Many people mistakenly use the terms of “intellectual capital” and “intellectual property”, being unaware of the significant difference between their meanings, so it is time to bring some light into the matter.
If we take after dictionaries:
- Intellectual capital – asset or advantage developed using one’s mental capacity.
- Intellectual property – possession or right developed using one’s mental capacity.
The difference between them may seem minor at this point, the common feature being more prominent: both of them are developed using one’s mental capacity. However, intellectual property implies ownership rights, while intellectual capital does not. The latter can be owned as well, but it cannot be patented, it does not have an associated legal ownership title.
But this is just the basic difference between the two. Here are some more:
- Intellectual property is protected by the law– Most countries have adopted specific laws to allow individuals and companies to patent and register their innovations and inventions, the most popular forms of intellectual property. Intellectual capital is confined by the individual or company’s boundaries, and the only forms of protection available refer to the use of various combinations of discipline, secrecy, procedure, contracts, agreements, etc.
- Intellectual property is more tangible than intellectual capital– The patenting of an intellectual property involves fully disclosing that property, providing relevant descriptions, drawings, prototypes, anything that clearly explains how the respective property works. These supporting documents make intellectual property relatively tangible, making it available for visualization and easier to understand. Intellectual capital is not supported by any documentations and is more intangible. It is often a complex mix of procurement standards, strictly controlled manufacturing processes, testing systems, labor skills enhancement strategies, recognition and rewards policy, all under a brand built throughout several years.
- Intellectual property is an event while intellectual capital is a process– Intellectual property is usually the result of a research project with a clear goal, meant to conclude with a clear innovation or invention that can and should be patented. After patenting, intellectual property becomes static. Unlike it, intellectual capital is quite dynamic. The elements in the mix described above are subject to continuous improvements and upgrades. Intellectual capital is the result of a never-ending improvement process.
- Intellectual property is tradable– Given that it is associated with an ownership title and tangible, intellectual property is tradable, rentable, leasable, it can be sub-let and even loaned. Intellectual capital is only relevant for the individual or company that has developed it and is not tradable.
- Intellectual property has a life– While intellectual property patents cover a fixed time period, after which they expire and the intellectual property becomes public, intellectual capital has no life limits.
There are some other, less important features that differentiate intellectual property from intellectual capital, but the ones presented above should be more than enough to help you understand the two concepts and use them correctly, no matter the occasion or the specific of the discussion you participate in.