What is Intellectual Property?

Often referred to as IP, intellectual property represents the ownership and rights to creative work.

PROTECTED PROPERTY

In general terms, intellectual property is any product created by your mind that the law protects from unauthorized use by others. Businesses can own these intangible assets in the form of patents, trademarks, copyrights, and trade secrets.

Intellectual property can be used for various reasons, such as branding and marketing, and to protect assets that give a competitive advantage. Intellectual property can be bought and sold just like tangible assets.

WHAT’S THE PRICE?

Unlike other property types such as buildings, equipment, and vehicles, internally developed intellectual property doesn’t appear on a company’s balance sheet. These costs are expensed as research and development expenses as they’re incurred.

When a business plans to sell its intellectual property, a valuation expert is hired to help determine a reasonable selling price. This calculation may be based on the income, market, or cost method to develop the IP, depending on your company’s industry, the economy, and the demand for the asset.