21111509

ANSH CHABBRA
2 BBA C

Patent

The word patent has been coined from a Latin word patent-em meaning open. A patent is a
document issued by government to the inventor granting permission to exclusively make, use
and sell on disclosure of the invention for a definite period of time. Unlike patents, monopoly
existed where inventions were not disclosed and exclusively sold. A patent is granted as an
exclusive right by the Government for an invention, for a limited period of time in
consideration of disclosure of the invention by an applicant.

IMPORTANCE:
Exclusive Rights: As mentioned earlier, patents provide exclusive rights which allow the
inventor to exclude others from using the invention. Particularly, for 20 years from the date
of filing the patent application.
Strong Market Position: Since the inventor has obtained the exclusive right to the invention,
the inventor can exercise this right by preventing others from commercially using the
patented invention thereby reducing the competition and thus establishing a place in the
commercial market.
Higher Returns on Investments: Having invested a considerable amount of time and money in
developing the invention, under the umbrella of exclusive rights, the inventor could bring in
the invention to the commercial market and thus obtain higher returns on the investment. Of
course, this depends on the economic utility of the patent. For this reason, the inventor must
ensure the commercial viability of the patent before investing in a patent.
Opportunity to License or Sell the Invention: Sometimes, the inventor might not want to
exploit the invention himself. In such cases, the inventor can sell or license the rights to
commercialize it to another enterprise. This would result to bring royalty and revenue to the
inventor.
Positive Image for the Enterprise: Business partners, investors, and shareholders may
perceive the patent portfolios as a demonstration. Particularly, the high level of expertise that
is provided by the subject matter experts. This acts as a spectacle of the organization’s
capability. Further, this may prove useful for raising funds, finding business partners and also
increase the company’s market value.

Promoting innovation
Innovation benefits the community by creating new and improved goods and services that
meet social needs. For example, innovations in medical research may produce new diagnostic
tests or treatments, which improve community health.
Patents promote innovation through the grant of limited monopolies, as a reward to inventors
for the time, effort and ingenuity invested in creating new products and processes. The
potential for financial returns adds an incentive to the traditional rewards of scientific
innovation, such as academic recognition and promotion within research institutions. Without
the incentive provided by patents, private investors may be reluctant to invest, resulting in
greater calls on government funding or a failure to develop and exploit new technology.

Investment and economic growth

Possessing a patent may help a company to grow by capitalising on the market potential of its
inventions. Small companies may use patents to attract financial backing. In addition, patents
stimulate the growth of national industry because local companies that hold patents can
attract overseas investment and develop products for export. Profits generated by patent
exploitation can be invested in further research and development, which may stimulate
commercial and industrial growth.
Patents also benefit Australian companies by providing a system for trading knowledge
internationally through licence agreements. The grant of licences to international companies
to exploit locally developed inventions provides returns to inventors and access to foreign
markets. The grant of licences to Australian companies to manufacture inventions developed
overseas can improve the skill and know-how within the Australian community. However,
patents may have adverse economic effects. Licence fees may drive up the price of goods and
services that utilise the patented invention. There are also transaction costs associated with
seeking the grant of a patent and enforcing patent rights. Fees must be paid before a patent
application will be examined or granted, and to maintain patent rights once granted. Asserting
patent rights, or challenging those of a competitor, may be costly and difficult for small and
medium-sized enterprises because claims of infringement may need to be pursued through the
courts. Patents may also have adverse effects on the balance of payments, especially for
countries like Australia, which are net importers of intellectual property. This is because
expenditure on licence fees or royalties for the use of patents owned by foreign entities may
exceed the income earned from the use, by foreign entities, of local inventions. Most
Australian biotechnology patents are owned by foreign entities and Australian researchers
generally pay licence fees to overseas companies to use these patented inventions in research.

Resource use and knowledge sharing

Patents promote knowledge sharing by requiring the details of the patented invention to be
placed in the public domain in return for the exclusive right to exploit the invention. In the
absence of this exchange, inventors might protect the details of new inventions through
secrecy. The disclosure requirements of the patent system are based on the idea that
‘scientific and technical openness benefits the progress of society more than do
confidentiality and secrecy’.
By encouraging knowledge sharing, patents reduce the duplication of research effort and
encourage researchers to build on existing inventions. Researchers may study a patented
product and find ways to improve upon it. Access to patented inventions may also facilitate
research that would not otherwise be possible. For example, access to a patented research tool
may enable vital research into the causes of a genetic disorder and lead to the creation of a
genetic test or treatment. This research may not have occurred if the tool had remained secret.
Due to the cumulative nature of much genetic research, knowledge sharing may be
particularly important in this context.