What are patents and is it a big deal if an ASX company wins one?

Nick Sundich Nick Sundich, March 14, 2023

So, your company has announced it has obtained a patent (or multiple patents) and has told investors that it is a major step – or something along those lines.

Is it really? Simply put, it is a major step but it is a very early step and there’ll be plenty more that a company will need to undertake before it can entertain the idea of commercialising its products.





What are patents?

Patents are intellectual property rights that allow individuals and companies to own the rights of an invention or concept.

A patent grants the owner the exclusive right to use, make and sell their invention for a limited period of time.

This means that no one else can copy, use or sell the patented item without permission from the patent holder.


Why is it a big deal?

Winning a patent is an important milestone as it provides protection from competitors who may try to copy and use your invention.

Holding a patent also gives customers an assurance that they are investing in a product or idea which is covered under legal protection.

It also gives them the confidence that their purchase will not be devalued by competition in the market.

Moreover, patents can provide owners with a powerful negotiating tool when licensing or selling their invention or ideas to other parties, as well as providing them with greater visibility in the market.


How a company can obtain a patent

A company can obtain a patent by filing an application with the relevant agency – in Australia that body is IP Australia.

The application must include a complete description of the invention and any drawings or diagrams necessary for understanding it.

Once the application is filed, an Examiner will assess the invention to determine if it meets all the criteria for a valid patent. This includes establishing novelty, utility and non-obviousness. If successful, a patent will be granted for a period of a certain number years from the date of filing.

The process of obtaining a patent in Australia may also involve engaging professional assistance from an attorney or agent with expertise in intellectual property law.

Once granted, companies are responsible for paying all associated fees on their patents including renewal fees every year. Additionally, they must take reasonable steps to actively enforce their rights against anyone who infringes upon their patented invention without permission.


What happens when a patent expires?

When a patent expires, the protected invention is now open to the public.

This means that other producers are now able to copy, manufacture and sell the same product without having to pay royalties or licensing fees to the original patent holder.

In addition, expired patents can also be used as a reference for further inventions, allowing for additional advancements in technology or products.

All this being said, patents typically don’t expire for several years. Hopefully by then a company that held the patent will have commercialised its technology and not need protection anymore.


Patents are a big deal but shouldn’t be the end game

Ultimately, a company should be striving to win a patent to help it develop and eventually commercialise a good or service.

They should not be striving for patents just for their own sake.

Nevertheless, a patent is no guarantee that the applicable good or service will ever find its way to market. That is where good management comes in.



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