Intellectual property is an intangible and created asset that has legal protection from unauthorized use, distribution or sale.
For example, a software company's most valuable intellectual property is its proprietary algorithm, protected by copyright and a patent. If a competitor copied the code, the company could seek a court injunction and damages, with the IP listed as an intangible asset on its balance sheet.
Why it matters: It is often a company's most valuable asset; protecting it prevents competitors from stealing innovations and eroding market share.
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