Financial Patents: Everything You Need to Know
Understanding financial patents requires an understanding of the different types of patents available to inventors.3 min read
2. How to Apply for a Patent
3. What is a Letters Patent?
Updated November 27, 2020:
What is a Patent?
Understanding financial patents requires an understanding of the different types of patents available to inventors. A patent is an exclusive right to intellectual property, used to sell or produce a specific process or product for a set amount of time.
A patent is also defined as a right that has been guaranteed or granted by the government, providing the exclusive rights to an inventor to produce, manufacture, and/or sell the invention for a specific amount of time. The time limit of a patent varies between countries, although many recognize the patent laws of one another. In the United States, a patent term is 20 years. Patents also protect inventors from others stealing their ideas, which helps to encourage entrepreneurship and innovation.
The Copyright, Designs, and Patents Act 1988 in the United Kingdom dictate that the national patent office can provide a patent to an inventor. The patent provides the inventor with a monopoly to use, sell, or manufacture the invention for 20 years. The 20-year time period begins when the applicant first files the patent application. Before receiving approval on a patent, an inventor must provide detailed information about the invention to the patent office. Reviewers in this office must feel satisfied that the invention has application on an industrial basis and original features.
Although the patent does provide monopoly protection on an invention, the patent office does not enforce this protection. Instead, the patent holder is responsible to protect their rights, determine if someone else is infringing, and take legal action against anyone who may be infringing on the patent. A patent granted in one country could be valid in another if it has been filed in countries party to reciprocal treaties. One example is the United Kingdom, which is part of the European Patent Convention. This convention includes 13 countries in Europe and provides additional rights across all 13 countries for those who file one patent application.
Choosing to sell a patent could result in capital gains on a long-term basis for the inventor because this intangible asset can depreciate over its life.
Within the United States, a patent term is 20 years and grants the inventor an exclusive right to make and sell a product without worrying about competitors. Patent protection gives incentive to a company or inventor to continue to develop products, processes, and services, which helps encourage innovation. For example, pharmaceutical companies invest a lot of money in research and development initiatives, and patent protection is essential to helping them recoup those funds and earn a profit.
There are three main types of applications for patents through the United States Patent and Trademark Office (USPTO):
How to Apply for a Patent
Before filing a patent application, the applicant must do some research on the USPTO database. This research should focus on whether another company or inventor already holds patent protection on something similar. Any invention that qualifies for patent protection must have significant differences from any previous design or be a significant improvement on a previous design. A patent applicant must keep records throughout the design process and any steps taken to create this new invention. The responsibility of enforcing the terms of the patent falls on the company or individual who applied for patent protection.
The process of patent application requires submission of detailed documents, along with the payment of required fees for search, examination, and filing. These steps can both take place through the USPTO website. The required documentation must include descriptions, claims, and drawings of the item. The application must also include a declaration or oath that the person or company submitting for patent protection did invent the item or improve an existing product in a major way. Upon approval of the patent by the government, the legal patent holder can start capitalizing on the invention.
What is a Letters Patent?
A letters patent legally grants the exclusive rights of an invention to a company or person. This type of patent is given to the patent holder by the government, granting the rights to a new discovery or invention. To qualify, an invention must provide a new solution or way of doing something.
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