Continuing our series on intellectual property (IP), in this post we discuss patents.
Patents are a form of intellectual property that gives their owners the exclusive rights to produce, use, and sell an innovation for a designated period of time. Patents are not automatic or necessarily universal. They must be registered in each country where the owner seeks to protect the innovation.
Patents are often acquired in new technology sectors, such as information and communication technology, and pharmaceutical and biotechnology industries. They are also common in many traditional industries, such as the automotive, chemical and other manufacturing sectors.
Patents are heavily based on the technical aspects of an invention, so two different inventors may have patents on two different elements of a particular product, and two seemingly similar products may include very different patented technologies. For this reason, it is imperative to know your patent-eligible innovations and ensure that they are legally protected.
Why protect this type of intellectual property?
Patents are a legal mechanism in place to encourage and safeguard innovation. A company may develop a technology or process that provides a competitive advantage, but if there is no patent, there is often no barrier to other companies or employees plagiarizing and profiting from that innovation. A company that fails to get an original invention patented could also miss out on substantial capital investments, returns on investment, profitability, and growth in market value.
What is the economic value of patents?
Patents are an important way of valuing innovative inventions. By giving limited production, use, and sale rights to the entities that own them, patents are an intangible asset that can be valued as part of a company’s net worth. They can also be licensed or sold to others at market-based rates. If you hold a patent on an invention, you will be able to receive all the proceeds from that particular invention. All of these provide a great way of generating investments in innovation, and allowing returns on investment to promote further innovation.
Patents are also an important mechanism for sharing technical knowledge that otherwise might be kept secret. The information in patent applications is made public, and the security of owning a patent encourages collaboration with other patent owners in expanding research and development to mutual advantage.
Why is it important not to infringe others’ patents?
Patents do present business and financial risks to those who infringe them. Without a patent license, those that use someone else’s patented technology can be at risk of being taken to court, paying substantial compensation to the patent owner, and potential suspension of their sales, manufacturing, imports and other business in infringing items.
Companies are well-advised to establish management practices to help avoid these kinds of risks. CREATe recommends that companies establish and clearly communicate policies and procedures for their employees and business partners about patent protection, including keeping up-to-date documentation of secured patents and patent licenses, promptly reporting patent infringement claims, and regularly assessing supply chains to determine whether patents are being used properly.
- CREATe Resources: Visit our resources page for a more detailed review of the risks of not protecting your inventions or their associated patents.