Innovation & Patent Protection: A Primer on Why to Patent

Lady Justice is not always blind.

Lady Justice is not always blind.

The patent system seems to be in the news only when big companies like Apple and Samsung are suing each other, or when there’s a major law change like the America Invents Act that was passed in 2011 and implemented in 2012 and 2013. Even then, the changes wrought by these legal wranglings are difficult to discern unless a person is well versed in patent law.

The US patent system was implemented when the country declared independence from Britain. Before that, all new inventions belonged to the King of England. The fledgling country’s founders realized that a strong patent system would add to the freedom of their new enterprise and enable the common person to thrive in a way that was difficult in other countries. That indeed has been the case. The US remains one of the top countries for innovation and this is due, at least in part, to a strong patent system.

Why are patents so important? A patent gives the inventor, or the company it’s assigned to, a monopoly on producing and selling the patented invention for 20 years. If filed in the US, that means that no other person or entity can make or sell the product in the US for 20 years. If filed in other countries too, the same rules apply. (International patent protection is key and has certain tricks to keep in mind. Be sure to check back with IN again for our future article on this topic.)

The pharmaceutical industry provides a perfect example of the value and progression of patent protection. Drugs cost millions of dollars and many years to research and develop, and for every 10,000 potential candidates, one drug may make it to the market place. No company is going to spend that kind of time and money to develop a drug, unless there’s a chance of a good profit at the end. This is what the patent system ensures.

But what about generics? Generic drugs can only be made after the original drug comes off patent, so for 20 years companies like Pfizer and Novartis get to recoup their research costs and hopefully make a profit on a drug that benefits human kind, without any competition. Having 20 years to market a successful drug gives a company a huge advantage, so even when generics do become available many consumers want to stay with the brand name because they know it works. Sometimes the same pharmaceutical companies with then offer a generic product of their own in order capture as much market share as possible and revitalize possible lost revenues.

Investors also value patents for any type of industry. If you’ve ever watched Shark Tank, you know they always want to see the Intellectual Property – ie: patents. The sharks don’t want to invest thousands of dollars just to have another company make a similar product and scoop them in the market place.

So, the answer to the question “how does the US patent system affect innovation?” is this: by giving an innovator a powerful tool to profit from their creativity and inventiveness. And an important way to feed those ongoing creative juices.

Article provided by Gearhart Law
gearhart law

Other links for the American Invents Act:
Wikipedia
The Act
Summary by the American Intellectual Property Law Association

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