Intellectual Property: Everything you need to know
Intellectual Property (IP) is any product, work, or invention from human creativity, such as artistic works, symbols, designs, and images used in business. Intellectual Property is protected by the law in many forms.
Patents, trademarks, and copyrights enable individuals to gain recognition along with financial benefits from their creations. The IP system aims to create a balance between the interests of innovators and the public to create an environment where innovations can prosper.
Intellectual property rights are the rights given to the creators for their innovation. These rights remain exclusive for a certain period. When someone creates anything unique, the creator can claim ownership of their work with these rights. The owner of this content/product will have complete control over its usage.
- Types of intellectual property rights
- Intellectual Property on the Balance Sheet
- Example of Intellectual Property in Film
Types of intellectual property rights
There are several types of Intellectual property rights. Some of them are:
Copyrights
The creativity of artists and writers like films, books, paintings, songs, and so on is guarded by these copyrights. This protection will live on for another 50 years, even after the death of the creator.
Copyrights secure the creator's works of authorship along with their rights to distribution, performance, public display, reproduction, and so on. The owners of these rights can deploy their works in the free market as property rights. The exclusive right to distribution that is provided by copyrights is particularly significant in the film industry.
In the filmmaking process, the distribution deals aid the finances of production by selling the right to distribute their movie. The distributors purchase these rights with an agreement to pay after the film is made.
This agreement is used to secure loans that help produce the movie. After the film is completed, an amount from distributors is used to pay these loans. Without copyrights, the producer will not have anything to offer the distributors, and thus, the film suffers financially. Copyrights also help the music and sound system that appear in movies. It ensures all the artists involved will be rewarded with fame and money for their hard work.
Trademarks
To distinguish the goods from different enterprises, trademarks are used. Trademarks are words, phrases, symbols or designs that distinguish the source of goods from another. Typically businesses trademark names, logos, or company taglines. For example, Tiffany & Co. has trademarked the color Tiffany Blue to be used on their promotional materials. Coca-cola has even trademarked the shape of their bottles.
We can also see these trademarks in the introduction of films specifying that the product is the work of a particular artist or director. Many famous movies such as Harry Potter, James Bond, and Lord of rings use trademarks to protect their titles and characters.
By featuring a reputed brand in the films, the producer can cash its popularity and increases relatability with the audience. Many movies and TV show characters are recognizable by a particular brand name. For example, The Yakult brand gains its popularity among many youngsters from the film To All The Boys I've Loved Before when Peret shows love for Lara Jean by bringing her favorite Yakult's.
Additionally, by marketing trademark-protected products, such as Yakult in our example, the producers can acquire another source of the avenue from these brands to build the finances of the film.
Patents
A patent is a special right granted to the creator, who will have complete rights over the content and can control who and if their content can be used or not. The patent owner will publish the technical data about the invention online in exchange for this right.
The patented technologies enhanced the film industry by providing a foundation on which the advertisements, along with the viewer's satisfaction, are based. For example, the implementation of Dolby Surround Sound in the year 1980 allowed the music composers and directors to develop rich sonic tapestries.
Trade Secrets
A trade secret is any confidential corporate information that gives any business a competitive advantage. Trade secrets can be as straightforward as Coca-Cola’s secret formula to distribution methods from Amazon. Other forms of trade secrets include: ad strategies, sales methods, lists of consumers, lists of vendors, production processes, and algorithms.
Trade secrets must be designated before they can be leaked, a person cannot state that they have a trade secret. Corporations typically use nondisclosure agreements or specifically state trade secrets in contracts when dealing with internal employees or partner companies.
Franchises
A franchise is a license that an individual, party, or company (franchisee) purchases that allows them to use another company’s (franchisor) name, trademark, processes, and company processes.
The franchisee is typically an entrepreneur who operates a store or franchise under the franchisor's name. The franchisor is typically paid an upfront fee as well as ongoing licensing fees. McDonald’s Corporation is a famous example of a franchise business.
Intellectual Property on the Balance Sheet
Many types of intellectual property are not listed on the balance sheet since it isn’t clear what the value of each asset is. Sometimes intangible assets such as patents are listed as property since they have an expiration date. These assets also have a value that is decreased over time by amortization.
Example of Intellectual Property in Film
Intellectual Property rights play the most critical role in the film industry when it comes to securing funds. The producer has to maintain clear documentation of all the IP rights to prevent problems in the sales of the film. The agreements with the scriptwriter, actors, and directors will enhance the financial requirements of the movie. Based on the jurisdiction, the director can also be identified as the joint owner, author, or story writer of the film.
Similarly, the producer has to negotiate an agreement with the actors. The legal status of the actors differs in countries. Some countries offer the actors related rights, whereas other countries hire actors to work as employees on the sets. Once the film is ready to be released and open for public viewing, the significance of IP rights is highlighted again.
To secure financing for a movie, Intellectual property rights play a crucial role. In a nutshell, IP rights are the most valuable asset to filmmakers that can be secured through copyrights, patents, trademarks, and industrial properties. They must be withheld despite challenges, as movie components like songs, scripts, and characters work, face the issue of ownership.