A patent is a form of intellectual rights protection that enables inventors to prevent other people from making use of their ideas. Patents can be very important, both for the individual inventor whose rights are protected and for the economy. Patent laws can ensure that no one is able to take unfair advantage of the work and ideas of other inventors. Patents can help to ensure that businesses and individuals work to create new ideas, which can help to provide an important boost for the economy by helping to encourage innovation.
By protecting a new idea for a process or product, patents make it possible for individuals and businesses to protect their work and investments. Without this kind of protection, it would not be worthwhile for people to invest large amounts of money in new inventions since they would not be able to prevent their competitors from immediately making use of their invention, without having had to put in the same time, money and hard work.
Patents can be particularly important for individual inventors and small businesses, since they can prevent larger companies from taking advantage of their creations. A patented invention can form the basis for a new business or even enable an inventor to make their fortune. Without patent protection, a small business would not be able to compete with larger companies that could take their idea and produce it more efficiently and on a larger scale. Large companies can also use patents to protect their inventions.
The patent system can also be incredibly important because it stimulates invention and innovation. It encourages people to come up with new ideas by ensuring that their rights will be protected to move the economy forwards. Since patents have limited terms and they require that the patented idea is made public, they can also help to encourage development by ensuring that ideas for processes and products will be available for use at the end of the patent term.
The importance of patents can also become clear when a company or an inventor finds themselves on the wrong side of patent law. Patents prevent anyone other than the patent holder from making use of an idea, even if they have come up with a new idea that based upon an old, patented product or process. It is, therefore, important that businesses understand how the patent system works in order to ensure that they avoid falling foul of it. If they should infringe upon the patent of another person or business, then it could result in expensive legal problems.
Patents can be important for individual inventors and for the business community and the economy at large. Patents encourage investment and the development of new ideas, they make new inventions available to the public so that they can be made use of at the end of the term of the patent, and they can also provide protection for the inventors of new products and processes.
Importance of patents is illustrated below:
First, patents provide freedom of movement in the company’s field. For many companies, this freedom of movement can be very valuable, especially in a crowded field with many competitors or in a field dominated by one player. Filing patent applications early helps limit the risk that someone else has obtained a patent on the same idea. This early mover position provides the company with greater assurance that it will not have to license technology from a patent holder. Indeed, the sooner patents are applied for, the better the chance that someone else will not be the first.
Secondly, patents provide licensing opportunities with companies inside and sometimes even outside a company’s field. An active patent program can generate revenue from the licensing of patents which cover technology or business processes that are not practiced by the company. Patents allow individual inventors and small businesses the option of obtaining licenses or selling rights to others who may be in a better technical and/or financial position to bring the ideas to market. Qualcomm and other technology companies are among those that no longer manufacture products but rather focus on technology innovation and licensing. Some companies license the intellectual property on technology used by the company to competitors, forcing the company to constantly innovate and re-invent itself. Other companies regularly patent technology which they never commercially practice, but instead sell to others that do.
Thirdly, patents provide increased overall corporate value. Corporate valuation relies greatly on a company’s intellectual assets, such as, patents. Today, the capital assets of Fortune 500 companies account for only 15% of the company’s value, whereas intellectual assets account for 85% of the company’s value. Fourthly, patents provide for the generation of prior art to protect the company from patent infringement suits. An active patent program provides a reservoir of prior art which prevents others from receiving patents which may exclude a company from practicing important technology and processes.