Intellectual property is becoming an increasingly important business asset. Intellectual property refers to innovations in the form of copyrights, patents, and trademarks. Examples of intellectual property include novel inventions, artistic works, literary works, and distinctive signs pertaining to a company. Protecting intellectual property allows a company to grow by sharing their innovations while maintaining their rights as the owner.
Business owners must understand the importance of intellectual property in order to effectively protect the company’s assets. The business world is becoming more aware that intellectual property protection is a huge factor of a company’s success and value. Investing in intellectual property protection will prevent the key resources of a company from being abused by its competitors.
The Different Types of Assets
An enterprise normally has two broad categories of assets, physical assets and intangible assets. Physical assets refer to the more traditional aspect of assets, such as the business’ buildings, machinery, and financial assets. Intangible assets are more difficult to cover, as they range from resources such as human capital to brands and ideas. Anything that contributes to a company’s creative and innovative capacity can be defined as intangible assets. Intellectual property is a huge component of a company’s intangible assets, and is often times the most valuable asset the company owns.
Due to the growth of information technology and service economy, innovative ideas and brand differentiation are becoming a main source of income for enterprises. The creation of intellectual property allows companies to have a competitive advantage over others. Understanding the different types of intellectual property protection allows a company to optimize the use of their assets.
Legal protection of intellectual property is more important than ever before, because it turns the company’s intangible assets into exclusive rights, so competitors are unable to benefit from their innovations. Intellectual property rights encourage and rewards innovations. It gives the owner of the property the opportunity to share their creations with limited competition and protects the company’s competitive point of differentiation. Intellectual property rights can sometimes be an extremely valuable bargaining tool rights, and it can be sold for financial gain. By protecting intellectual property, a company can expand the value of their assets and increase future productivity.
Patents and copyrights give companies exclusive ownership to their creative innovations. The holder of the patent or copyright has the sole power to decide how their work should be distributed and to whom it can be distributed to. A company trademark will create a reputation among customers, potentially enhancing its consumer base. Making the correct investment decisions in an enterprise is essential. If a company decides not to invest in legally protecting their intellectual property, their key resources may be at risk for infringement by competitors. Without legal protection, a company’s assets are open to the public and may be freely and legally used to acquire profit.
Reasons to Invest in Intellectual Property
A company’s future profits may be affected by the acquisition of a new patent or copyright. There are many instances in which a company’s value heavily increased overnight due to the acquisition of a patent. Furthermore, a trademark with a good reputation may also expand market value and increase the future revenue of a company. Investing in new intellectual property is now seen as a strong way to enhance a company’s financial situation. Research, product development and marketing for intellectual property is an investment that that every company should consider making.