"Intellectual Property" is a heading used for patents, trademarks, copyrights, and trade secrets. They are property in that they add value to the owner. Examples abound: (1) A weekly magazine that owns a building, printing equipment, employment contracts, etc. has some valuation. But if you add the trademark "Time Magazine", the valuation is higher. And it is even higher if the law allows them to stop all others from using the same name. (2) A magazine's customer list is another asset, treated initially as a trade secret. The owner may choose to sell it for additional income. (3) The price of software is more for the development cost, than the cost to make your copy (which is miniscule). Recouping the development cost is accomplished because software is protected by copyright, which prevents making unauthorized copies. (4) Whoever bought a "talking speller" toy between 1980 and 1997 paid a royalty to Texas Instruments for its patents covering the invention. Even other companies which produced the toy did so under license from Texas Instruments.

In every such case many of the principles are the same as with real property. The owner chooses how to use his property: He can sell ("assign") it, or lease ("license") it for rent ("royalties"). He can sue to evict ("stop") an accused trespasser ("infringer").

But intellectual property is not exactly real property. Unlike real property, they keep making more of it. To generate intellectual property can require anywhere from very little effort and cost to very much. To secure it legally can cost from very little to somewhat substantial. And the return on investment ranges from nothing to the stratospheric.

Some examples of the various types of intellectual property are:

• A trade secret is information that is valuable to the owner. The owner must make an effort to keep it a secret (e.g. employee agreements, etc.). It can be anything from a customer list, to the source code of a software, to the chemical formula for Coca-Cola. Trade secrets can last indefinitely; they last until they are figured out. Illegitimate ways of figuring out the secret, such as theft, carry steep penalties. Reverse engineering is a legitimate way to discover technical knowledge that constitutes a trade secret.



• A company might prefer a patent as a means of safeguarding its technical knowledge. Then that knowledge will no longer be a secret (everyone can read the patent). To some it is worth the time and effort required to obtain a patent, because trade secret protection would be inadequate (for instance, if reverse engineering would be easy to accomplish). A patent would allow its owner to prevent all others from practicing the same invention for close to 20 years.



• A utility patent is granted on a new technical invention. A technology company has a duty to not produce something covered by someone else's patents (not knowing is no excuse). So, before investing in production, a prudent company first surveys the landscape by doing a patent search. Of the patents they find, those that have expired are simply free information that does not need to be reinvented. This saves on development time and costs. Those patents that have not expired may be available for assignment or license. And if the area is free of existing patents, they can apply for their own patents, to keep out all future competition.
  
  A patent initially belongs to the inventor. Typically an engineer's employment agreement includes a clause that forces him to assign all inventions and patents to the company. A prudent company will not penalize, but will compensate an engineer who invents. One way might be allocating a budget for the time spent interfacing with the patent attorney. A second suggestion is to offer a cash reward. While it may seem far fetched, it may beat the alternative. Engineers invent all the time. When they get a good idea, they may wonder: do I give it to the employer, or do I leave, patent the new invention myself, and compete against them? A guaranteed $2,000 bonus may often prove the path of least resistance.



• A trademark is a word, phrase, or other mark that is used to identify a source of goods. The value of the mark is the imprint it has in the minds of the relevant consumers. The value is created by advertising (having a good product helps, too). So, infringement is where a mark is chosen that confuses the relevant consumers. In starting a new business, often a competitor is copied. The competitor's trademark should never be copied or even approximated - such would give the competitor an easy cause of action against the start up.


A mark can not be extended to prevent consumers from describing the same kind of thing. So, a mark can not be generic ("automobile") or descriptive ("four wheel drive"). A mark can be suggestive ("Legacy") or arbitrary ("Jeep").

Trademarks should be used carefully and properly. If not, they can be lost to the public. A proper use is Kleenex ® Tissues. But if the word "Tissues" is not printed near the word "Kleenex" (where the generic name of the product is to be printed), then the intended trademark becomes a generic name. Then it is refused protection, and others can use it, too. This is what happened with the word "aspirin" (it did not say "pain tablets").

A discussion of trademarks would not be complete without mentioning Internet domain names. They are the words between the "www." and the ".com" of a URL. Some are proving to have a huge commercial value. One domain name can not infringe another (computers do not get confused). However, where trademarks get involved, legal liability can appear in at least two directions. Does someone with a URL get to use it also as a trademark (to the exclusion of others)? Does someone with a trademark get to prevent all others from getting a URL? All confusingly similar URLs? In the entire world? These questions are being examined by courts as of this writing.