Proprietary Technology

DEFINITION of 'Proprietary Technology'

A process, tool, system or similar item that is the property of a business or an individual and provides some sort of benefit or advantage to the owner. Companies that are able to develop useful proprietary technologies in-house are rewarded with a valuable asset: they can either use it exclusively or profit from the sale of licensing of their technology to other parties.

BREAKING DOWN 'Proprietary Technology'

For example, let's say a biotech company successfully develops a new drug to treat a major disease. By patenting the process, method and end result of the drug, the company is able to reap substantial rewards from its efforts to develop its proprietary technology.

In some industries, proprietary technologies are a key determinant of success. As a result, they are guarded closely within a corporation and are protected legally by patents and copyrights.

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