Intellectual Property

AAA

DEFINITION of 'Intellectual Property'

A broad categorical description for the set of intangibles owned and legally protected by a company from outside use or implementation without consent. Intellectual property can consist of patents, trade secrets, copyrights and trademarks, or simply ideas.

The concept of intellectual property relates to the fact that certain products of human intellect should be afforded the same protective rights that apply to physical property. Most developed economies have legal measures in place to protect both forms of property.

INVESTOPEDIA EXPLAINS 'Intellectual Property'

Companies are diligent when it comes to identifying and protecting intellectual property because it holds such high value in today's increasingly knowledge-based economy. Extracting value from intellectual property and preventing others from deriving value from it is an important responsibility for any company.

Many forms of IP cannot be listed on the balance sheet as assets, but the value of such property tends to be reflected in the price of the stock. Management's ability to manage these effectively and turn a profit is just one example.

RELATED TERMS
  1. Goodwill

    An account that can be found in the assets portion of a company's ...
  2. Logo

    A graphical mark used to identify a company, organization, product ...
  3. Trade Secret

    Any practice or process of a company that is generally not known ...
  4. 25% Rule

    1. The idea that a local government's long-term debt should not ...
  5. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  6. Patent

    A government license that gives the holder exclusive rights to ...
RELATED FAQS
  1. Is intellectual property considered a form of capital asset within a company?

    Some kinds of intellectual property are considered capital assets and may be recorded on a company's balance sheet as intangible ... Read Full Answer >>
  2. What are common examples of monopolistic markets?

    The most extensive and common monopoly markets operate with exclusive licensure, anti-competitive subsidization and/or tariff ... Read Full Answer >>
  3. What tangible assets are depreciated?

    Nearly all tangible assets can be depreciated. An asset is considered "tangible" when it has a physical form. This includes ... Read Full Answer >>
  4. What transactions are included in a country's balance of payments?

    The balance of payments is supposed to be for a country what a balance sheet is for a company. For example, the balance of ... Read Full Answer >>
  5. Why is the Gordon Growth Model not more widely used?

    The Gordon growth model is not more widely used because it relies on many assumptions that are hard to predict. The Gordon ... Read Full Answer >>
  6. What are the tax incentives or disincentives to vertical integration?

    In certain jurisdictions, such as the countries that are members of the European Union, there is a system of taxation called ... Read Full Answer >>
Related Articles
  1. Forex Education

    Using The Price-To-Book Ratio To Evaluate Companies

    The P/B ratio can be an easy way to determine a company's value, but it isn't magic!
  2. Personal Finance

    Can You Count On Goodwill?

    Carefully examine goodwill and its sources before considering the value of your investment.
  3. Investing Basics

    How To Evaluate A Company's Balance Sheet

    Asset performance shows how what a company owes and owns affects its investment quality.
  4. Markets

    Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  5. Fundamental Analysis

    Understanding Consolidated Financial Statements

    Consolidated financial statements are the combined financial statements of a parent company and its subsidiaries.
  6. Fundamental Analysis

    Explaining the Common Size Income Statement

    A common size income statement expresses each account as a percentage of net sales.
  7. Economics

    Understanding Historical Cost

    Historical cost equals the original purchase price of an asset recorded on a company’s balance sheet.
  8. Economics

    What's Recorded in a Cash Book?

    A cash book is an accounting book that records all cash receipts and cash payments before they’re recorded in a business’s general ledger.
  9. Economics

    Explaining Capital Reserve

    Capital reserve is an account on a company’s or municipality’s balance sheet that is dedicated to money reserved for long-term or large-scale projects.
  10. Economics

    Understanding Capital Investment

    Capital investment is a term that describes a company’s expenditures for long-term assets used in the operation of its business.

You May Also Like

Hot Definitions
  1. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  2. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  3. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  5. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  6. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!