Patent protection is granted for an invention, a product, or a process, which brings a new technical solution. The invention, which is to be protected by a patent, must be new, useful, functional, and innovative, i.e., solution, for which the patent protection is sought, should not be an obvious one. Patent protection is usually granted for new innovative products, their composition, and technology. The prevailing majority of patent applications is made to patent an improvement of previously existing patented inventions. After the patent was awarded, the patent owner has an exclusive right to prevent others from commercial use of the patented invention.8

Since it is frequently difficult to identify, which inventions have commercial potential, when they appear, firms may have the tendency to use excessive patenting. Rivera and Kline (2000) provide specific examples of companies, which due to inefficient intellectual property protection experienced the loss of their competitive advantage. This behavior can limit innovation activities of their competitors. Since the cost of patenting is relatively low (especially for larger and well-established firms) and potential losses from insufficient protection of innovations are high, businesses have also an incentive to file a patent application at an early stage of the innovation process and to file several patent applications related to the same technology to ensure that alternative commercial applications of their innovations are protected and they will have a patent on the technology, which will ultimately become commercially successful. Thus, also in this regard, we can observe the contradictory impact of patents. On one hand, patent protection can encourage innovation by facilitating adequate return from innovations of innovating firms. On the other hand, the tendency toward over-patenting can adversely affect innovative activities of other firms.

It is important to note that patents represent territorial rights granted in a country or a region, in which a patent has been awarded. Patent protection is granted for a limited period of time only, usually 20 years from the date, when the application is filed. Thus, if the firm wants to market patented product in different countries, separate patent protection is to be sought in all countries, where the business is to be conducted. This increases the cost of the patent protection. Except for initial fees related to the patent application, patent holders are also to cover maintenance fees, which are to be paid periodically to “maintain” the patent validity. The patent owners can grant the right to use the patent to other entity; thus, firms requiring the patented technology should get in touch with patent owners to find out under what conditions they could have access to the patented technology.

Patenting and publishing

Good patent protection is essential for anyone who wishes to exploit an invention industrially, to invest in it, and to manufacture it. The patent is a guarantee that no one else, without risking some form of legal action, can exploit the original idea for commercial profit. In order to secure a patent for an invention, it must be “new.” If one places the idea before the public by means of a publication or a lecture, then patenting possibilities are voided, thus creating a high hurdle to jump in the path to product innovation.