The Importance of Intellectual
Property
Mohammad Shafiur Rahman Chowdhury
Associate Professor
Department of Accounting
University of Chittagong
The Importance of Intellectual Property
• Intellectual Property
– Is any product of human intellect that is intangible but has
value in the marketplace.
– It is called “intellectual” property because it is the product
of human imagination, creativity, and inventiveness.
• Importance
– Traditionally, businesses have thought of their physical
assets, such as land, buildings, and equipment as the most
important.
– Increasingly, however, a company’s intellectual assets are
the most important.
Determining What Intellectual
Property to Protect
Common Mistakes Firms Make in Regard to
Protecting Their Intellectual Property
The Four Key Forms of Intellectual Property
Patents
• Patents
– A patent is a grant from the federal government conferring
the rights to exclude others from making, selling, or using
an invention for the term of the patent. (see the next slide
for a full explanation)
• Increasing Interest in Patents
– There is increasing interest in patents.
• Since Patent #1 was granted in 1790, the U.S. Patent &
Trademark Office has granted over six million patents.
• The patent office is strained. It now takes an average of
32.2 months from the date of first filing to receive a
U.S. patent.
Proper Understanding for What a Patent Means
Three Basic Requirements for Obtaining a
Patent
Types of Patents
Business Method Patents
(Special Utility Patent)
• Business Method Patent
– A business method patent is a patent that protects an
invention that is or facilitates a method of doing business.
– The most notable business method patents that have been
awarded:
• Amazon.com’s one click ordering system.
• Priceline.com’s “name-your-price” business model.
• Netflix’s method for allowing customers to set up a
rental list of movies to be mailed to them.
The Process of Obtaining a Patent
Patent Infringement
• Patent Infringement
– Takes place when one party engages in the unauthorized
use of another party’s patent.
– The tough part (particularly from a small entrepreneurial
firm’s point of view) is that patent infringement cases are
costly to litigate.
• A typical patent infringement case costs each side at
least $500,000 to litigate.
Trademarks
• Trademark
– A trademark is any word, name, symbol, or device used to
identify the source or origin of products or services and to
distinguish those product or services from others.
– Trademarks also provide consumers with useful
information.
• For example, consumers know what to expect when
they see an Abercrombie & Fitch store.
• Think how confusing it would be if any retail store could
use the name Abercrombie & Fitch.
Illustration of the Multifaceted Nature of
Trademark Protection
Types of Trademarks
Types of Trademarks
What is Protected Under Trademark Law
What is Protected Under Trademark Law
Exclusions From Trademark Protection
The Process of Obtaining a Trademark
Copyrights
• Copyrights
– A copyright is a form of intellectual property protection
that grants to the owner of a work of authorship the legal
right to determine how the work is used and to obtain the
economic benefits from the work.
– A work does not have to have artistic merit to be eligible
for copyright protection.
• As a result, things such as operating manuals and sales
brochures are eligible for copyright protection.
What is Protected By a Copyright?
Exclusions From Copyright Protection
• The Idea-Expression Dichotomy
– The main exclusion is that copyright laws cannot protect
ideas.
• For example, an entrepreneur may have the idea to
open a soccer-themed restaurant. The idea itself is not
eligible for copyright protection. However, if the
entrepreneur writes down specifically what his or her
soccer-themed restaurant will look like and how it will
operate, that description is copyrightable.
• The legal principle describing this concept is called the
idea-expression dichotomy.
• An idea is not copyrightable, but the specific expression
of an idea is.
Obtaining a Copyright
• How to Obtain a Copyright
– Copyright law protects any work of authorship the
moment it assumes a tangible form.
– Technically, it is not necessary to provide a copyright notice
or register work with the U.S. Copyright Office.
– The following steps can be taken, however, to enhance
copyright protection.
• Copyright protection can be enhanced by attaching the
copyright notice, or “copyright bug” to something.
• Further protection can be obtained by registering the
work with the U.S. Copyright Office.
Copyright Infringement
• Copyright Infringement
– Copyright infringement occurs when one work derives
from another or is an exact copy or shows substantial
similarity to the original work.
– To prove infringement, a copyright owner is required to
show that the alleged infringer had prior access to the
copyrighted work and that the work is substantially similar
to the owner’s.
– The illegal downloading of music is an example of
copyright infringement.
– Copyright infringement costs the owners of copyrighted
material as estimated $20 billion per year in the U.S. alone.
Copyright Infringement
• Copyright Infringement
– Copyright infringement occurs when one work derives
from another or is an exact copy or shows substantial
similarity to the original work.
– To prove infringement, a copyright owner is required to
show that the alleged infringer had prior access to the
copyrighted work and that the work is substantially similar
to the owner’s.
Trade Secrets
• Trade Secrets
– A trade secret is any formula, pattern, physical device,
idea, process, or other information that provides the
owner of the information with a competitive advantage in
the marketplace.
– Trade secrets include marketing plans, product formulas,
financial forecasts, employee rosters, logs of sales calls,
and similar types of proprietary information.
– The Federal Economic Espionage Act, passed in 1996,
criminalizes the theft of trade secrets.
What Qualifies For Trade Secret Protection?
• Trade Secret Protection
– Not all information qualifies for trade secret protection
– In general, information that is know to the public or that
competitors can discover through legal means doesn’t
qualify for trade secret protection
– Companies protect trade secrets through physical
measures and written documents.
What Qualifies For Trade Secret Protection?
The strongest case for trade secret protection is information that
is characterized by the following
Physical Measures for Protecting Trade Secrets
Conducting an Intellectual Property Audit
• Intellectual Property Audit
– The first step a firm should take to protect its intellectual
property is to complete an intellectual property audit.
– An intellectual property audit is conducted to determine
the intellectual property a firm owns.
– There are two reasons for conducting an intellectual
property audit:
• First, it is prudent for a company to periodically
determine whether its intellectual property is being
properly protected.
• Second, it is important for a firm to remain prepared to
justify its valuation in the event of a merger or
acquisition.
Conducting an Intellectual Property Audit
• The Process of Conducting an Intellectual Property Audit
– The first step is to develop an inventory of a firm’s existing
intellectual property. The inventory should include the
firm’s present registrations of patents, trademarks, and
copyrights.
– The second step is to identify works in progress to ensure
that they are being documented and protected in a
systematic, orderly manner.
Warning!
• Never use these slides as a substitute of your
Entrepreneurship Development text books.
• These slides should help to keep you on track, as a guiding
assistance of reading text books that has come to you along
with these slides.
• Please use the relevant sections of the following text books in
reading the slides.
• “Entrepreneurship – Successfully Launching New Ventures” -
Bruch R. Barringer& R. Duance Ireland
