Intellectual Properties: Patents, Trademarks, and Copyrights

Intellectual Property Rights
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Intellectual Property Rights
1. How does intellectual property differ from tangible property, such as a house or a car?
Intellectual property (IP) refers to inventions or things that are created by people’s minds, such as designs, symbols, artistic works, and names used in commerce. Indeed, it is the intangible creations that emanate from human intellect (Bouchoux, 2016). Unlike tangible property, such as a car or a house, IP cannot be quantified. Businesses with IP rights restrict the use of their designs, logos, and other intangible resources that they have invented. Tangible property can involve buildings and other physical things that belong to a company. However, IP enables a firm to gain a competitive advantage since it cannot be imitated easily.
2. Do patents provide socially optimal incentives?
A patent refers to a license that a company gets, which excludes other firms from using a particular design, selling, or using an invention for a specific period (Bouchoux, 2016). However, when the license expires, the knowledge can be used by other firms without any repercussions. Patents offer socially optimal incentives for a company. Specifically, a socially optimal output level is achieved when the costs and benefits that arise from a transaction are at the equilibrium of the market outcomes and externalities. In other words, patents prevent competitors from using a particular design or invention, which increases the benefits of a firm that has patented. 
3. Why do firms use trademarks?
A trademark can be a word, phrase, or symbol that is legally registered and represent a particular product or company (Bouchoux, 2016). A firm can use the trademark to create brand recognition. For instance, Apple Inc. is known for its symbol of an apple, and it helps customers of that company differentiate its products from those of competitors. A trademark prevents unnecessary lawsuits, which might arise when competitors imitate the products or services and give substandard quality. Since trademarks are permanent, they help customers to find products or services of thei...