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What Is an Intellectual Asset?

G. Wiesen
G. Wiesen

An intellectual asset is typically something of value to a business that may not have a physical presence, which can include various forms of Intellectual Property (IP), trade secrets, and employee knowledge. IP usually refers to the ownership of certain ideas, such as patents on inventions and copyrights on creative works, which have value to a company. Trade secrets, which are a form of intellectual asset, are inside information known by a company, such as a formula for a product or a method by which services are provided. In addition to these assets, employee knowledge and experience is an important and intangible advantage for a company.

The word “intangible” is important to an understanding of what an intellectual asset is, because these assets cannot be directly measured or held. They are typically ideas or concepts, forms of intellectual property, and the experiences of employees. While they can be represented by a contract or a book of procedures, it is the actual information that is of value, and not the paper on which it is contained.

Man climbing a rope
Man climbing a rope

One of the most common types of intellectual asset is Intellectual Property or IP that can be created and owned by a business. Patents are one of the most common and important forms of IP a company can have, which provides ownership over a particular invention or method for doing something. Trademarks are also valuable assets to a company, and provide ownership for a business over words and images that are associated with a particular product or service. A copyright can also be an intellectual asset, which is ownership of a creative work, such as a book or film.

Trade secrets for a company are one of the most important types of intellectual asset, and are often closely guarded by a few members of a business. These secrets can range from the formula used to create a particular product, such as a food or beverage, to a process used to start and complete a sale. Such trade secrets are not necessarily protected by law, and so their protection relies on limited knowledge of them within a company. This type of intellectual asset is considered vitally important, since it often gives one business an advantage over its competitors.

Employee knowledge and experience can also be considered an intellectual asset, though it is often more difficult to identify. An employee with years of experience working for a company can have an intrinsic understanding of company policies and procedures that allow him or her to complete work more quickly and efficiently than some other employees. When this person leaves a company, that knowledge and experience goes as well. This type of asset is often recognized and missed only after the employee has left a company, and can result in unexpected failure.

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