Works of art and designs for new technology may seem ephemeral—even otherworldly at times—but they also have economic value and certain legal protections, thanks to a designation known as intellectual property (IP).
Just like tangible assets, they have the potential to generate income for their creators or owners. In fact, some of today’s most valuable companies (Apple, Microsoft, and Alphabet) derive most of their profit from IP.
Determining the best way to get legal protections for your work can be challenging. Whether you’re a new entrepreneur or a seasoned business owner, learn how to get IP protections for your products and services in this guide.
What is intellectual property?
Intellectual property (IP) refers to creations of the mind, such as inventions, literary works, artistic works, designs, and images used in commerce. Examples of intellectual property protections include patents for inventions, copyrights for books and music, and trademarks for brand logos.
The importance of intellectual property rights
Protecting IP from unauthorized use—also known as intellectual property infringement—is crucial for businesses and individuals to safeguard their creative and innovative efforts.
Intellectual property law is designed to protect and encourage innovation while letting creators benefit exclusively from the commercial exploitation of their own work for a period of time without fear of being undercut by copycats.
Types of intellectual property
Not all types of intellectual property are the same. Here are the main types and the protections involved:
Copyright
Copyright law grants the creator of an original work exclusive rights to its use and distribution, usually for a limited time (generally 70 years after the creator’s death), so the creator and their estate can receive compensation for their intellectual investment.
This type of IP protection applies to a wide range of creative, intellectual, or artistic forms or works. Works can include:
- Literary: Books, articles, poems, plays, and other written content.
- Artistic: Paintings, drawings, sculptures, photographs, etc.
- Music: Compositions, songs, musical scores, and performances.
- Audiovisual: Films, TV shows, and commercials.
- Architectural: Building designs and architectural plans.
- Software: Software programs and computer code.
Copyright infringement can include using someone else’s copyrighted work without permission, or using copyrighted material in a way that violates the copyright holder’s rights. It’s a civil offense and can be prosecuted in federal court.
How to register a copyright: Anyone can register their work with the US Copyright Office. It offers greater legal protection than not registering the copyright, like the ability to sue an infringer through federal court. A standard application costs $65.
Trademark
Trademarks are distinctive symbols, names, phrases, logos, or other identifiers used to distinguish the source of goods or services from others. They play a crucial role in protecting a company’s brand identity and helping consumers recognize and choose products or services they trust and prefer.
Trademarks are a form of intellectual property protection granting exclusive IP rights to use a mark in connection with specific goods or services. For example, the multinational food manufacturing company Kellanova owns the trademarks of recognizable brands like Eggo, Pringles, Pop-Tarts, and Frosted Flakes.
Trademark infringement occurs when someone uses a trademark that violates the rights of the trademark holder or uses a trademark that is confusingly similar to another trademark. This type of IP infringement is a civil offense and can be prosecuted in federal court.
How to register a trademark: While the use of a trademark can provide some level of intellectual property protection, registering a trademark with a government authority such as the United States Patent and Trademark Office offers additional legal benefits and protections. Registration typically involves a thorough examination process to ensure the mark meets the required special considerations, spelled out in the federal Lanham Act—the law establishing the US’s trademark registration system and defining what constitutes trademark violation.
Under trademark law, legal rights can potentially last indefinitely if the trademark owners continue to use the mark and maintain the registration.
Patent
Patents give inventors the exclusive right to their inventions for a set period. The purpose is to encourage innovation by granting this temporary monopoly on use, development, and commercial exploitation. This allows inventors to recoup the costs of research and development and to potentially profit from them.
There are three types of patents you can register:
- Utility patents. These protect IP like machines, processes, and materials.
- Design patents. These cover the shape or design of an invention.
- Plant patents. These cover species of plant life copied through grafting.
Patent law typically covers new and useful inventions, processes, machines, or compositions of matter, such as drugs or chemicals. In some cases, patents can also cover new developments for existing products.
Patent infringement occurs when someone makes, uses, sells, or imports a patented invention without the patent holder’s permission.
How to register a patent: You can apply for a patent through the US Patent and Trademark Office. Most often, you’ll need assistance from a patent attorney familiar with patent law to ensure your application is watertight. This can be an expensive process. Attorney fees aside, other patent filing costs include basic registration fees, patentability starches, and issue or maintenance fees. Patents typically last for 20 years from the filing date. However, it’s worth noting that the US Patent and Trademark Office often has a backlog of applications, meaning it could take a few years for a patent to be approved. Formal protection might actually amount to 17 or 18 years.
Trade secret
A trade secret protection refers to confidential and proprietary information providing a business with a competitive advantage. Trade secrets can include a wide range of technical information such as formulas, processes, workflows, customer lists, and other business information that derives its value from being kept secret.
You can protect your IP as a trade secret by keeping it confidential and only disclosing it to people who need to know, such as specific employees. Say you’ve developed a new software algorithm that gives your company a competitive edge. You can keep it a secret and only disclose it to employees who need to know, such as your developers.
Trade secret misappropriation is the unauthorized disclosure of a trade secret. This can include disclosing a trade secret to someone not authorized to know it, or using a trade secret in a way that violates the rights of the trade secret holder.
How to register a trade secret: There are no official registries or offices where a company can register trade secrets, as they might with a copyright, a patent, or a trademark. Instead, well-written business contracts, enforced through civil litigation, protect trade secrets.
Industrial design
An industrial design protection covers the visual appearance or configuration of a product that makes it visually distinctive. Examples include patterns, packaging design, or sneakers like Crocs.
Unlike design patents, industrial property protection only protects a product’s appearance—not the technology or configuration. Other people can create a similar product, but the industrial design IP prevents them from using the same visual design.
How to register an industrial design: You can apply to register your design with the US Patent and Trademark Office. This is a long process—it can take between one and three years to hear back on your industrial design IP application.
Geographical indication
Geographical indication (GI) is a type of IP protection that’s granted to products that share unique characteristics related to a geographical location. They protect the authenticity and origin of a product.
The most well-known example of GI IP is Champagne. Only sparkling wine produced in the French region of Champagne can legally be labeled Champagne.
How to register a geographical indication: Most governing bodies already have GI tags to ensure that producers from a specific area meet conditions to market their products using the name. You can apply to use this certification mark with the United States Patent and Trademark Office (USPTO). It’s rare for individuals to file a new GI application. Since the protection can apply to multiple brands within the same location, businesses tend to come together and file a joint application with the USPTO when the need for location-based protection arises.
How to protect intellectual property rights
The best way to protect your IP is by registering it. This will give you a legal right to exclusive use of your IP and act as a deterrent to would-be infringers. For example, if you’ve created a new logo for your company, you can register it with the US Copyright Office. Once it’s registered, you can sue anyone who uses it without your permission.
Other ways to protect your intellectual property rights include:
- Non-disclosure (NDA) and confidentiality agreements. If you plan to disclose your IP to others, make sure to do so under an NDA. This will prevent the recipient from disclosing your IP to others without your permission. For example, if you plan to share your invention with a potential investor, have the investor sign an NDA before disclosing any details.
- Implementing security measures. Guard your secret IP with physical and digital security measures, such as encrypting your confidential files and limiting access to them. You can also store them on a password-protected server that only authorized employees can access.
- Educating employees. Ensure your employees know your company’s IP policy and the importance of keeping IP confidential. You can do this by having them sign NDAs, providing training on company IP policy, and putting up reminders around the office.
- A digital rights management (DRM) system. If you plan to sell or distribute digital content—such as ebooks, music, or software—you can use a DRM system to control how your customers use your content. For example, you can use DRM to prevent copying and unauthorized distribution or to set rules on how your content can be used.
“The best place to start when wanting to register your IP is by searching for the national IP office in the country in which you are seeking protection,” says Rina Sond, founder and CEO of the boutique IP consultancy firm Intangen. “This is the UKIPO in the UK, the EUIPO in Europe, and the USPTO in the US. Each country has its own rules and systems in place for IP registrations, and it is important to protect your IP in the main markets or countries into which you sell.”
How to handle IP in accounting
- Categorization
- Amortization
- Depreciation exceptions
Here’s how to handle IP in your accounting practices:
Categorization
Although many IP assets do not appear on a business’s balance sheet, they usually fall under a category known as non-current assets. This category represents a company’s long-term, income-producing investments in the business.
For example, if a company holds the publishing rights to a song, it can collect license fees from third parties who wish to use the song in television commercials. The same goes for a software company licensing a computer program to third-party users.
Amortization
Because some types of IP such as patents have expiration dates, they lose value as they age and are amortized over time. Amortization is an accounting method that reflects an asset’s declining value, much like a computer or truck wearing out with use.
By amortizing a patent’s value over the lifespan of its exclusivity period (the time before it becomes available to the public domain), a patent owner can lower taxable income by deducting a percentage of a patent’s falling value.
For example, a company may only hold the exclusive right to a patent for 20 years. Under a straight-line depreciation model, the total value of the patent would be divided by 20. For each passing year of exclusivity, the company would deduct 1/20th of the total value from its income for tax purposes.
Depreciation exceptions
In other instances, usually for a tax advantage, some of the depreciation might be front-loaded at the beginning of the patent’s term. For IP that has no shelf life, like trademark protection for slogans, logos, and brand names, there’s no way for a company to amortize value since it doesn’t expire.
How intellectual property enforcement works
Here are the main components of intellectual property enforcement:
Registration
Federal law permits you to register your IP with the relevant authority, depending on the type of IP at hand. You can register trademarks and patents with the USPTO.
Registration isn’t always necessary with copyrights, however. Copyright usually takes effect the moment a work is published or otherwise made public, but registering your copyright-protected work with the US Copyright Office can create a useful record. It can also be used as an enforcement mechanism if you ever need to settle an IP infringement case in federal court, which handles almost all IP disputes.
Foreign countries and organizations like the European Union have their own IP systems with respective registration benefits.
Confidentiality
Keeping your IP confidential is another way to avoid IP infringement. This is especially useful when it comes to trade secrets, which you can’t register ahead of time.
Ownership of trade secrets is usually only ever determined in court after someone has already filed a lawsuit. A much cheaper way to defend them is to limit knowledge of your IP to trusted employees, who can be bound to secrecy through non-disclosure agreements. You can also keep patent details confidential or closely guard early drafts of works you later intend to copyright.
Monitoring
Regularly monitor relevant marketplaces for unauthorized use of your copyrighted works, patents, trademarks, or trade secrets. Consider conducting regular internet searches, setting up Google Alerts for your IP, and monitoring social media for infringement. You can also hire a service that specializes in monitoring IP infringement.
Take prompt action against infringers knowing that litigation may not be necessary. A sternly worded cease-and-desist letter from intellectual property lawyers or a Digital Millennium Copyright Act (DMCA) takedown notice will often do the trick.
Documentation
Maintain detailed records of the creation, development, and use of your IP. This documentation can be crucial in legal proceedings, if or when it comes to that.
Impact of social media on intellectual property
Creators are automatically covered by copyright law when they post unique content to their accounts. This means that all social media is copyrighted by default, and you can take legal action against anyone using your content without permission.
This works both ways for you as a brand. Reposting a customer’s video to your own TikTok or Instagram page, for example, could constitute copyright infringement, since you’re using content produced by another person. Always make sure you have explicit permission to repost user-generated content (UGC), ideally within a legal contract, to ensure you’re protected.
Rina Sond says, “Whilst [social media] has opened up a worldwide marketplace full of opportunities, it has made it more challenging from an IP protection perspective. The vast amount of content on various social media platforms means it is harder than ever to monitor and control any copying and sale of counterfeit goods.
“Enforcement on social media can be time-consuming and costly, but having registered IP rights can simplify the process and provide stronger legal recourse,” Rina adds. “Without proper IP protections, pursuing infringers can be more complicated and costly.”
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Intellectual property FAQ
What is IP, in simple terms?
IP, or intellectual property, is a category of intangible property or asset that is the product of human intellect, such as creative works, industrial designs, software, logos, and more.
What is the purpose of intellectual property protection?
Intellectual property protects the rights of the owner. These rights include the right to exclusive use of the intellectual property and the right to prevent others from using it without permission.
What is the most common type of intellectual property infringement?
Copyright infringement is one of the most common types of IP infringement. The creator of a piece of work can sue people who use their creations without permission.
Does your employer own your intellectual property?
Most employment contracts have a clause that states the employer owns any intellectual property you create as part of your job during your employment.
What is not intellectual property?
You can’t protect an idea, but you can protect how you create something from it, like the way you’ve written it in a book or illustrated the concept. Additionally, facts, generic titles or phrases, familiar symbols, and mathematical formulas are not considered IP.
