Strategic Management of Innovation, Patent System - Essay Example

Name Professor Topic Date Patent systems According to Groves “A patent is a monopoly right to the exclusive use of an invention. The right lasts for twenty years provided renewal fees are paid on time. It is granted in consideration of a complete disclosure of the invention, so the learning it embodies is available to anyone who is interested” (pg 103). The bits and pieces of patent system are to promote innovation, development, and expansion of novel manufacturing industries. Consequently, the patent system provides the customer with novel alternatives hence advance his/her lifestyle, and generate other novel channels for individual actions (Andersen 136). Due to the fact that the patent system claims to award a domination of a meticulous development, it generates complete control of companies. However, the patent system is not considered a gold standard, meaning it does not operate on its own to give favorable results (Greenhalgh & Rogers 327). This can be attributed to the fact that a patent system calls for methodological, profitable, and capitalist panache, assets, strength of mind, and valor. In order to encourage innovation and novel factories, the patent system calls for easy, obvious, rapid, contemptible, effectual, pale, and definite systems (Stobbs 805). Advantages According to Michael: An important benefit of the patent system, in contrast to other methods of encouraging innovation, like direct prizes, is that it allows each invention to be valued directly through a market mechanism. A patent can obtain a financial reward for its patent by producing a product that incorporates the invention or by transferring the technology through a patent license or sale to a manufacturer who develops and produces a product. The market reward earned by the patentee in either case will depend upon the extent to which the consumers prefer the patented invention over alternatives and prior technology, which helps determine the invention’s economic value. (pg 138) Patent system benefits the exclusive rights holder and the community in general in a number of ways. The system enables the rights holder to employ the benefits of this control of the market supply to convalesce the expenditure incurred in the product development. For instance, drugs used for combating AIDS are projected at three hundred million dollars (Ferguson & Ferguson 181). The architect of these drugs requires the situation in which his company controls the market supply to convalesce the costs of production and development of the drugs. This shows that a patent system offers incentives for the venture of investments through the provision of temporary control of the market (France & Gilbert 98). Studies done in the past have shown that the patent system promotes and heartens methodological investigations with an aim of discovering facts, and growth in the community where the development of a product takes place. These studies have elucidated the fact that the majority thriving research and developments are found in communities with well-built patent arrangements. It is important to consider the fact that patent regulations calls for the printing of the patent hence ensuring that information is disclosed. By doing this, other individuals and industries learn of these novel advancements and may motivate the developers to take advantage of the research (Takenaka 68). Patent rights can enable the funding of various innovative actions. Patent privileges can sustain the funding of these actions if they assist in the diminution and cut back of alternative information. A patent system avails security to small firms and industries hence giving them a platform to bargain, get payment, and protects against losses that can be incurred as a result of competition from other firms (Lennon 308). Disadvantages The patent system also has some demerits to the rights holder and to the community at large. Making the discovery public could be an inconvenience due to the fact that everybody learns the various aspects and elements of the invention. Some of them may take advantage and develop the invention when the patent life of the rights holder comes to an end. This can be demonstrated by the pharmaceutical industry where the end of patent life of a particular drug goes along with a reduction of the cost of the drug in the market as other individuals and industries also starts selling the drug (George et al 258). The rights holder must therefore regain all the costs incurred in the development stage of the drug preceding the end of the patent life. Control of the market portrayed by the patent system can enable the discoverer gain huge profits. This is a risk as the public may view the discoverer as taking advantage of their predicaments to gain profits (United Nation Staff, 220). A firm can determine whether to protect their technical knowledge or diffuse it by identifying whether the firm has a competitive advantage. Competitive advantage is achieved by ensuring that the firm has exclusive and inimitable products otherwise the opponents and other players in the market will copy and reproduce the product. It is important for firms to have a wide array of knowledge that can ensure the incorporation of conventional assets and ideas in developing novel and distinct products. The presence of adequate knowledge that will ensure capacity to obtain, put together, and accumulate it will determine whether the firm will protect its technical knowledge or diffuse it (OECD 126). There are other factors that can also determine whether a firm should protect its technical knowledge or diffuse it. This may include the costs of research and development of an innovation. Some new ideas or methods are unplanned and are discovered by chance. Such ideas that in essence required no financial plans and accounts for methodological investigations may be diffused as they may be beneficial to the general population (Kuanpoth 6). Conclusion Patent system promotes innovation, development, and expansion of novel manufacturing industries, consequently, providing the customer with novel alternatives that advances his/her lifestyle, and generate other novel channels for individual actions (Mankiw 264). The patent systems enable the patentee to employ the benefits of this control of the market supply to convalesce the expenditure incurred in the product development. Patent systems uphold and hearten methodological investigations with an aim of discovering facts, and growth in the community where the development of a product takes place. Making the discovery public is a demerit as it follows that everybody learns the various aspects and elements of the invention. Some of them may take advantage and develop the invention when the patent life of the rights holder comes to an end. There are a number of factors that determines whether a firm will protect its technical knowledge or diffuse it. These include the availability of adequate knowledge within the firm for new innovations to happen, and the cost incurred during the development of the innovation (Edquist & Hommen 137). References Andersen, Birgitte. Intelectual Property Rights: Innovation, Governance and the Institutional Environment. New York: Aspen Publishers, 2006. Print. Edquist, Charles & Hommen Leif. Small Country Systems: Globalization, Change and Policy. Cheltenham: Edward Elgar Publishing, 2009. Print. Ferguson, Paul & Ferguson Glenys. Industrial Economics: Issues and Perspectives. New York: New York University Press, 1994. Print. France, Bev, & Gilbert John. A Model for Communication About Biotechnology. Rotterdam: Sense Publishers, 2006. Print. George, Kenneth, Joll Caroline & Lynk E L. Industrial Organization: Competition, Growth and Structural Change. London: Routledge Publishers, 1992. Print. Greenhalgh, Christine & Rogers Mark. Innovation, Intellectual Property, and Economic Growth. New Jersey: Princeton University Press, 2010. Print. Groves, Peter. Sourcebook on intellectual Property law. London: Cavendish Publishing Limited, 1997. Print. Kuanpoth, Jakkrit. Patent Rights in Pharmaceuticals in Developing Countries. Cheltenham: Edward Elgar Publishing, 2010. Print. Lennon, Michael. Drafting Technology Patent License Agreements, Second Edition. New York: Aspen Publishers, 2007. Print. Mankiw, Gregory. Principles of Macroeconomics. Mason: Cengage Learning, 2008. Print. Michael, Suzanne. Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition. Washington: Federal Trade Commission, 2011. Print. OECD. OECD Science, Technology and Industry Outlook. New York: Aspen Publishers, 2008. Print. Stobbs, Gregory. Software Patents/ With 2006 Cumulative Supplement. New York: Aspen Publishers, 2000. Print. Takenaka, Toshiko. Patent Law and Theory: A Handbook of Contemporary Research. Cheltenham: Edward Elgar Publishing, 2008. Print. United Nation Staff. Globalization and Development. New York: United Nations, 2002. Print. Read More