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Start Your Business Startup Basics

What is Intellectual Property?

intellectual property Credit: arka38 | Shutterstock

Intellectual properties are considered creations of the mind, such as inventions, designs and songs, and there are few things entrepreneurs and businesses of all sizes hold dearer.

The United Nation's World Intellectual Property Organization (WIPO), which promotes the development of intellectual property, divides itinto two main categories. The first is industrial property, which includes inventions, patents, trademarks, industrial designs and geographic indications of source. The second is copyright, which includes literary and artistic works such as novels, poems and plays, films, musical works, artistic works such as drawings, paintings, photographs and sculpturesand architectural designs.

U.S. and international law gives creators of intellectual property certain rights to ensure that their work is not stolen and used for someone else's benefit. Intellectual property is also legally protected as a way to promote creativity and encourage fair-trading to help boost economic and social development.

History of intellectual property

While the WIPO wasn't officially established until the late 1960s, its principles have been followedsince the late 1800s, after the adoptions of the Paris Convention and Berne Convention. In the United States, the founding fathers were the first to grant intellectual property protection, having included it in the Constitution. Article I, Section 8 of the Constitution states that Congress shall have power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

Today, the United States Patent and Trademark Office (USPTO) is charged with protecting patents and trademarks, while the U.S. Copyright Office handles issues related to copyright protection. In recent years, the U.S. Department of Homeland Security has been working to combat global intellectual property theft. Homeland Security reports that in 2011, federal agencies made 24,792 intellectual property rights seizures valued at $178.3 million.

Intellectual property laws

There are four main categories for intellectual property law:

Copyrights: Protects pieces of writing, such as books, music and other works of art. Copyright protects the work from being used by others for as long as the author lives, plus 50 more years. There are some instances when the material may be used, referred to as "fair use," including for noncommercial, nonprofit or educational purposes.

Patents: There are three main types of patents: utility, design and plant. While each type provides protection for something different, they each protect the invention from being made, sold or used by others for 20 years.

Trademarks: Protects words, names, symbols, sounds and colors that distinguish goods and services, such as the Nike swoosh or the MGM lion. Trademarks can be renewed for as long as they are being used for business purposes.

Trade Secrets: This is the critical information and data that companies protect at all costs because it gives them an edge over their competitors. Trade secrets include both manufacturing or industrial secrets and commercial secrets. The WIPO often defines the secrets in broad terms, such as sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients and manufacturing processes. Examples of famous trade secrets include recipes of Coca-Cola, Thomas English Muffins and McDonald's special sauce.

How to protect intellectual property

The steps required to protect intellectual property vary depending on the type. Because the process can be complicated, those looking for help can always employ the use of a specialized patent, trademark or copyright attorney. [Related: Defending Intellectual Property: Be Careful]

Steps for filing for protection include:

Patents: Patent protection can be filed for with the U.S. Patent and Trademark Office. To file for a patent, the applicant must first determine which type of patent — design, plant or utility — they are seeking and if they need protection only in the United States or internationally. Once that has been determined, the filing process can be completed online. It can take up to a year for the USPTO to rule on the request.

Trademarks: One of the first steps is to identify the mark — character mark, a stylized/design mark or a sound mark — that needs protecting and the goods and services it will apply to. It is also important to search the USPTO database to ensure the name hasn't already been claimed. The application can then be filed online through the Trademark Electronic Application System. It often takes several months for the USPTO to assign the case to an attorney, who then will determine whether it complies with all applicable rules and statutes.

Copyright: Unlike the other forms of protection that don't become legal until granted by the USPTO, copyright protection technically exists from the moment the work is created. However, in order to bring a case of copyright infringement before a court, the work must be registered with the U.S. Copyright Office. Work, both published and unpublished, can be registered both online and through the mail. It takes about two-and-a-half months for online requests to be processed, and about six months for those filed in paper form.

Trade Secrets: Unlike patents and trademarks, there are no applications to obtain a trade secret. Trade secrets exist when a company takes steps to protect confidential information from becoming public. Businesses can protect their trade secrets in various ways, including by having employees sign non-disclosure and no-compete contracts. In addition, The Uniform Trade Secrets Act makes it a criminal act to share trade secrets.

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Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.