What is a 'Patent'

A patent is the granting of a property right by a sovereign authority to an inventor.  This grant provides the inventor exclusive rights to the patented process, design, or invention for a designated period in exchange for a comprehensive disclosure of the invention. Government agencies typically handle and approve applications for patents. In the United States, the U.S. Patent and Trademark Office handles applications and approvals.

BREAKING DOWN 'Patent'

In the United States, most patents are valid for 20 years from the date the application was filed with the U.S. Patent and Trademark Office.  U.S. patents are only valid in the United States.  Patents provide an incentive for companies or individuals to continue developing innovative products or services without the fear of infringement.  For example, large pharmaceutical companies can spend millions of dollars on research and development.  Without patents, their medicines can be easily duplicated and sold by companies that issue no outlays for R&D.

The U.S. Patent and Trademark Office oversees three types of patent applications: utility, design, and plant patents. Utility patents cover anyone who invents a new and useful process, machine, article of manufacture, or a composition of matter. A design patent includes an original and ornamental design for a manufactured product. Plant patents go to anyone who produces, discovers, and invents a new kind of plant capable of reproduction.

How to Apply for a Patent

Before making a formal application, an applicant should research the Patent and Trademark Office's database to see if another person or institution has claimed a patent for a similar invention. The invention must be different from or an improvement upon a previous design to be considered for a patent. It is important for applicants to maintain careful records of the design process and the steps taken to create the invention. Enforcing the patent is up to the person or entity that applied for the patent.

To apply for a patent in the United States, the applicant submits specific documents and pays associated fees. Written documentation includes drawings, descriptions, and claims of the item to be patented. A formal oath or declaration confirming the authenticity of the invention or improvement of an existing invention must be signed and submitted by the inventor. After fee payment, the application is reviewed and either approved or denied.

Patent Statistics

In 2015, the U.S. Patent and Trademark Office received more than 629,000 applications for patents, of which 326,000 were granted. Most of the grants (~298,000) were for utility patents.  In 2015, more than 40,000 utility patents came from the state of California, which was the most for any state. Second was Texas with more than 9,900 applications and third was New York with more than 8,400 utility patents granted.  By comparison, in 1963 the U.S. Patent and Trademark Office received nearly 91,000 applications and granted more than 48,000 patents.  Learn more about patents and competition by reading Who are Apple's (AAPL) main competitors in the tech industry?

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