Legal Definitions - intangible

The term intangible refers to something that lacks a physical presence or form; it cannot be touched, seen, or held in a physical sense. Despite this, intangibles often possess significant value, particularly in a legal or business context.

As an adjective, intangible describes something that is not physical. As a noun, an intangible (or an intangible asset) is a non-physical item of value, such as intellectual property or a legal right.

Here are some examples to illustrate the concept of an intangible asset:

• A Company's Brand Recognition: Imagine a well-known beverage company whose logo and brand name are instantly recognizable worldwide. This recognition, built over decades through marketing and quality products, holds immense value. While the company owns physical factories, bottles, and ingredients, the brand's reputation and the public's association with its name are entirely non-physical. If another company wanted to acquire this brand, a significant portion of the purchase price would be for this intangible asset – the established brand recognition and customer loyalty – rather than just the physical assets.

• A Software License: When you purchase a license to use a piece of software, you don't receive a physical object that embodies the software itself (even if it comes on a disc, the disc is just a medium). Instead, you acquire a legal right to install and use the software program according to specific terms. The software code, the algorithms, and the right to use them are all intangible. They exist as data and legal permissions, not as something you can physically grasp or touch.

• A Professional Sports Team's Broadcast Rights: A professional sports league often sells the exclusive rights to broadcast its games on television or streaming platforms for billions of dollars. These broadcast rights are incredibly valuable assets for the media companies that acquire them. However, the rights themselves are not physical objects; they are legal agreements and permissions that grant the ability to transmit content. The value lies in the exclusive privilege to show the games, which is an intangible asset distinct from the physical equipment used for broadcasting or the athletes playing the sport.