Intellectual property (IP) is a legal field that refers to creations of the mind such as musical, literary, and artistic works; inventions; and symbols, names, images, and designs used in commerce, including copyrights, trademarks, patents, and related rights. Under intellectual property law, the holder of one of these abstract properties has certain exclusive rights to the creative work, commercial symbol, or invention by which it is covered.
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 gives 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 give creators exclusive rights to their creations, thereby providing an incentive for the author or inventor to develop and share the information rather than keep it secret. The legal protections 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. Likewise, industries which rely on IP protections are estimated to produce 72 percent more value per added employee than non-IP industries.
Additionally, 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 imply causation.
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 have no incentive 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.
Modern usage of the term intellectual property began with the 1967 establishment of the World Intellectual Property Organization (WIPO), but it did not enter popular usage until passage of the Bayh-Dole Act in 1980.
The earliest use of the term intellectual property appears to be in an October 1845 Massachusetts Circuit Court ruling in the patent case Davoll et al. v. Brown., in which Justice Charles L. Woodbury wrote that "only in this way can we protect intellectual property, the labors of the mind, productions and interests as much a man's own...as the wheat he cultivates, or the flocks he rears." (1 Woodb. & M. 53, 3 West.L.J. 151, 7 F.Cas. 197, No. 3662, 2 Robb.Pat.Cas. 303, Merw.Pat.Inv. 414). The statement that "discoveries are...property" goes back earlier. Section 1 of the French law of 1791 stated, "All new discoveries are the property of the author; to assure the inventor the property and temporary enjoyment of his discovery, there shall be delivered to him a patent for five, ten or fifteen years. In Europe, French author A. Nion mentioned propriété intellectuelle in his Droits civils des auteurs, artistes et inventeurs, published in 1846.
The concept's origins can potentially be traced back further. Jewish law includes several considerations whose effects are similar to those of modern intellectual property laws, though the notion of intellectual creations as property does not seem to exist. The Talmud contains the first known example of codifying a prohibition against the theft of ideas, which is further discussed in the Shulchan Aruch.
Some critics of intellectual property, such as those in the free culture movement, characterize it as intellectual protectionism or intellectual monopoly and argue that the public interest is harmed by protectionist legislation such as copyright extension, software patents and business method patents. Although the term is in wide use, some critics reject the term intellectual property altogether. Richard Stallman argues that it "systematically distorts and confuses these issues, and its use was and is promoted by those who gain from this confusion." He suggests the term "operates as a catch-all to lump together disparate laws [which] originated separately, evolved differently, cover different activities, have different rules, and raise different public policy issues." These critics advocate referring to copyrights, patents and trademarks in the singular and warn against abstracting disparate laws into a collective term.