Patent

Definition

In business and finance, a patent is a legally granted property right that provides exclusive ownership and protection to an inventor or assignee for a novel and useful invention or innovation.

What is a patent?

A patent grants the holder the exclusive right to use, make, sell, or licence the patented invention. This exclusivity allows the patent owner to prevent others from using or profiting from the invention without their permission. A patent has a defined lifespan, typically 20 years from the date of filing. After this period, the patent expires, and the invention enters the public domain.

Types of patents:

1. Utility patents: These cover new and useful processes, machines, manufactures, or compositions of matter. 
2. Design patents: These protect the ornamental design or aesthetic appearance of a functional item. They do not cover the item’s function.
3. Plant patents: These are granted for new and distinct varieties of reproduced plants.

To obtain a patent, the inventor must file a patent application with the relevant national or regional patent office. This application includes a detailed description of the invention, along with any necessary drawings or diagrams.

Patents can enhance a company’s attractiveness to investors and lenders, as they provide a tangible asset that can be valued and used as collateral.

Obtaining and maintaining a patent can be expensive and involve legal complexities. Businesses must weigh the costs against the potential benefits. Holding a patent also means defending it. This can lead to legal battles if others dispute the validity or infringement of the patent.

Example of a patent

Imagine a technology company, Tech Innovations, invents a new type of smartphone with advanced features and functionalities. To protect its invention, Tech Innovations files for a patent for the design and technology used in the smartphone.

The patent grants Tech Innovations exclusive rights to manufacture, sell, and use the patented smartphone design and technology. This prevents other companies from copying the design and technology without Tech Innovations’ permission.

As a result, Tech Innovations can capitalise on its innovative smartphone design, establish a strong market presence, and potentially license the technology to other manufacturers for a fee.