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This article focuses on the relationship between intellectual property and intellectual capital. The broader concept of 'intellectual capital' is a useful framework within which to analyse the relative merits and drawbacks of reliance on proprietary rights over knowledge. Strategic analysis of the costs, risks and benefits of various forms of proprietary protection is vital in the context of rapid innovation in a 'knowledge economy'. Maximising the value of the intellectual capital of the firm will require: a considered assessment of the strengths and weaknesses of each IP regime; combining reliance on the rules of intellectual property law with other strategies; and re-evaluating the utility, function and expectations of intellectual property protection in general. This article presents some tentative conclusions concerning strategies to protect the intellectual capital of the innovative firm. Its main themes are: (i) That intellectual property will not be effective in protecting many aspects of intellectual capital; (ii) That combining reliance on the rules of IP law with other strategies will maximise the firm's control over intellectual capital; (iii) That the real value of intellectual property rights may lie rather in their transactional utility than in restricting competition-by-imitation; (iv) That there may be advantages in investing in goodwill, rather than technological innovation and ideas; and (v) That a firm should primarily focus its intellectual capital strategies on maximising the value of the tacit knowledge of its employees.
This document has been peer reviewed.