Intellectual property (IP) is – a set of intangible assets – a broad term that refers to the ownership of various intellectual goods like logos, brand names, inventions, and designs, etc. According to UK law, intellectual property only refers to the things or products you have created and have physical existence. It means your idea itself can’t be considered as intellectual property unless it gets a physical shape. Let’s see what is intellectual property, what are its rights and laws, types of IP and intellectual property in accounting.
Want to overcome your financial worries? Why not speak to one of our qualified accountants? Give us a call on 02034411258 or request a callback!
What is Intellectual Property?
IP is a valuable intangible asset of a business. It refers to a creative work that you create from an idea that can be treated as an asset or physical property. Be it new, established, large or small business, you need to have IP to earn recognition or to get financial benefit.
All businesses need to secure their IP. If your business is built around your IP and someone steals/copies it, you might face the risk of losing market share. But there are rights and laws that protect your IP.
Intellectual Property Rights and Laws
Business owners and creators have the right to protect their IP. These rights are your valuable possessions that should be robustly protected after the inception of the business. Intellectual property law is aimed at encouraging the creation and protection of intellectual assets. In addition, it will help to eliminate or reduce the risk of the invention being copied or stolen.
In this way, the holders and creators of IP can gain more profit from their IPs. Thereby, this law offers economic incentives for people and businesses to create and develop intellectual products.
Some IPs are given automated protection, however, there are some kinds for which you need to apply for. For instance, any art, web content or music, created by you, is automatically protected by copyright. However, you’ll need to apply for trademarks and patents to protect goods, inventions, and logos, etc.
Therefore, you need to have an in-depth insight of your business to find out what IP needs protection. This process is known as IP audit. It will help you to work out your IPs, and it works the same for IPs as your physical assets.
Types of Intellectual Property
The basic types of intellectual property include; copyright, trademarks and patents.
Patent
It is the form of intellectual property right provided to an investor by a government. This offers investors a legally protected monopoly for 20 years. If a patent is granted, inventors can protect their IP products from others for using, leasing or recreating, or selling without their permission.
Trademarks
A trademark is a sign, logo, color, design, or symbol that differentiates a product or service of a business from those of other businesses. If you register your trademark, you can take legal action against anyone who copies/uses your sign or design without your consent.
Copyrights
Copyrights are the legal rights that stop people from using your work without permission. These include intellectual property like literary works, artistic or musical work. You don’t need to apply for it. Here, you need to be careful that you don’t infringe on anyone else’s copyright.
Looking for a Limited Company Accountant? Click here to get to know about the inclusive monthly package!
Intellectual Property in Accounting
In accounting, IP is taken as an intangible asset that is recorded on the balance sheet. So, you need to post trademarks, copyrights, and patents on the balance sheet and others statements at or below the cost price.
Same as depreciation for tangible assets, the intellectual property should be amortised with the passage of time and need to be recorded separately from goodwill. Note that goodwill is an intangible asset, but it is not intellectual property.
What is Intellectual Property Theft?
Copying, using, or recreating the idea of anyone else without permission is considered a breach of intellectual property law. So before designing a product, registering a trademark or applying for a patent, you need to research beforehand to check that your idea is unique. There are various resources that you can use to check the existing intellectual properties.
Still, some companies allow others to use their intellectual property by granting them a license. For more information on intellectual property law, you can visit the Intellectual Property Office.
Quick Sum Up
To sum up the discussion, you have got a basic overview: what is intellectual property, its rights & laws, types, what is IP in accounting, and what is IP theft. Intellectual property is the physical outcome of your idea that is unique. Alike tangible assets, IPs are intangible assets that have their own worth and can be transferred or sold. To protect your intellectual property, you need to be well aware of the IP law to take can take effective action against any breach.
At Accotax we take the burden off your shoulders and work for the robust growth of your business. Whether you’re concerned about the company formation, accounts, taxes, tax return, payroll, or financial advice, we cover it all!
Have a query, reach out today!
Get an instant quote for a customized offer!
Disclaimer: This blog is intended to provide a general guide on the IP.
