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.

BREAKING DOWN '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 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. Investing

    How To Calculate Minority Interest

    Minority interest calculations require the use of minority shareholders’ percentage ownership of a subsidiary, after controlling interest is acquired.
  6. Investing Basics

    3 Companies That Hate Debt Financing

    Learn how companies such as Chipotle, Bed Bath & Beyond, and Paychex are able to maintain impressive levels of growth without debt financing.
  7. Fundamental Analysis

    The Economics of FanDuel

    Part of fantasy sports’ success lies in one-day and week-long contests serving as an alternative to season-long games. FanDuel, a leader in this space, has recently surpassed a $1 billion valuation.
  8. Personal Finance

    Invest in Costco? First Understand Its Balance Sheet

    A strong balance sheet sets a company apart and boosts investor confidence. How healthy is Costco based on an analysis of its balance sheets from the last two years?
  9. Active Trading Fundamentals

    Oil Exploration Companies Pose High Risk for Investors

    Learn why oil exploration companies pose high risks for investors. Oil exploration stocks are highly leveraged to the price of crude oil.
  10. Investing

    How To Invest For The Greater Good

    We discuss why is important to prioritize economic, social and governance factors when making investment decisions, regardless of gender or generation.
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 >>

You May Also Like

Hot Definitions
  1. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  2. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  3. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  4. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  5. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  6. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
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!