A patent aims to protect the inventor of a new product or manufacturing process.  It allows a business to design, produce and sell a new invention and prevents competitors from copying it.   New inventions can be protected for up to 15 years.

Obtaining a patent can be a lengthy process.  To qualify for a patent the invention must be brand new, i.e., you can’t patent an idea that is already being sold.  Checks are then made to ensure the invention is authentic.  The patent is published 18 months after its application and then signed and sealed sometime after this.  The developer must make annual payments to the Patent Office which become more expensive after the first four years.  This is done to encourage production of the new idea. 

The benefits to business of patents are:

• A higher level of sales.
• Reduced competition.
• Legal protection that encourages research and development.
• Higher profits that can be ploughed back into research and development.
• The industry benefits from technical information as a result of the patent.
• High risk research and development is encouraged.

The consumers also benefit from patents:

• New products will lead to better to choice and a higher standard of living.
• New and more efficient production techniques mean lower costs and therefore lower prices.

The major criticism of the patent system is that it leads to a legal monopoly (where there is only one firm in the industry).  If this monopoly power is abused then consumers maybe exploited via higher prices.

The table below illustrates some ideas that have been patented in the past.

It is up to the patent holder to enforce the patent if he or she believes it is being infringed.  This can be an expensive legal process that can be hard for small businesses to fund. 

Further Reading

Anthrax fears prompt patent law review (bbc 18.10.01)
Patent row brews ahead of WTO summit (bbc 25.10.01)

Links

US Patent and Trademark Office