What is Intellectual Property and Why is it Important?

Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, copyrights, trademarks, and trade secrets.

Types of Intellectual Property

Type	Property	Example
Patent	An exclusive right granted for an invention. A patent provides the patent owner with the right to decide how - or whether - the invention can be used by others. In exchange for this right, the patent owner makes technical information about the invention publicly available in the published patent document.	The patent for the personal computer was filed in 1980 by Steve Jobs and three other colleagues at Apple Inc.
Copyright	A legal term used to describe the rights that creators have over their literary and artistic works. Works covered A legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture and films, to computer programs, databases, advertisements, maps and technical drawings.	copyright
Trademark	A sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Trademarks date back to ancient times when artisans used to put their signature or “mark” on their products.	The Nike logo or “swoosh” is a trademark
Industrial design	An industrial design constitutes the ornamental or aesthetic aspect of an article. A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or color.	The Coca-Cola bottle shape is an industrial design
Geographical indication	A sign used on goods that have a specific geographical origin and possess qualities, a reputation or characteristics that are essentially attributable to that place of origin. Most commonly, a geographical indication includes the name of the place of origin of the goods.	Champagne is a geographical indication for sparkling wine from France
Trade secret	A trade secret is confidential information that may be sold or licensed. The unauthorized acquisition, use or disclosure of such secret information in a manner contrary to honest commercial practices by others is regarded as an unfair practice and a violation of the trade secret protection.	The recipe for Coca-Cola is a trade secret

 

Why is Intellectual Property Important?

Intellectual property is important because it allows companies and individuals to protect their core business and research and development activities, to create a stronger negotiating posture for cross-licensing and counterclaims, to contribute enormously to national and state economies, to ensure consumer safety and quality, and to foster an environment in which creativity and innovation can flourish.

Protection of Ideas

One of the main reasons why intellectual property is important is that it enables the creators and owners of IP to protect their ideas from being copied or exploited by others without their consent. This gives them an incentive to invest time, money and effort into developing new and original products, services, works or inventions that can benefit society. Without the protection of ideas, businesses and individuals would not reap the full benefits of their inventions and would focus less on research and development. Similarly, artists would not be fully compensated for their creations and cultural vitality would suffer as a result.

Value Creation

Another reason why intellectual property is important is that it creates value for businesses and individuals who own IP. Intellectual property can be a source of competitive advantage, revenue generation, reputation enhancement, market expansion and social impact. For example, patents can help inventors to license their inventions to other companies or individuals who can commercialize them in exchange for royalties or fees. Copyrights can help authors and creators to sell their works or grant permission for others to use them in various ways. Trademarks can help businesses to build brand recognition and loyalty among consumers who associate them with certain qualities or characteristics. Industrial designs can help businesses to differentiate their products from those of competitors and attract more customers. Geographical indications can help producers to promote their products as having unique features due to their origin and increase their market share. Trade secrets can help businesses to maintain their competitive edge by keeping their confidential information away from competitors.

Economic Growth

A third reason why intellectual property is important is that it contributes enormously to national and state economies. Intellectual property-intensive industries account for millions of jobs, billions of dollars in exports, trillions of dollars in gross domestic product (GDP) and a significant share of innovation activity in many countries around the world. According to a report by the U.S. Department of Commerce, in 2019, IP-intensive industries supported 30.2% of all U.S. jobs, 52.2% of all U.S. exports, 45.8% of all U.S. GDP and 74.9% of all U.S. private sector research and development spending⁷. Similarly, according to a report by the European Patent Office and the European Union Intellectual Property Office, in 2016 IP-intensive industries supported 29.2% of all jobs, 45% of all GDP and 90% of all EU exports in the EU.

Consumer Protection

A fourth reason why intellectual property is important is that it protects consumers from counterfeit and pirated goods that can harm their health, safety and welfare. Counterfeit and pirated goods are products that infringe on the IP rights of legitimate owners and are produced and sold illegally. They can include fake medicines, cosmetics, electronics, clothing, toys, food and beverages, among others. These products can pose serious risks to consumers who may not be aware of their origin, quality or ingredients. They can also damage the reputation and revenue of the legitimate IP owners who invest in creating and marketing their products. Intellectual property laws and enforcement mechanisms help to prevent, detect and combat the production and distribution of counterfeit and pirated goods and to ensure that consumers can trust the products they buy.

Innovation Promotion

A fifth reason why intellectual property is important is that it fosters an environment in which creativity and innovation can flourish. Intellectual property laws and policies aim to strike a balance between the interests of innovators and the wider public interest, by providing incentives for innovation while ensuring that the benefits of innovation are widely shared. Intellectual property also facilitates the dissemination and exchange of knowledge and information among different actors in the innovation system, such as researchers, inventors, entrepreneurs, investors, educators, consumers and policymakers. Intellectual property can also stimulate collaboration and cooperation among these actors, by enabling them to share their IP assets through licensing, joint ventures, open innovation platforms or public-private partnerships. Intellectual property can also support social innovation and inclusive development, by addressing the needs and challenges of marginalized or underserved communities through appropriate IP tools and strategies.

Conclusion

Intellectual property is a broad term that covers various types of intangible assets that are the result of human creativity and intellect. Intellectual property is important for many reasons, such as protecting ideas, creating value, boosting economic growth, safeguarding consumers and promoting innovation. Intellectual property rights and registrations allow businesses and individuals to secure their IP assets and leverage them for their benefit and for the benefit of society.