• Damon Butcher

How a Patent Works and the Benefits They Can Bring

This blog is written to provide additional knowledge of patents, the benefits they have, and explain how and when you can apply for one. As experts in the field, we feel there can be too much nuance in the details of what can and cannot be patented, and this will hopefully give you more of a feel as to whether your own creation can be patented. If you would like to speak to a professional one-on-one, we at Inovasi can help here.





Contents


· Patents

· Patent Box and Other Tax Relief

· Intellectual Property

· Infringement

· Increased Appeal

· Other Information


Patents


A patent is a type of intellectual property that prevents other companies or persons from making, using, or distributing an invention for a given number of years. For an invention to be eligible, there are certain criteria that must be met:

The invention must be

  • Something that can be made or used

  • A new invention

  • Inventive, and not merely an adaption of a previous invention

This list explicitly excludes artwork, business strategies, ways of thinking, medical treatment and diagnostics, a scientific or mathematical discovery or method, certain computer programs and applications, essential biological processes, and more. While this may seem like a large list, there are still countless other creations waiting to be made.


Patent box and Other Tax Relief


Patent Box is a government scheme created to give tax relief to companies using patented inventions within their product. It comes in the form of a corporation tax relief of 9%, meaning you pay only 10% as opposed to the 19% paid otherwise. This only applies to the profits gained from the patented item, not the company as an entirety, so for example if you were to sell cars then only those using patented parts would benefit from the corporation tax relief, not all of the cars you sell. It also applies to:

  • Bespoke spare parts

  • Licencing out patent rights

  • Selling patent rights

  • Infringement income, explained later

  • Damages, insurance, and other compensation related to patents


A patent can also increase the R&D tax relief you receive, as it clearly shows the innovation and subsequent costs associated with the innovation. These two combined can alleviate a lot of the costs of designing a new product and give your business every possible chance. For more information on R&D, see here.


Intellectual Property


Intellectual property includes more than just patents, with designs, trademarks, and copyrights alongside. It can also be owned by both a person or business or by multiple owners. Intellectual property is there to prevent one company from stealing the work that others have done, so for example it wouldn’t be legal for me to start making and selling the latest iPhone as the intellectual property belongs to Apple and is thus protected. Every country has different laws for patents and other intellectual property, and so it is advised that you ensure that you know the individual laws for the country you are operating from.

The UK includes many different things within intellectual property, including, but not limited to:

  • Inventions

  • Written, made, and produced things

  • Designs and looks of a product

  • Names of products and brands

Because of this it is important to check current patents and company names when creating a company of your own. To see companies and their names, see here. It is also important to register your intellectual property as soon as you can to prevent others from creating the same invention, causing you to lose out. It is recommended you seek professional advice, as this process can be arduous.


Infringement


Infringement of intellectual property can be a serious crime. It is essential that research is done before creating a business or producing anything. Intellectual property laws are broken when the property in question exploits, copies or otherwise uses someone else’s property without the authorisation of the person or company that owns the rights, or their representatives. There are many cases, some that don’t amount to much, but many that can cost companies millions.

A good example of a case where the plaintiff secured a large sum would be when Mattel inc countersued MGA Entertainment Inc in 2008 for the use of their designs. When Mattel inc created the Bratz doll line of toys, they took a fair percentage of the doll market. However, when they created a line with larger heads and slimmer bodies, MGA attempted to sue for intellectual property infringement. However, it was later shown that as Bryant, the creator of the Bratz doll, worked for Mattel at the time that the property was actually that on Mattel due to stipulations in the contract. This cost MGA $100,000,000 and they were forced to remove the doll from sale for a year.

There are also ones where nothing comes from it, of course, such as when Isaac Newton released a paper claiming he was the father of calculus, despite Leibniz releasing his paper some 20 years beforehand. Isaac claims that he had first invented it many years before, calling it “the method of fluxions and fluents”, which he had not released but shown drafts of to his colleagues. He argued that Leibniz had stolen his ideas from the drafts that were passed around to their peers, with Leibniz naturally arguing that this was false, and that Newton had merely claimed the idea for himself and made a story around it. However, the two never came to a conclusion as Leibniz sadly passed away before an agreement could be met.

As we can see, intellectual property infringement is a difficult subject to approach, with some cases resulting in a loss of millions, and others coming to nothing. Infringement can also come in different forms, from employees taking protected work or supplying fake goods, to using unlicenced software on a business computer. For more information, see here, or get in touch with us here to seek professional advice.


Increased Appeal


Alongside the bonuses of tax relief and less competition, companies with patents are seen as a better investment than companies without. This only comes naturally, as you are more much likely to invest in something that can be shown to be unique, and as an investor you want to see that the company has more than just an idea and that they have a design and a specification. It is understandable that an investor would only want to put money into something that is likely to generate an income.

On similar lines, government grants are more likely to be given to those with patents than those without. Innovate UK can provide companies with up to £2,000,000, and the same applies with the government as investors: they like to see a patented idea. The government’s Innovate UK, and other innovation-based grants, are given with the intention of making more money and jobs, and thus benefitting the economy.

This same appeal goes not only for the investors and the government, but to the audience you wish to sell to. How many times, for instance, have you seen a product for sale and seen it is their own patented design? This approach shows the customer not only that you are competent and made something entirely new, but that you are the only place to get that specific product. This can boost sales several times over.


Other Information


Getting a patent is not free. It costs to claim for a patent, to hire somebody who can check that is isn’t patented already, and to hire somebody who can go through the claim with you. Thankfully, here are Inovasi we offer a pre-patent at a fixed rate, and we can give a fixed rate application for a full patent that we can agree with you once the process is decided. After this, you can sit back and relax as we sort everything for you. For more information, see here.