Promoting innovation and securing R&D investment using patents

Promoting innovation and securing R&D investment using patents

Promoting innovation and securing R&D investment using patents

Imagine investing countless man-hours and money into the research and development (R&D) of something innovative, only to have third parties copy your innovation without bearing any of the R&D costs.  

More disheartening still, third parties with greater purchasing, manufacturing and/or selling powers are now free to undercut you, dashing all hopes you had of procuring a return on your initial investments.  

In such a landscape, investors in R&D would be few and far between, inventors would be inclined to conceal their work from the public eye for fear of being copied, and promising technological advances may not be realised; ultimately, the flow of potentially beneficial innovations and knowledge would slow to a trickle.  

Patent systems are designed to redress these very issues by creating conditions that promote innovative activity while ensuring that any resulting knowledge and benefits are accessible to the public.

The rationale for patent systems rests upon two founding principles:

  1. The sharing of knowledge benefits society more than its concealment; and
  2. innovative activity would be severely limited if innovators were not remunerated for their efforts. 

These two principles are entwined in legal instruments called patents.  A patent provides security for investment in R&D, analogous to the security provided by, for example, a mortgage for investment by a bank.  

The rationale for patents is traceable to the 15th century laws of Venice and the 1624 Statute of Monopolies, which was a statute to suppress all monopolies except those for manners of new manufacture (inventions).  This exception formed the basis for Anglo American patent law.  

How do patents protect innovations?

A patent is a legally enforceable and exclusive right to commercially exploit an invention for a limited period of time.  

Effectively, patentees are rewarded for their inventive contributions with time-limited monopolies in which they can appropriate returns for their investments in R&D.   Patent systems thus stimulate innovation because they create environments in which investing time, effort and money into R&D can become immeasurably more attractive; innovators and investors can be motivated by, and take confidence from, the ability to secure exclusive rights in any inventive knowledge which may be generated.

However, by granting patentees temporary monopolies in which to exploit their inventions (inventions that may not exist without the lure of monopolistic markets in the first place), society must bear potential monopolistic costs.  In order to mitigate such costs, patents must publicly disclose the inventive knowledge associated with, and resulting in, the very inventions they protect.  In this way, patents strike a bargain with their owners; in exchange for a temporary monopoly, patentees must share their protected inventive knowledge, not only for the pursuit of knowledge openness in and of itself, but so that society can eventually benefit from their inventive activity.  The result is that information about inventions is available for others to use as the basis for their own inventive work.

For instance, the page ranking method integral to Google’s success is disclosed in a patent that was published in September 2001, and the information disclosed in that patent has since been applied to fields as disparate as bibliometrics and the “analysis of road networks, as well as biology, chemistry, neuroscience and physics”.1

While no two patent systems are identical, or even perfect, patent systems around the world are relentlessly adapting to the technologies that they aim to promote and protect.  It is up to policy makers to sculpt patent systems which stimulate innovative activity while ensuring that any resulting benefits can be enjoyed by the public.  

Patent systems are rarely ever static, and are presently facing exciting and challenging issues posed by relatively young areas such as 3D printing, software, and biotechnology.  

For more information on patent protection and other forms of intellectual property, such as trade marks, copyright and design protection, please feel free to get in touch with us.


End notes

  1. Gleich, David F. (18 July 2014). “PageRank beyond the Web”. arXiv. Retrieved 28 July 2014.