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Patent: Definition, Economic Benefits, Patent Law & Global Insights

The critical role of Patents in economic development.

Patents have evolved as the most significant legal instruments for protecting intellectual property rights of innovators. A patent “confers to an inventor the sole right to exclude others from economically exploiting the innovation for a limited time (20 years from the date of filing)”. To be patentable, an innovation must be unprecedented in the sense of not existing in the public domain prior to the application. A patentable innovation usually involves an inventive step. It must be non-obvious to a person with ordinary skills in the particular field of application. The innovation also must be useful to be patentable and it must provide the solution of a particular problem in at least one application. A major component of a patent application is disclosure. The invention must be described in absolute detail to enable skilled professionals pertaining to that field to practice it. In the highly competitive contemporary times, recognizing intellectual ideas is imperative for governments the world over. Patents are drivers of economic growth and hence, invention and the protection of that invention is preponderant.

Patent – The pure definition

A patent is a legal right for invention, by application. “It is not an automatic right that comes into existence, unlike copyrights which exist automatically, and registered design which only requires registration and also trademark by registration for distinctive identification of products or services”. Since the creation of the first mechanism to protect inventions in mid-15th   century, the patent system has come a long way. It has evolved into a tool to promote innovation encouraging economic development. By offering exclusive rights for a limited period, an inventor generally recovers R&D costs and investments incurred during the process.  The exercise also facilitates investment to commercialize and market new inventions to enable the general public to enjoy the benefits of the innovation.

Economic benefits of the patent system

The economic benefits afforded by the patent system are manifested in promoting innovation, facilitating investment, economic development, knowledge sharing and the optimum use of resources.

  • Innovation benefits the larger society by creating new and user-friendly goods and services that fulfil social needs.
  • Patents system encourages innovation through the grant of limited monopolies, as a reward to innovators for the time, resources and ingenuity invested in creating something new.
  • The scope for financial enrichment acts as an incentive along with the conventional rewards of scientific innovation, such as academic recognition and promotion within research bodies.
  • A robust patent system is vital to foster and encourage continuing innovation and research, leading to further enhancements in diverse functional domains.
  • Patents help enterprises accrue transformational benefits by leveraging the market potential of their inventions. MSMEs may use patents to attain financial backing and stimulate the growth of national industry by attracting overseas investments and visualizing new, export-oriented products.
  • Patents encourage knowledge sharing by mandating the details of the patented invention to be placed in the public domain. It is usually done in exchange for the exclusive rights to exploit the invention.
  • By facilitating knowledge sharing, patents reduce the duplication of research effort and encourage researchers to improvise existing inventions. Researchers will gain the luxury of studying a patented product finding ways to improve upon it. Seamless access to patented inventions facilitates research that would not be possible otherwise.

A brief history of patent system

The first instance of a “patent system” can be traced back to the ancient Greek city of Sybaris around 510 BC. As per history the leaders decreed that, if a cook invents a new recipe, no other cook is to be permitted to prepare the same dish for the next one year. The inventor retained the commercial profits from the dish. This motivated other chefs to conjure up new inventions.

The first formal patent system was introduced by the Senate of Venice, way back in 1474. It was also the earliest known administrative system for the grant and protection of patents. The new law for patent throughout the territories of Venice regulated that “Any person in this city who makes new and ingenious contrivance, not made heretofore in our dominion, shall, as soon as it is perfected so that it can be used and exercised, give notice of the same to our State Judicial Office, it being forbidden up to 10 years for any other person in any territory of ours to make a contrivance in the form and resemblance thereof”.

International legal framework on patent law

  • Paris Convention was the first intellectual property treaty and the scope of protection of industrial properties cover patents under Article 1(2) spanning national treatment, Right to Priority, Independence of Right.
  • World Intellectual Property Organization (“WIPO”) providing two main objectives including the protection of intellectual property globally and ensure administrative cooperation among the intellectual property unions established by the treaties that WIPO administered in 1967.
  • Patent Law Treaty administered under the WIPO for the streamlining procedures.
  • Patent Cooperation Treaty administered under the WIPO.
  • The Budapest treaty by WIPO providing the deposit of biological organisms or microorganisms for the patent procedure.
  • The Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) is an international legal agreement between all the member nations of the World Trade Organization (WTO) enumerating standards relating to minimum standards of protection, enforcement and disputes resolution. It spans invention in all the fields of technology in any product or process, conditions of patentability in the inventive step and capable of industrial application and exclusive rights in nature that prevent the third party from making, using, offering for sale, selling, or importing for unauthorized use.

A brief history of the Indian Patent Act

  • Act VI of 1856 on the protection of inventions
  • The Act modified as act XV Patent monopolies called exclusive privileges, 1859
  • The Patterns & Designs Protection Act, 1872
  • The Protection of Inventions Act, 1883
  • Consolidates as the Inventions & Designs Act, 1888
  • The Indian Patents & Designs Act, 1911
  • The Indian Patent Act, 1970
  • Amendment Act, 1999
  • The Patents (Amendment) Act of 2002
  • The Patents (Amendment) Act, 2005

Patents – A global perspective

Following is the list of nations that filed for the highest number of patents in the year 2021.

  • China – 69,540
  • USA – 59.570
  • Japan – 50,260
  • Republic of Korea – 20,678
  • Germany – 17,322
  • France – 7280
  • UK – 5841
  • Switzerland – 5386
  • Sweden – 4453
  • Netherlands – 4127
  • India – 66,440 (Domestic patents filed)


Also Read: The How and Why of Creating New Product Ideas

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CP Raj
CP Raj
A senior level Marketing & Communications professional with over 20 years of rich and varied experience. Previous stints with reputed ad agencies, eminent corporate entities and renowned media houses. Satyam, TCS, The Hindu, Apple and Musings. Had the wonderful opportunity of contributing on a sustained format (8 years) for Wheels supplement of The Hindu, AP and Retail Plus supplement of The Hindu, Hyderabad (1 year). Present assignment – Principle Consultant.


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