Intellectual Property: Knowledge assets of a firm are considered to be the traits that every firm embeds in the products and processes; they are named intellectual capital. The assets of such contributors are intangible but still their importance is similar to those tangible ones. Intellectual property is a legal concept which refers to the components of the intellectual capital that may be protected under law. Just like material assets, intellectual capital enables the firm to gain competitive advantage. With knowledge specific process the firm is able to reduce cost and sell its technology to recover the invested funds for this development. Since intellectual capital is the key for competitive advantage and profitability, in a free market economy, competitors try to appropriate it for their own. Thus a firm might lose its intellectual property to its competitors; this could happen in three ways (Narayanan, 2000): Imitation: It is the serious threat to any competitive advantage. If the imitators were faced by the high cost of the imitation or a legal notice they cannot benefit from the innovators idea.
Obsolescence: competitors can engage in innovation and they enhance the innovation into a product more superior to the original product. Infringement: competitors sometimes steal the original idea from other firm’s knowledge. Hitachi and Mitsubishi stole technological secrets from IBM. With these issues the firms need to protect their intellectual property in order to keep the advantage and survive in the market of competition. This could happen in several ways: A firm may take several actions in order to protect their innovations and the power of their products. They may invest in advertising, or develop arrangements with licensing; sometimes they shut down the distribution channels to cut the way on those imitators. Another way the firms may take to