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Intellectual property, sometimes abbreviated IP, is a legal definition of ideas, inventions, artistic works, and other commercially viable products created out of a person's own mental processes. In the same sense that real estate titles and bills of sale establish ownership of tangible items, intellectual property is protected by such legal means as patents, copyrights, and trademark registrations.
Generally speaking, intellectual property is handled in the same way as any other tangible product or piece of real estate. The Coca-Cola company, for example, has legal ownership of several factories, the bottling equipment, trucks for transporting their product AND the formula for the soft drink itself. The secret recipe for the Coca-Cola® beverage is also "owned" outright. Obviously, other beverage companies can produce a cola-flavored soda, but Coca-Cola's formula is protected by trade secret registration.
Not every idea inside a person's mind can be considered intellectual property, which can only be a good thing in some instances. There is usually a commercial viability angle that needs proper protection to prevent theft of the idea or outright copyright infringement. Hundreds of people throughout history may have conceived of a long-distance communication system, but Alexander Graham Bell needed to establish ownership of his idea, which became known as the telephone. Without a proper patent, dozens of other enterprising businessmen in the 1870s could have legally manufactured their own version of the telephone without penalty.
Intellectual property may or may not belong to the original inventor or composer, however. An individual scientist working for a pharmaceutical company or private laboratory may invent a formula for a new cancer drug or a zero gravity machine, but the actual rights to the idea may be held by the company or laboratory as a whole. The inventor could not resign from the laboratory and begin marketing the miracle drug or machine on his own. Often, when a company acquires another company, it receives IP rights as well as the building and equipment.
Many court cases arise over improper use of intellectual property. This is why experts strongly recommend that inventors and those in creative fields seek protection through official registration of their ideas and trade secrets. Infringement can usually be proven if the owner of the idea or creation can establish a date of origination. Although intellectual property laws exist to protect the inventor or creator, court decisions have also made it easier for others to "borrow" similar ideas or concepts. Humorists can parody a trademarked product or a copyrighted work if it is considered social commentary, for example.