and not obvious, it provides the owner(s) with economic or competitive advantage and therefore has real value, and it is protected against disclosure. Examples of trade secrets include tactics, recipes and any other information that gives the company a competitive advantage.
Trademarks are a common type of IP. The U.S. (United States) Patent and Trademark Office (PTO) defines a trademark as “any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others.” The Trademark Law Treaty Implementation Act provides some global protection for U.S. registered trademarks, it is not as robust as the protection for copyrights.
Copyrights are among the most widely used types of IP and are a form of protection provided to the authors of original works, both published and unpublished. A copyright protects tangible forms of expression (such as art and music) rather than the idea. In the United States, under the Copyright Act of 1976 states that protection applies to any original work as soon as it is created in a tangible form.
Compared to the other types of IP, patents are the most valuable, costly, and difficult to obtain. A patent (defined by the PTO) is “the grant of a property right to the inventor,” providing the owner “the right to exclude others from making, using, offering for sale, selling, or importing the invention.”
Innovative technology and business methods can be patented, but more abstract items such as web sites and ideas cannot. Patents are usually valid for 20 years from the date of application and will only be granted when the PTO has received sufficient documentation and verification of originality.
Once a patent has been issued, the owner can then grant licenses to others to use the invention or design – the owner of the patent can also charge a fee for its use. At the time of writing, patents are only valid within the United States, however, 130 countries have agreed to honour patents through instruments including the Patent Cooperation Treaty (PCT).