What is 'Medical Patent'

A medical patent is a legal protection against market competition that a government grants to the inventor of a unique medical item or process.

BREAKING DOWN 'Medical Patent'

A medical patent, like other types of patents, prevents competitors from making, using or selling the patented item or process for a limited time. In the United States, the three categories of patents are utility patents, design patents and plant patents. Utility patents apply to machines, processes and manufactured objects as well as to useful improvements on these items. Design patents protect ornamentation. A 1980 Supreme Court ruling made it possible to patent living, man-made organisms, a key to the success of biotechnology firms. The United States Patent and Trademark Office grants patents in the United States, and these patents are valid for 20 years.

Medical patents and their value to companies

A patent is a type of intellectual property right and a key driver of value for biotech companies. Biotech companies use patents to protect their intellectual property rights to items such as drugs. A patented drug is protected against generic competition for a specified number of years, which lets the company that developed it earn high profits that help compensate for the high research and development costs to bring the drug to market, but can also make the drug unaffordable for low-income patients.

Other examples of health care patents include patents for software that helps physicians manage patients, patents for prosthetic limbs, and patents for physical therapy devices such as back braces. Patents may be owned by one company but licensed for use by another, making it possible for more than one company to profit from a patent.

If one company thinks another has violated patent law, it can file a patent infringement dispute in court to try to stop the other company from using its patented technology. Patent infringement can cause problems for investors if it reduces the profitability of the company whose patent is being infringed upon or if a company must stop selling an important product or is sued because it is found guilty of patent infringement.

Biotechnology patents are a controversial subject. Those in favor of biotech patents argue that they support scientific progress because they promise financial rewards to individuals and companies who successfully create new products that they can sell exclusively for a few years at a lucrative price. Those opposed to biotechnology patents argue that they are unethical because the high prices they generate limit access to health care for poorer individuals, especially in developing countries.

RELATED TERMS
  1. Patent

    A patent is the grant of a property right by a sovereign authority ...
  2. Design Patent

    A design patent is a form of legal protection of the unique visual ...
  3. Patent Reexamination

    A process conducted by the U.S. Patent and Trademark Office (USPTO) ...
  4. Letters Patent

    Letters patent are a type of legal instrument in the form of ...
  5. Plant Patent

    A plant patent is an intellectual property right that protects ...
  6. Expiration Date

    Expiration date is the date after which a consumable product ...
Related Articles
  1. Small Business

    How Patent Trolls Hurt Competition

    Patent trolls are known to have a negative impact on the overall business ecosystem. Investopedia explores how.
  2. Small Business

    What's The Cost To File A Patent?

    When filing a patent, be ready to pay attorney fees, filing fees and other related expenses. Usually the total bill is a few thousand dollars.
  3. Small Business

    Patents, Trademarks and Copyrights: The Basics

    In this article learn the basics and differences about patents, trademark and copyrights that can help protect you from legal problems down the road.
  4. Insights

    Google Creates Community License to Unify Android Makers

    The PAX license is an agreement between its signatories for peace in patent litigation.
  5. Insights

    See How China Overtook the World in Patent Applications

    Not so long ago Japan was the clear global leader in IP. China took its place (and the U.S. took the Soviet Union's).
  6. Tech

    Most Blockchain Patents Last Year Were From China

    In spite of uncertain regulations, China led the way in blockchain patents in 2017.
  7. Investing

    Apple Loses To VirnetX In Patent Case

    Apple, Inc. loses a patent case to VirnetX Holding Corporation and needs to cough up $625 million.
  8. Investing

    Patent Trolls Dealt Blow in High Court Ruling

    By narrowing the interpretation of a relevant statute, the Supreme Court limits 'venue shopping.'
  9. Small Business

    Top 5 Patent Holders

    These patent-holders may not be household names, but some of them have 10-times more patents than Thomas Edison.
  10. Investing

    Boston Scientific Hit With Patent Lawsuit (BSX, NVRO)

    Nevro filed a patent infringement lawsuit against Boston Scientific over patents related to its Senza and HF10 therapies.
RELATED FAQS
  1. Biotech vs Pharmaceutical company

    Though biotech and pharmaceutical companies share similar business features, there also have differences. Here, we'll distinguish ... Read Answer >>
  2. What are typical examples of capitalized costs within a company?

    Learn examples of company capitalized costs, including expenses incurred to put fixed assets; software development costs; ... Read Answer >>
  3. What is an economic moat?

    An economic moat refers to a company's ability to maintain competitive advantages to protect its long-term profits and market ... Read Answer >>
  4. What kinds of events or circumstances will increase or decrease the proportion of ...

    Learn the variety of events and circumstances which can significantly increase or decrease the proportion of intangible assets ... Read Answer >>
  5. How does CAPEX differ from net working capital?

    Net working capital measures the short-term liquidity of a company. CAPEX, on the other hand, is a long-term investment in ... Read Answer >>
Trading Center