Proprietary Technology

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Absolute Advantage

    The ability of a country, individual, company or region to produce ...
  2. Rate Of Adoption

    The number of members of a society who start using a new technology ...
  3. Visual Basic For Applications - ...

    A computer programming language developed by Microsoft which ...
  4. Crowdsourcing

    A method of acquiring news about current events. Crowdsourcing ...
  5. Non-Competition Agreement

    A legal agreement in which one party is restricted from working ...
  6. Comparative Advantage

    The ability of a firm or individual to produce goods and/or services ...
RELATED FAQS
  1. What are the elements of an effective value proposition?

    In the modern world’s ultra-competitive marketplace, a critical factor in determining the success of a company is how good ... Read Full Answer >>
  2. What is an economic moat?

    The term economic moat, coined and popularized by Warren Buffett, refers to a business' ability to maintain competitive advantages ... Read Full Answer >>
  3. How can a company execute a tax-free spin-off?

    The two commonly used methods for doing a tax-free spinoff are either to distribute shares of the spinoff company to existing ... Read Full Answer >>
  4. How often should a small business owner go through a bank reconciliation process?

    Small business owners should go through the bank reconciliation process at least monthly, and many business consultants recommend ... Read Full Answer >>
  5. How is the marginal cost of production used to find an optimum production level?

    The marginal cost of production can be tracked to show the optimal production level where per-unit production cost is lowest ... Read Full Answer >>
  6. How do companies with a large product portfolio use BCG Analysis?

    BCG analysis is used to evaluate an organization's product portfolio in sales planning and marketing. It is specifically ... Read Full Answer >>
Related Articles
  1. Markets

    Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  2. Markets

    Buying Into Corporate Research & Development (R&D)

    Investors take note: companies that cut research and development are in danger of saving today but losing big tomorrow.
  3. Fundamental Analysis

    Calculating the Capacity Utilization Rate

    Capacity utilization rate is a ratio used to compare a current usage level against a maximum potential level.
  4. Investing

    Why Real Estate Investors Need a Business Plan

    And how to write one that will serve as a road map to give you direction and motivate you to stay on track.
  5. Economics

    How Does a Perpetual Inventory System Work?

    Perpetual inventory is a system that continually tracks inventory items for quantity and availability.
  6. Investing Basics

    Netflix's Billion-Dollar Content Licensing Budget

    Understand how Netflix selects the TV shows and movies it streams to its subscribers, and learn how it finances those licensing deals.
  7. Economics

    What is Managerial Accounting?

    Managerial accounting is internally-based accounting that helps managers measure the results of their decisions.
  8. Investing Basics

    Should Netflix Consider Commercials And Ads?

    Understand why Netflix does not currently support commercials or ads on its streaming site, and learn how it could benefit if that changed.
  9. Fundamental Analysis

    Explaining Capitalized Cost

    A capitalized cost is an expense associated with a fixed asset that is added to the basis of that asset and expensed over its depreciable life.
  10. Taxes

    What's an Audit?

    An audit is an objective examination of accounting records that makes sure the records are a fair and accurate representation of the transactions they claim to represent.

You May Also Like

Hot Definitions
  1. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  2. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  3. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  5. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  6. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!