Intellectual Property Rights

Intellectual property rights protection issues get a lot of attention in the media, but it seems like the terminology used in discussions about IP protection is almost interchangeable. In fact, the methods which you use to protect IP have significant strategic importance to your firm.

Patent
Patents protect tangible items or processes by prohibiting others from making, selling or importing material that utilizes the ideas contained in the patent. Patented items could be processes, machines, manufacture processes or compositions. In the U.S. a patent is protected by law for a term of twenty years.

An example of a patent would be a new drug which a pharmaceutical company developed after substantial research and development costs. The patent protects the pharmaceutical company’s investment in the new drug, preventing other companies from copying it, while its costs are recouped in the market.

Copyright
Copyrights protect intangible intellectual property such as works of authorship (i.e. books, movies, pictures and software) by preventing others from copying, making derivative works, displaying, performing or distributing that property. Copyrighted material is protected for seventy years after the death of the author/artist or a total of 95 years from publication for a company.

An example of a copyright would be a movie produced and distributed on DVD. Copyrighting the material makes it illegal for others from simply copying the DVD and distributing it themselves for a profit. The copyright law allows the company who produced the work to recoup the costs, etc. involved in producing the movie.

Trademark
A trademark is a symbol, name, slogan, or image which is used to identify a company or brand with consumers. Trademarks allow a company or brand to capitalize on consumer’s past experience and expectations of the product or service it represents, thus reducing marketing costs. Trademarks are protected indefinitely in the U.S. provided that the owner of the trademark utilizes the trademark properly.

An example of a trademark would be the Coca-Cola symbol. The symbol is known around the world and customers who see that symbol are familiar with the Coca-Cola beverage as well as the Coca-Cola family of beverages associated with it. Because of its nearly universal recognition, Coca-Cola saves money in advertising what the product tastes like and what to expect when they purchase their product.

Trade Secret
Trade secrets are information that a company holds secret to prevent competitors from gaining and advantage on that company. Trade secrets usually hold information that allows a market advantage to a company, or a method to reduce costs, thus directly affecting profitability. Trade secrets are not patented as this would entail the release of the details of that secret.

An example of a trade secret would be what the eleven herbs and spices are in Kentucky Fried Chicken’s secret recipe. By keeping this a secret, KFC prevents competitors from directly copying their product offering to the market.