What is Intellectual Property?
According to the Wikipedia, Intellectual property (IP) are legal property rights over creations of the mind, both artistic and commercial, and the corresponding fields of law. Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; ideas, discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property include copyrights, trademarks, patents, industrial design rights and trade secrets.
The majority of intellectual property rights provide creators of original works economic incentive to develop and share ideas through a form of temporary monopoly.
Although many of the legal principles governing intellectual property have evolved over centuries, it was not until the late 20th century that the term intellectual property began to be used as a unifying concept.
Intellectual property rights are a bundle of exclusive rights over creations of the mind, both artistic and commercial. The former is covered by copyright laws, which protect creative works, such as books, movies, music, paintings, photographs, and software, and give the copyright holder exclusive right to control reproduction or adaptation of such works for a certain period of time.
The second category is collectively known as "industrial properties", as they are typically created and used for industrial or commercial purposes. A patent may be granted for a new, useful, and non-obvious invention and gives the patent holder a right to prevent others from practicing the invention without a license from the inventor for a certain period of time. A trademark is a distinctive sign which is used to prevent confusion among products in the marketplace.
An industrial design right protects the form of appearance, style or design of an industrial object from infringement. A trade secret is an item of non-public information concerning the commercial practices or proprietary knowledge of a business. Public disclosure of trade secrets may sometimes be illegal.
The term intellectual property denotes the specific legal rights described above, and not the intellectual work itself.
Intellectual property rights grant exclusive rights to intellectual creations; they grant ownership over creations of the mind. These exclusive rights allow owners of intellectual property to reap monopoly profits. These monopoly profits provide a financial incentive for the creation of intellectual property, and pay associated research and development costs. Some commentators, such as David Levine and Michele Boldrin, dispute this justification.
Technology diffusion occurs if intellectual property is licensed or sold, conversely technology can equally be prevented from being shared, should the owner wish not to sell or license.
The legal monopoly granted by IP laws are credited with significant contributions toward economic growth. Economists estimate that two-thirds of the value of large businesses in the U.S. can be traced to intangible assets. Industries which rely on IP protections are estimated to produce 72 percent more value per added employee than non-IP industries. A joint research project of the WIPO and the United Nations University measuring the impact of IP systems on six Asian countries found "a positive correlation between the strengthening of the IP system and subsequent economic growth."
However, correlation does not necessarily mean causation: given that the patent holders can freely relocate, the Nash equilibrium predicts they will obviously prefer operating in countries with strong IP laws. In some of the cases, the economic growth that comes with a stronger IP system is due to increase in stock capital from direct foreign investment, as was shown for Taiwan after the 1986 reform.
Intellectual property rights are considered by economists to be a form of temporary monopoly enforced by the state (or enforced using the legal mechanisms for redress supported by the state).
Intellectual property rights are usually limited to non-rival goods, that is, goods which can be used or enjoyed by many people simultaneously—the use by one person does not exclude use by another. This is compared to rival goods, such as clothing, which may only be used by one person at a time. For example, any number of people may make use of a mathematical formula simultaneously. Some objections to the term intellectual property are based on the argument that property can only properly be applied to rival goods (or that one cannot "own" property of this sort).
Since a non-rival good may be used (copied, for example) by many simultaneously (produced with minimal marginal cost), producers would need incentives other than money to create such works. Monopolies, by contrast, also have inefficiencies (producers will charge more and produce less than would be socially desirable).
The establishment of intellectual property rights, therefore, represents a trade-off, to balance the interest of society in the creation of non-rival goods (by encouraging their production) with the problems of monopoly power. Since the trade-off and the relevant benefits and costs to society will depend on many factors that may be specific to each product and society, the optimum period of time during which the temporary monopoly rights exist is unclear.
