These days, more and more companies gain a competitive advantage in the market due to their innovations and implementations of them in people’s lives. When doing this, the company’s management does not forget to prevent their developments from being stolen by competitors. Consequently, there was invented a universal way of intangible assets preservation that cannot be guarded physically: patents, licenses, and copyrights. Moreover, when applying these security methods in the company’s structure, the management improves an organization’s financial situation due to the cash flow generated from other companies. This essay, there will be discussed how to protect intangible assets effectively and generate some extra profit for the company by using patents.
To begin with, it is important to define the reasons for implementing the power of intellectual property (IP) into a company’s value. First, it is the company that provides innovations, so that everything produced by it should be implemented in its value until the products are bought. Second, the company invested some money in the research and development (R&D) process, which requires large capital expenditures and highly valuable human capital. Last but not least, the company paid for their worker’s labor when creating the product so that there were salaries, wages, and social insurance expenditures made by the company. Consequently, the company spends a large sum for all of these categories, and the business should be provided with a credible guard from copying the product, often used by the reverse-engineering method. More specifically, the “reverse engineering” method means that the company that wants to copy the competitor’s products should buy them once and try to recreate the production process.
However, there is a widespread method that helps people to save the company from reverse engineering called “patent,” and it could be implemented in a company’s intangible assets structure immediately. Patents are specific documents where it is clearly stated that there is a concrete producer or patent owner who possesses intellectual property, which is represented by a tangible object or innovation, that might be copied, and the time of holding this patent (Lau et al., 2021). When the patent was signed, the company is fully prevented from having 100% copied innovative products because the judicial court will fine the competitor without any difficulties due to the patent’s documentation.
For instance, if Apple company invents a specific phone production approach, it should create a patent for the cellphone or, when it is possible, on its major details. By doing this, the company prevents the telephone or one of its details from being copied for a determined amount of time, after which the patent could be renewed by Apple or another company or expired.
However, it is crucial to mention that not all innovations could be patented and protected from stealing. For example, when the company tries to develop a patent with an idea only, it is impossible to execute it because of the variety of production methods. In addition, some scientific phenomena, vague ideas, natural phenomena, and artists’ works are not applicable for being patented. Moreover, unimportant for people’s lives, and publicly dangerous patents are also forbidden to be made.
Overall, one of the most widespread ways of preventing IP stealing is product patenting. Patents are specific documents that define the author’s innovative idea, implementation into practice, and the time of holding the patent by the holder. The main idea is that this document has legal power in court so that if other people or companies try to copy the detail of the IP, they will be fined due to their actions.
Reference
Lau, T., & Johnson, L. (2021). The Legal and Ethical Environment of Business (2nd ed., Vol. 1). FlatWorld.