Legal Studies 3050

Section 1: Starting a Small Business

Patents

Patents are another method used to protect intellectual property rights. The government issues patents to those who invent new and useful products or processes, as well as for distinctive improvements over existing inventions. It is also necessary for the invention to be ingenious and not just be a natural development that would normally become apparent to any skilled person in the field. The inventor typically retains exclusive ownership. In a situation where these rights are sold or transferred to another party, the second party becomes the owner and is able to obtain a patent. In addition, employers usually retain ownership over inventions their employees create during the course of their employment duties.

Under the terms of federal legislation called the Patent Act, a patent provides the holder with " the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used" for a period of 20 years. Patents are given to the inventor who first files an application. After a patent has been granted, the document is made available to members of the public. This allows others who are interested to keep up with new developments and possibly make improvements over the original design.

Patents have the potential to create a monopoly for a business; however, legislation protects the public's interest in three ways. It does this by

  • ensuring that only genuinely new inventions receive patent protection

  • allowing the competition to challenge the validity of the patent

  • allowing interested parties to apply for redress when it is believed the patent right is being abused

A patent can be an important asset to a business, especially if it has exclusive rights over a unique invention. Essentially, a patent provides a monopoly over the invention for a period of 20 years. This often gives the business a considerable competitive advantage. When a business is just starting out, the patent provides the company with a considerable amount of time to establish itself. The ability to sell or grant a license for the full or limited use of the invention also provides a business with an alternate means of benefiting financially from the invention. Furthermore, a business can seek compensation for any unauthorized use of the invention. This serves as a deterrent to the infringement of these rights.