Why Do Patents Expire: Everything You Need to Know
If you find yourself asking, "why do patents expire?" it's important first to have an understanding of what patents are.5 min read
"Why do patents expire," may be a question you find yourself asking. But first, it's important to have an understanding of what patents are.
What Are Patents and What Do They Do?
Patents are given by the U.S. Patent and Trademark Office and allow the inventor to have exclusive use of an invention, such as a device or process.
Patents are considered intellectual property rights. Patents are further classified into utility patents, design patents, and plant patents. In order to get a patent, there is an application process that consists of review by the USPTO office as well as payment of certain filing fees.
Patents can be beneficial for those seeking to protect a specific invention that may have been R&D-intensive. In the U.S., there are primarily utility and design patents. Here is how long each patent lasts:
- Utility Patent – 20 years
- Design Patent – 14 years
The term for utility patents starts when the patent application is filed. In contrast, for design patents, the term starts only when the patent is granted.
Utility patents are for specific processes, mechanisms, and uses of an invention, while design patents are for a patent's look, aesthetics, and appearance. It is possible to get both a design and utility patent for the same invention.
A patent essentially is a contract between the inventor and society at large. By recognizing the inventor's right to exclusive use of the patent for a period of time, the inventor contributes knowledge of the patent and its design to public knowledge. This both recognizes the inventor's hard work while promoting technological innovation for everyone else.
Why Do Patents Expire?
Eventually, patents do expire. While a patent will remain in force for a period of time, eventually it is considered to be no longer in effect. The patented invention then becomes freely usable by others.
Patent terms, if maintained correctly, vary but generally go for up to 20 years. After the patent expires, the invention can be used by others as much as they wish. For those seeking to use the patent after its expiration, knowing this expiration date is essential. There are historical reasons for the 20-year term, but nonetheless, it remains current policy.
Patent expiration is a policy balance between rewarding research and development as well as stimulating broad societal innovation.
A patent that remains in effect for too long can restrict others from using and building on it. All technology is built on past technology. To prevent long-term slowdown and unjust enrichment, patents eventually expire.
Consumers and the public benefit from both patented inventions as well as the inventions that the patent helps spur. Patents are essentially a monopoly, which is seen as a necessary means of making research and development a worthwhile investment. A patent may also expire if the inventor or owner fails to pay the required fee on time.
Design patents do not have maintenance fees. Utility patents will require a fee at the 3.5-year mark, the 7.5-year mark, and the 11.5-year mark from issuance. The fee also must be paid during the USPTO's specific window for payment, which may change and generally is only a few months. There also is a grace period that may be granted.
The grace period allows the patent owner to pay the fee after the deadline. But if the fee is not paid during this time, the patent will expire. Under certain circumstances, such as extraordinary difficulty in paying the fee, the USPTO may allow the fee to be paid and patent retaken even after the grace period.
The patent must also be renewed annually in order to justify the continued government grant of monopoly rights. The fees increase as the patent nears the 20-year mark, therefore decreasing the incentive to keep the patent if it's not economically useful. This patent expiration policy is carefully designed to attempt to balance innovation incentives by inventors with the larger public welfare.
The exclusive economic use of the patent rewards the inventor for pushing human knowledge forward. However, if all such inventions were restricted for a long time afterward, it would significantly slow down inventions by others and thus overall social well-being.
Even though a patent provides protection for the original producer, it does not mean the competition cannot produce a similar design or method. If the idea, design, or process is similar but distinct from the original or the company has gained the rights to license the inventor's idea, it can be produced even while a patent is in effect.
The reason for putting a time limit on patents is to prevent the building of unlimited monopolies. If patents were to have no expiration date then large corporations could corner the market by securing numerous patents to push out the competition by never allowing them to create similar products or designs.
An example of a case where allowing non-expiring patents would stifle competition would be phone technology. If the patent for the creation of the telephone would be extended for a period of time as well as broadly applied, the company that gained the patent would be able to control the production of all phones. If this were to occur, it could not only stifle technological advancements but also could drive up the price, as there would be no competition to drive the price down. This is how a monopoly is created, and antitrust laws in the U.S. prevent this from occurring. Giving patents an expiration date will allow competition to keep the price competitive and allow improvements to the idea.
There are some companies that wish to hold onto the intellectual property that they use to produce products. They do not seek a patent, instead, keeping the idea from becoming publicly known by protecting it as a trade secret.
What Happens to a Patent When it Expires?
After a patent expires, the inventor loses his exclusive right to profit from the idea. Other companies can compete and produce the product or process themselves. Usually, at this point, the market will become flooded with imitations, which often drives the price of the product down and competition increases. The inventor can continue to produce the product, but buyers will often not pay the same prices when there are comparable items for much less. However, the competition can not use the inventor's name for the product.
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