Patents apply to inventions and processes and cannot protect logos or concepts. The type of inventions that can be patented is large and includes the following:
- A new product
- A new process of manufacturing
- An improvement to an existing product or process
- A new method or process relating to the testing or control of an existing manufacturing process
- Improvements in computer technology
- New chemical compounds or compositions
To qualify for a patent, an invention must meet certain criteria relating to novelty, inventiveness and utility. In short, it must be new. It should also have an industrial application and contain an inventive step that is ‘non-obvious’.
Patent or Trade Secret?
Before applying for a patent it is important to decide whether a particular innovation should be protected by a patent or retained as a trade secret. An invention can not have patent protection and be kept secret. Part of the patent process is publishing a complete description of the invention.
For example, if a food processor invents a new low cost, energy efficient refrigeration process for freezing vegetables they have to decide whether to patent the process or keep it secret. Patenting it will give them a window of opportunity to decrease costs relative to competitors and they can either pass this on to customers in the hope of increasing market share or create a higher margin on goods to increase profits.
Alternatively, the company could choose to keep the new process a trade secret. By doing so the process would have no legal protection but the company could extend their competitive advantage for longer than the patent period, e.g. 20 years, providing the new process remains secret. By keeping the process secret the company runs the risk of a competing company discovering the same process which they could then patent and have exclusive rights over. This could mean that the original inventors may not be able to use the process without buying the patent or license to use it from the competing company.
An inventor may also choose not to patent a process but focus resources on marketing the invention while continuing to refine it to stay ahead of competitors.
Advantages and Disadvantages of Patents
Benefits gained by patent protection include:
- The patent holder has exclusive commercial rights to use and license the invention.
- Legal action can be taken against anyone who tries to use the invention without the patent holders consent.
- The existence of the patent may be enough to deter would-be infringers.
- The patent can be sold.
Drawbacks of patent protection include:
- A full description of the invention is published and can be viewed by anyone applying to the appropriate patent administration office.
- After the exclusive patent period other people or businesses can freely use the invention without needing permission from or making a payment to the inventor.
- The cost of the patent may out-weigh the financial advantages of the invention.
- Inventors may choose to capitalise on inventions that could benefit the wider public, such as a new low carbon emitting energy source, rather than allowing the inventions to be used widely.
Buying and Selling Patents
A patent is a business asset that can be bought, sold, transferred or licensed like most other property. They can be sold at any time during the specified exclusivity period. Some inventors do not actually manufacture their patented inventions but rather trade and profit from licensing their patents to others. For example, a person could enjoy inventing new machinery but not have the resources or interest in manufacturing the products for sale to the public. Benefit can still be gained from their inventions by selling or licensing the new machinery to others to manufacture.
On the other hand, a business may not have the expertise or resources to create inventions and are willing to purchase inventions from inventors. Buying a patent or the license to use a patented innovation may be more cost effective for some companies than running a research and development department.
Organisations administering patents include:
- The United States Patent and Trademark Office
- The Canadian Intellectual Property Office
- The Intellectual Property Office of New Zealand
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