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Patents

Updated on March 21, 2024
Article byPrakhar Gajendrakar
Edited byPrakhar Gajendrakar
Reviewed byDheeraj Vaidya, CFA, FRM

Patent Meaning

Patents are ownership documents offering applicants exclusivity rights to an original idea, concept, or invention. It can be applied by a person, firm, or entity. It ensures that the registered intellectual property is not used or exploited by anyone else.

Patents

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After patenting, an applicant can use, sell, import, and export the intangible asset. They have to be renewed periodically; primarily, they have a limit of 20 years. They act as proof of authenticity and public knowledge. Although similar, it should not be confused with copyrights and trademarks.

Key Takeaways

  • Patents are ownership rights to intellectual property. It works as an intangible asset, and companies ensure that their authority is exclusive to them.
  • Patent law differs from one country to another. In the US, patenting is overseen by the USPTO. It is further classified into three types—utility, design, and plants.
  • “Google Patents” is a dedicated search engine for indexing inventions and designs. Users can type publication numbers pertaining to a particular patent and access related information instantly.

How Do Patents in Business Work?

Patents are documents that legalize a particular invention, design, or utility. It can be acquired by a company, group, individual, or entity. Patenting ensures that the innovation isn’t copied, stolen, or sold without their consent.

Patent law differs from one country to another. In the US, they are classified into three types—utility, design, and plants. In the US, the registration process is overseen by the USPTO (US Patent and Trademark Office. 80% of USPTO registrations were acquired for utility assets.

We protect tangible assets—land, property, collectibles, and monetary investments. In the same way, official registration protects intellectual property, ideas, concepts, and design. In order to penalize infringements, law enforcement needs to trace the origin of an idea or innovation. This is where registration comes in. It serves as a license and right to ownership. Documentation makes actual legal action possible.

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Types

It is further classified as follows.

#1 – Utility

It is expensive and requires a complex process. Utility patents are associated with new inventions. Innovators acquire them to have authority over their products.

For example, inventors who build new machines or compositions can acquire registration. It is one of the most significant intellectual property forms. A utility patent search ensures that no one has ever published a similar invention. If it matches a prior invention, the registration process becomes more challenging.

#2 – Design

Design patents are acquired for unique, new, and eccentric designs. Alternatively, it can be for a mass-produced product. It is important to note that patenting design only protects the appearance and design of an article—not its features and functions.

Sometimes, multiple registrations are acquired for the same product. For example, a company might even acquire both utility and design registration for the same invention.

Usually, the registration of an invention or idea entails a maintenance fee. This fee is mandatory and is paid to the USPTO. However, a maintenance fee is not required for design patents (up to a period of 15 years). Though when a design registration passes the examination, an allowance notice is sent to the applicant’s attorney asking for an issue fee.

#3 – Plant

A plant patent is associated with agriculture, pharmaceuticals, and medical research. A plant registration lasts 20 years but is only available for unusual and unique plants. Therefore, it entails a complex procedure. The procedure requires tedious paperwork and formalities.

Examples

Now let us look at patent examples to understand the process better.

Example #1

Rosaline owns a tech firm. They build computers, processors, and laptops. Recently her R&D team came up with a new idea for smartphones—a camera is installed on both sides of the body panel—placed adjacent to volume and lock controls. This invention would allow users to click pictures from both sides.

Rosaline was convinced, and she filed for a design registration with the USPTO for smartphone design.

Consequentially, Rosaline launches the product in the market—the product receives a very positive response—the firm sets new sales records. But Rosaline’s first-mover advantage will not last if other firms use the same design. Thankfully, Rosaline owns legal rights; no company can copy the design legally. Any such attempt would be considered an infringement.

Example #2

Now let us look at a real-world patent example.

In 1895, King C. Gillette introduced the concept of use-and-throw blades for safety razors. The patenting process took six years. The firm sold less than three hundred blades and razors in the first year. But soon, the number skyrocketed—two hundred thousand sold in the second year.

Till 1921, it remained a costly product for the general public. Then, Gillette launched an updated version. Gillette needed to update the design because its patent had expired. The updated design significantly reduced the cost of production. The market price was also brought down from $5 to $1 per blade. The price drop led to a significant increase in customers. Nonetheless, the cost of the razor remained unchanged at $5.

The Gillette brand grew due to first-mover advantages; Gillette completed patenting process in a very prompt manner.

Benefits

  • Credit and monetary benefits should go to the inventor—individual, firm, or institution. Registration protects intellectual property. Intangible assets are hard to quantify, register and defend. Therefore, it is a documentation process that enables legal action.
  • It provides a legal framework for the sale, production, and export of intangible assets. After registering assets, inventors can let third parties manufacture a product.
  • It acts as a license and proof of original invention.
  • The term ‘infringement’ refers to use without the registered inventor’s consent. The aggrieved party can seek judicial remedy.

Most people struggle to differentiate between these terms owing to similar denotations. Let us look at the differences between them.

ParticularPatentsCopyrightTrademarks
MeaningIt protects inventions, machines, designs, ideas, and concepts.Copyrights are associated with creations, self-made products of artistic value, critical thinking, and innovative products.It generally guards a word, phrase, or sentence that signifies a company or a brand.
ExamplesIt may apply to a plant, design, utility, equipment, product design, or chemical composition.Paul McCartney and Sony own the rights to the Beatles’ music.Apple® is a registered trademark. Apple Inc. is a tech company that sells products, services, and gadgets.
ImportanceIt protects intellectual property rights and serves as proof of original invention.It offers exclusivity to revisit, reframe, reproduce, perform, create, and resell.Businesses use it for brand awareness.

Frequently Asked Questions (FAQs)

1. How long do patents last?

The world intellectual property organization stipulates a patenting life span of 20 years. However, there are multiple renewal fees attached to that. Only design registrations can be completed without paying a maintenance fee (only for the first 15 years).

2. Are patents an asset?

Yes, they are assets; despite lacking a physical form, they are categorized as intangible assets. For a brand, consumer goodwill is a monetizable asset that affects brand awareness and brand perception. In the same way, registered inventions or designs are an asset—intellectual property rights.

3. Can a patent be renewed?

In the US, once the initial procedure is completed, renewal fees have to be paid every 3.5, 7.5, and 11.5 years from the issue date. The renewal fee is not applicable for plants and designs.

4. What is Google Patents?

“Google Patents” is a dedicated search engine for indexing registered inventions. It was launched in 2006. Users can type publication numbers pertaining to a particular invention or design and access related information instantly.

This has been a guide to Patents and definition. We discuss its types, examples, benefits, copyright, and trademark. You can learn more about it from the following articles –

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