How patents encourage innovation in technological development and deployment

Innovation is crucial to the development and deployment of technologies. A widely deployed model to understand technology builds on the concept of the technology life cycle. The life cycle of technologies can be divided into stages – from invention, through research, development and dissemination (RD&D) and market development, to commercial diffusion. Different processes occur at each stage of the life cycle, providing various opportunities to employ instruments that promote innovation.

One group of such instruments relates to IPR. IPR refers broadly to the ownership of intellectual findings in the industrial, scientific, literary and artistic fields. IPR grants inventors certain exclusive rights over their creations; it aims to encourage creative activity for the benefit of society by affording inventors an opportunity to derive fair returns from their investments.

Traditionally, IPR is divided into two forms: industrial property rights and copyright. In general, copyright is a legal term describing rights given to creators over their literary and artistic creations, while the term ‘industrial property rights’ refers to certain exclusive rights regarding innovative ideas or distinguishing signs in the industrial or commercial field. Industrial property takes a range of forms and includes patents to protect inventions, trademarks, industrial designs and commercial names.

Patents can play a prominent role in the entire technology life cycle, from initial RD&D to market introduction (demonstration to diffusion), and allow competitive technologies to be protected and licensed to third parties to expand financial opportunities (Figure 1).


Global patenting activity is on the rise. World Intellectual Property Indicators (PDF) show that the total number of patent filings worldwide in 2011 exceeded 2 million for the first time, with a growth rate of 7.8% over 2010.

A patent is the right granted to a patent holder by a state, or by a regional office acting for several states, which allows the patent holder to exclude others from commercially exploiting their invention for a limited period without authorisation. By granting such rights, patents provide incentives for innovators, offering them recognition for their creativity and enabling them to appropriate the returns of their investment. A patent may be a powerful business tool allowing innovators to gain exclusivity over a new product or process, develop a strong market position and earn additional revenue through licensing.

Patent protection is usually sought at the research and development (R&D) stage of the technology life cycle. Various departments in companies, including research units and specialised lawyers, play a key role in the development of inventions, as well as in the process of preparing and filing patent applications and obtaining, maintaining and exploiting patents. In return for exclusive rights, the inventor must disclose sufficient information regarding the patented invention to the public to allow others to access and further develop the technology. The disclosure of the invention is an essential consideration in any patent granting procedure. In this way the patent system is designed to balance the interests of inventors and the public.

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