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Summary Article: Intellectual Property
From Encyclopedia of Business Ethics and Society

Intellectual property, as distinguished from real property, refers to products of the mind (or intellect); it concerns those rights or entitlements that attach to intangibles such as artistic expressions and technological inventions. Protection is afforded to intellectual property to encourage development of ideas, expressions, and processes for commercial gain.

Types of Intellectual Property

There are various types of intellectual property. Distinctions are made according to the nature of the proprietary innovation. Four reasons are generally offered to justify the protection of intellectual property rights: (1) disclosure, (2) innovation, (3) product investment, and (4) design development.


Intellectual property such as computer software, video games, songs, and movies is granted legal protection in the form of a copyright. A copyright is a set of exclusive legal rights accorded to the expression of a particular literary, artistic, or scientific work. Any moral rights are separate and distinct from legal rights. The purpose of copyright law is to protect and promote creative endeavors by deterring unauthorized use.

Copyright is not granted automatically. For material to be protected, it must reflect some degree of originality. Furthermore, copyright is not granted ad infinitum; it typically expires after a predetermined period of time (typically, in the United States, 50 years).

A fair use exception excludes some uses of copyrighted material from legal protection in the United States. To determine whether the fair use exception applies, the purpose of the use is considered along with the nature of the work. Copyrighted material is often given fair use treatment when used for educational purposes. Also considered are the proportion used, as compared with the size of the whole, and the effect of the use on the potential market for the copyrighted material.

The granting of copyright protection is defended on public policy grounds. First and foremost, copyright law provides an incentive for creators to share their ideas with the public, and at the same time, it militates against intellectual piracy. Through copyright law, copyright holders can enforce their rights through civil lawsuits.


Patents are issued with regard to systems, processes, and other inventions. New mechanical contrivances, for example, are appropriate subjects for patent protection. A patent offers the patentee exclusive rights for a defined period of time, often 20 years, in exchange for sharing information with the public about the systems, processes, or other inventions that are protected. The proprietary right allows the patentee to restrict others from making, using, or selling the patented invention until the term of the patent expires.

A condition for a patent to be granted is that the patentee provide a written description of the invention in sufficient detail so that another person can reproduce that invention. Once a patent is granted, the patentee's rights can be enforced through the vehicle of civil lawsuits.

Patents are generally given to encourage inventors to share information about their inventions. Through such disclosure to the public, inventors are able to build on the inventions of others. Without the protection of patents, inventors might be reluctant to share their creations with the public.

Patents are also widely considered to be economically beneficial. The promise of exclusive rights to an invention is believed to promote innovation of new systems, processes, and devices. This encourages companies to invest in research and development up front because of the anticipated financial returns often linked to the patenting of successful inventions.

Patents arguably provoke new innovations in that competitors are often inspired to develop new designs to work around the patented invention. In this way, the patent system promotes technological progress and economic growth.


A trademark is a distinctive symbol or sign to which commercial value is attached because of the connection between the symbolic representation and organizations, products, or services. Trademarks distinguish organizations, products, and services from those of their competitors. Trademarks have traditionally taken the form of names, phrases, symbols, designs, and images.

The primary purpose of a trademark is to identify organizations, products, and services in the marketplace. Rights are enforced to protect the ability of organizations to benefit financially from their investment by distinguishing their products and services through a brand image from those of competitors.

For rights to be enforced, however, trademarks must be registered. To be registered, a trademark must be distinctive. Fanciful designs and made-up words (e.g., Kodak as a camera company) are often de facto eligible for trademark protection. Similarly, arbitrary words (e.g., Apple as the name of a computer company) are also considered acceptable, although apparent trademark infringements, as with Apple Records, must sometimes be resolved through negotiation and, often, compensation. Suggestive words (e.g., Salty for sailing equipment) can serve as legitimate trademarks, whereas descriptive or generic marks (e.g., salty as used to describe saltine crackers) are not protected.

Unlike copyright and patent rights, trademark rights do not expire at the end of a predetermined time period. For rights to be enforced, however, the trademark owner must continue to use the trademark.

Public policy considerations underlie the granting and enforcement of trademark rights. In fact, trademarks are generally considered to benefit consumers. While companies are able to reap the financial benefits of establishing strong brand reputations and linking those reputations to identifiable trademarks, consumers benefit from making more informed decisions about the companies, products, and services in which they invest.

Ethical Considerations

The granting of intellectual property rights is often controversial in that intellectual property protection translates essentially into a “legal monopoly.” Assigning rights to intellectual contributions creates negative rights in that the rights attributed to intellectual property involve excluding others from using that property. This imposition of negative rights can arguably stifle competition and inhibit consumer choice and artistic appreciation.

Furthermore, intellectual property rights are distinguishable from rights that attach to real property in that their abridgement does not result in harm, other than perhaps financial loss for the innovator. Even this loss is not certain, however. Many musicians, for example, argue that Internet-based file sharing actually increases name recognition and the popularity of their songs. When intellectual property is shared or copied, there is no tangible loss.

Not all information, expressions, or ideas are eligible for intellectual property protection. Some people argue that the choice of what is protected is arbitrary, serves commercial interests, and is not linked to inherent moral entitlements.

It is generally assumed in the United States that free market societies must protect intellectual property to reward innovation and promote economic growth. Individuals and businesses assume and expect that their information, expressions, and ideas deserve the protection of copyrights, patents, or trademarks. The emergence of the Internet, however, has introduced increasing challenges to this framework. On the one hand, technology facilitates the infringement of digitized intellectual property. At the same time, the Internet increases the exposure of intellectual property to other cultures that have different values and regulations pertaining to intellectual property, its use, and its protection.

See also Competition; Copyrights; Intellectual Capital; Patents; Piracy of Intellectual Property; Property and Property Rights; Public Domain; Trade Secrets, Corporate Espionage and; Trademarks; Unfair Competition

Further Readings
  • De George, R. T. (2005). Intellectual property and pharmaceutical drugs: An ethical analysis. Business Ethics Quarterly, 15(4), 549-575. doi:10.5840/beq200515444.
  • Di Norcia, V. (2005). Intellectual property and the commercialization of research and development. Science & Engineering Ethics, 11(2), 203-219. doi:10.1007/s11948-005-0042-z.
  • Lea, D. (2006). From the Wright Brothers to Microsoft: Issues in the moral grounding of intellectual property rights. Business Ethics Quarterly, 16(4), 579-598. doi:10.2307/3857797.
  • Reed, E. D. (2006). Property rights, genes, and common good. Journal of Religious Ethics, 34(1), 41-67. doi:10.1111/j.1467-9795.2006.00255.x.
  • Resnik, D. B. (2003). A pluralistic account of intellectual property. Journal of Business Ethics, 46(4), 319-335. doi:10.1023/A:1025631902384.
  • Stark, C. D. (2005). Patently absurd: The ethical implications of software patents. TechTrends: Linking Research & Practice to Improve Learning, 49(6), 58-61.
  • Werhane, P. H.; Gorman, M. (2005). Intellectual property rights, moral imagination, and access to life-enhancing drugs. Business Ethics Quarterly, 15(4), 595-613. doi:10.5840/beq200515441.
  • Tara J. Radin
    Copyright © 2018 by SAGE Publications, Inc.

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