Patents and Registered Designs

Companies that invest in R&D want to make sure that they can reap the rewards of their investment without simply being copied by their competitors. Their technical know-how and innovations are aspects of what is known as ‘intellectual property’, which is increasingly important – not to say difficult – to protect in our globalised marketplaces.

If a firm or individual invents a new product or process and can prove that it is genuinely novel, a PATENT may be applied for. In the UK, this is looked after by the UK Patent Office see http://www.patent.gov.uk/patent.htm for more information.

Typically, a patent is based on one of the following:

How something works
How something is made
What something is made of

This requires the details of the invention to be registered with the Patent Office, which if approved, grants a licence that means that the holder has exclusive rights to exploit the invention for 20 years as long as the patent is renewed annually.

The patent holder may choose to sell or license part or all of these rights to other firms around the world – for example, if it did not have the capital required to manufacture the product in sufficient quantities to meet market demand.

For an idea to be patented

The invention must be genuinely new
It cannot just be adaptation of something that is already in the public domain
It must be capable of industrial application

In other words, the invention must make a technical contribution. This means you can’t, for example, patent a business method unless it involves some technical innovation. For example, in the USA, eBay failed to gain a patent for ‘Buy it Now’ and Amazon for ‘One Click’.

Inventions relating to computer software may be ‘patentable’, but only if they involve something more than just software running on a computer in a technically ordinary way.

Other ideas that cannot be patented are:

Scientific or mathematical discoveries, theories or methods;
Literary, dramatic, musical or artistic works;
Schemes, rules or methods for performing a mental act;
Methods of medical treatment.

There are similar ways to register patents in many other countries around the world. It is up to the patent holder to ‘police’ any infringements and to take anyone to court that infringes their rights. There is no authority actively looking out for infringements, and in some countries, patent holders will receive little support from local courts. It is often the case that bringing legal action in the case of patent infringement can be expensive and ultimately fruitless.

Evaluation

It is a moral dilemma whether a patent should be granted for products such as drugs when society could benefit from widespread low-cost production of, for example, an effective AIDS drug. However, there has to be an incentive for firms to spend massive amounts on R&D, and this is one justification for granting patents, so that the extraordinary profits that are earned by some successful innovations can help fund new developments.

Once a patent expires after 20 years, the firm’s product is open to widespread imitation – if this has not happened through firms finding an alternative approach in the meantime. One UK example was Dyson, the firm that invented a bag-less vacuum cleaner that was extremely effective – and went on to capture the largest share of the US market. As the patent drew towards the end and new competition loomed, Dyson switched manufacture from Wales to the Far East in order to cut costs and also launched a new innovation called ‘The Ball’, that brought new, patented features to its vacuum cleaners.

Patent law is quite complex and does not need be dealt with in depth in A-level Business Studies. If you would like to find out more about Patents and the other kinds of intellectual property rights listed below, see the UK Patent Office website http://www.patent.gov.uk/patent.htm

Registered Design

This provides a weaker form of protection than a patent and has more to do with form and shape, so can protect products that might not qualify for a patent.

Once again, there is often little that can be done when products are copied in other countries, although it may be possible to prosecute anyone selling these products sold in the UK, other EU countries, the USA and so on. In the UK, Trading Standards officers offer a degree of enforcement.

Products that are often counterfeited and offered for sale in markets and boot sales include fashion, jewellery, watches and perfumes.

Note – there are other ways of protecting intellectual property that you will cover in the Law’ part your A2 External Influences Module. Here are brief descriptions for the purpose of comparison and to help avoid confusion.

Registered Trademarks

Used to protect trade names, logos and even colours (Dyno-Rod and its ‘Dyno-Glo’ colour) and tunes (Intel) – all of which help a firm to defend itself against other firms passing themselves off as an imitation of the firm’s service or product.

Copyright

Anyone creating prose, poetry, art and music automatically has copyright for that material and can prevent others from imitating it or from using it in a way not approved of by the creator. When the holder does allow others to use their work, they are entitled to charge a fee for their consent.

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