Chapter 07

The Importance of
Intellectual
Property
Bruce R. Barringer
R. Duane Ireland
12-1
What is Intellectual Property?

 Intellectual property (IP) refers to creations of the

mind, such as inventions; literary and artistic
works; designs; and symbols, names and images
used in commerce.
– 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 mind and creativity.
 The Importance of Intellectual Property

• 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.
– Intellectual property protection is critical to raising
innovation. Without protection of ideas, businesses and
individuals would not earn the full benefits of their inventions
and would focus less on research and development.

12-3
The Four Key Forms of Intellectual
Property

Patents Trademarks

Copyrights Trade Secrets

12-4
 Patents

• Patents
– Patents are a right granted to an inventor that allows them
to exclude all others from making, using, or selling their
invention for 20 years.
– Patents provide incentives for innovators, offering them
recognition for their creativity and enabling them to
appropriate the returns of their investment.
– A patent may be a powerful business tool allowing
innovators to gain distinctiveness over a new product or
process, develop a strong market position and earn
additional revenue.

12-5
Three Basic Requirements for Obtaining a
Patent

12-6
 Types of Patents
Type Type of Invention Covered Duration

New or useful process, machine, 20 years from the

Utility manufacturer, or composition of material or date of the original
any new and useful improvement thereof. application.

14 years from the

Invention of new, original, and ornamental date of the original
Design design for manufactured products. application.

20 years from the

Any new varieties of plants that can be
Plant date of the original
reproduced asexually.
application.
12-7
Design patents – anyone who creates a new design for a product can apply for a design patent.
Examples include beverage bottles (think of the shape of the Coca-Cola container) or furniture
(such as the kneeling chair).
Plant patents – botanists involved in grafting and creating new hybrid plant forms can apply for a
plant patent. Examples include the Smooth Angel rose or drought-tolerant corn.
Utility patents – anyone who invents or discovers “any new and useful process, machine, article
of manufacture, or composition of matter, or any new and useful improvement thereof” can
apply for a utility patent. Examples include the little green drink stopper Starbucks gives out with
its cups or the hoverboard type of skateboard.
 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.

12-9
 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 a
burger king store.

12-10
 Types of Trademarks
 Service Marks
 Collective marks
 Certification Marks
 Service Mark
 Any word, name, symbol, device, or any
combination, used, or intended to be used, in
commerce, to identify and distinguish the services
of one provider from services provided by others,
and to indicate the source of the services.
 Examples,plumbing company. They may have a logo
of a leaking faucet and wrench to identify their
company. This logo would be a service mark
because it identifies their plumbing services. Their
name could also be service marked. Courier
service, hotel service, transport, healthcare
 Collective mark
 These are trademarks used by group of companies and can be
protected by the group collectively. The owner of such marks may be
an association or public institution or it may be may be cooperative.
 A collective trade mark can be used by a more than one
trader ,provided that the trader belongs to the association.
 Examples

TATA Sons ,(TATA motors), TATA construction and reliance

communication
 Certification mark
• It is sign indicating that the goods / services are certified
by the owner of the sign in term of
Quality ,accuracy ,material or other characteristics.
• Certification mark are used to define the standard of the
particular goods . They guarantee the customers that the
product meets certain prescribed standards . The
occurrence of certification mark on a product indicates that
the product has gone through standard tests specified.
• food products , toys, cosmetics, electrical goods etc have
such marking that specifies the safety and the quality of
the product.
Example: certified iso.
What is Protected Under Trademark Law
2 of 2

Item Example

Fragrances Stationery treated with a special fragrance

Shapes Unique shape of the Apple iPhone

Colors Nexium—the “purple pill”

Trade dress The layout and décor of a restaurant

12-15
 Copyrights
• Copyrights
• Copyright ownership gives the owner the exclusive
right to use the work. When a person creates an
original work, fixed in a tangible medium, he or she
automatically owns copyright to the work.
• The length of copyright protection may vary from
country to country, but it usually lasts for 50 to 100
years. Examples include books, poems, plays, songs,
films, and artwork.
• In modern times, copyright protection has been
extended to websites and other online content.
12-16
 Types of works are eligible for copyright
protection
 Audiovisual works, such as TV shows, movies, and online
videos
 Sound recordings and musical compositions
 Written works, such as lectures, articles, books, and musical
compositions
 Visual works, such as paintings, posters, and advertisements
 Video games and computer software
 Dramatic works, such as plays and musicals
 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.

12-18
 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 rolls, logs of sales calls,
and similar types of exclusive information.
–.

12-19