Intangible property: Overview, definition, and example
What is intangible property?
Intangible property refers to assets that do not have a physical presence but still hold value. Unlike tangible property, such as real estate or equipment, intangible property consists of non-physical rights, interests, or assets that can be owned, transferred, or licensed. Common types of intangible property include intellectual property (like patents, trademarks, and copyrights), goodwill, trademarks, brand recognition, and financial assets like stocks and bonds.
For example, a company’s trademark or a patent for an invention are considered intangible property because they represent legal rights and ownership but do not exist in physical form.
Why is intangible property important?
Intangible property is important because it can be a significant source of value for individuals and businesses. Many companies derive a large portion of their value from intangible assets such as intellectual property, brand recognition, or proprietary technology. These assets can be leveraged for licensing, litigation, or sale, providing ongoing financial benefits.
For businesses, understanding the value and protection of intangible property is crucial to maintaining competitive advantage, protecting their innovations, and ensuring that intellectual property rights are enforced. For individuals, intangible property can represent valuable personal assets, such as copyrights for creative works or royalties from inventions.
Understanding intangible property through an example
Imagine a tech company that owns several patents for its proprietary software and algorithms. While the company’s physical assets (like office equipment) are valuable, the majority of its value comes from the intellectual property rights granted by those patents, which allow the company to control how its technology is used in the marketplace. These patents are considered intangible property because they are valuable but not physically tangible.
In another example, an author may have the copyright to a book they wrote. The copyright is an intangible asset that gives the author exclusive rights to reproduce, distribute, and sell the book. Although the physical book may be sold to readers, the copyright itself remains an intangible property that generates revenue through royalties and licensing.
Example of an intangible property clause
Here’s how an intangible property clause might appear in a contract:
"The Parties acknowledge that all intellectual property, including but not limited to patents, trademarks, copyrights, and trade secrets, created during the term of this Agreement shall be considered the exclusive intangible property of [Company/Party Name]. The Parties agree to protect and maintain the confidentiality and ownership of such intangible assets in accordance with applicable laws and regulations."
Conclusion
Intangible property plays a critical role in the modern economy, offering value in forms other than physical assets. It can generate significant revenue streams, serve as a competitive advantage, and require careful management and protection.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.