Intellectual Property Definition

Intellectual property is an Intangible Asset derived from human intellect.

Intellectual Property is an Asset that is derived from human intellect, Intellectual property is of Intangible form, meaning they cannot be touch and do not benefit from any real physical form. Common examples of intellectual property are: Brand names, Software, Music, Formulas, Literature and many more. The term Intellectual Property may also sometimes be found abbreviated as IP.

A companys Intellectual Property can be susceptible to use by others without consent i.e. Company X is a resteraunt business and decides to start under the McDonald's brand name as a means to attract more customers.

Companies will heavily protect their Intellectual Property and will proactively take measures to ensure it is not used by others without consent. A company is able to add a layer of protection by law via the following; Patents, Copyrights and Trademarks.

Intellectual Property can be seen extremely difficult to value as they can never be seen of any fixed value, as a result any valuation of Intellectual Property will be an esitmation. Depending on the type of the Intellectual Property it may be necessary for it to undergo systematic amortization or be tested yearly for impairment. It is also common for these not to be valued at all as accounting standards will limit the way in which Intellectual Property can be recorded, although their value instead would be reflected in the company's market value.

You may also be interested in: