Tangible or Intangible…That is the New Question

I believe property today really falls into two categories: tangible and intangible.  An item that is tangible is something that is discernible by touch, something material and substantial.  An intangible item, in contrast, is something that is incapable of being perceived by touch.  These broader definitions are not as limiting as “real property” and “personal property” (see my last post which discusses the inherent shortcomings of these definitions), however, they are not perfectly separate categories. I still think there is an area of overlap, where a piece of property can be both.

Tangible and Intangible Property Definitions Overlap

So how can an item be both tangible and intangible at the same time?  The perfect example is computer software.  A piece of code is generally contained on something, a hard drive, a disc, flash drive, etc., which is something you can touch.  But software’s intrinsic value does not come from where it is contained, but instead from what it does, how it is written and how it works in conjunction with other software and devices.  All things you cannot touch.

So why is it important to know “what” something is again?  You need to know what it is to know how to protect it.  Many of the clauses, terms, and conditions that you would use in a contract to protect a piece of tangible property may be completely different than those you would use to protect a piece of intangible property.

For example, when drafting a lease, you would include a description of the property to be rented, and you probably would include: “{description}, including all attachments, improvements and additions made to said property by tenant over the period of the tenancy.”  But when drafting  a software license, you most likely would include assignment language to determine ownership of any improvements to the software, like: ” {licensee} hereby assigns in full and without condition to {licensor] any and all intellectual property created, invented or otherwise generated by {licensee} in conjunction with said {software name} during the pendency of this license.”

Even though the two categories overlap, they still provide a much better description of how to broadly categorize all the different types of property out there.  These two categories also point you in the right direction of what questions you need answers to, to be able to adequately protect that property.

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