Intellectual property and intellectual capital

Abstract

This article focuses on the relationship between intellectual propertyand intellectual capital. The broader concept of 'intellectual capital'is a useful framework within which to analyse the relative meritsand drawbacks of reliance on proprietary rights over knowledge. Strategicanalysis of the costs, risks and benefits of various forms of proprietaryprotection is vital in the context of rapid innovation in a 'knowledgeeconomy'. Maximising the value of the intellectual capital of the firm willrequire: a considered assessment of the strengths and weaknesses of eachIP regime; combining reliance on the rules of intellectual property law withother strategies; and re-evaluating the utility, function and expectations ofintellectual property protection in general. This article presents sometentative conclusions concerning strategies to protect the intellectualcapital of the innovative firm. Its main themes are: (i) That intellectualproperty will not be effective in protecting many aspects of intellectualcapital; (ii) That combining reliance on the rules of IP law with otherstrategies will maximise the firm's control over intellectual capital; (iii)That the real value of intellectual property rights may lie rather in theirtransactional utility than in restricting competition-by-imitation; (iv) Thatthere may be advantages in investing in goodwill, rather than technologicalinnovation and ideas; and (v) That a firm should primarily focus itsintellectual capital strategies on maximising the value of the tacitknowledge of its employees