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What is useful life of Patent and factors influencing it

useful life of patent

We know them through patent registration we have secure our inventions from competitors. However, not many are clear that every patent has a useful life. In this blog, we will discuss the useful life of patents.

What is a Patent?

If you have invented something new including a product, process, composition. You can file an application for patent registration for the same. This registration application is to be filed with the appointed government authority for conferring license. Once your application is approved by the respective authority patent will be issued in your name in the form of a legal document/ license. Such a patent creates a right in your favor. You have the right to restrict any other party from using such patented invention for their commercial benefits. This entitles you to take legal action against anyone infringing your intellectual property rights.

Patent registration in India

In India Patent registration and regulation is done by the Controller General of Patents, Design & Trademark. Patents Act, 1970 is the regulating Act for patents in India.

As per these regulations if you have a new invention that you want a patent for then to record the details of such inventions along with sketches and diagrams, run a patentability search to check the viability of such patent application. After you have completed all the checks on your end file all application for grant of the patent in Form 01. If you are in the early stages of development of your invention you can also file an application for provisional registration. Such provisional registration is valid for a period of 12 months, within which the applicant is required to complete it and submit the details for proper Patent Registration.

The validity of Patent Registration in India

As per legal provisions, any patent registration is not granted with lifetime validity. Like everything it also comes with an expiry date.  A registered patent has a validity of 20 years. After the expiry of said 20 years from the date of its registration such patent will fall into the public domain if not renewed.

What is the useful life of a Patent?

We have discussed the validity of a patent. This is the period for which the patent owner will have undisputed legal rights over such intellectual property. During this period no other party can lay claim over it and they are not even authorized to use it without prior permission of the owner of such patent.

However, many believe that just because they have invented something new and fresh they can reap in its benefits for eternity. This is not actually the case. Firstly, there is an issue of the validity of your registered patent. And secondly, there is a concept of the useful life of patents. The total period for which a patent is able to contribute to the future cash flows of an organization is termed as ‘useful life of a patent’. Such contribution can either be direct or indirect in nature.

No two patents have the same useful life. The useful life of a patent depends on a number of factors including technological changes, technical factors, legal limitations etc. As all these determining factors are not in control of the patent holder and are volatile in nature thus it becomes imperative to evaluate the useful life of the patent.

Importance of determining the useful life of a Patent

In income generation capacity of a patent will help you determine the actual value of a patent. And for valuation of the patent, it is important to determine the remaining useful life of such patent. As the factors affecting such useful life are changing on a regular basis and out of any single person’s control, the useful life is also unpredictable and not very long.

Thus, we have to understand that for correct evaluation of your intellectual property you are first required to evaluate its financial contribution to your business. And to understand its contribution in income generation determination of remaining

Factors for determining the Useful Life of Patent

As we discussed in order to evaluate the value of an intangible asset for accounting purpose we are required to determine the remaining useful life of such intellectual property. So is the case with patents. The useful life of a patent is the time period for which it can contribute to the patentee’s future cash flows. Here, we will discuss the factors which determine such useful life of patent:

  1. Competition

One of the major factors influencing the useful life of a patent is the competition. If your competitors are also working on developing similar or may be better products, then it can reduce the relevancy of your patent thus reducing its useful life.

  1. Market Forces

Another pertinent factor is the demand for such patent-related product in the market. You can only keep in the benefits of a patent if there are any takers for it in the market.

  1. Availability of Raw Material

Raw materials used during the production of a patented product or during patented procedure also play a vital role in the computation of useful life of the patent. If the availability of such raw materials is scarce or if it is depleting in nature then it will significantly reduce the patent’s useful life.

  1. The life cycle of similar products

There are some similar products which follow similar life cycle starting from the conception of their idea to development and further implementation. Therefore, you can use the life cycle of such similar products as a reference while calculating the useful life of your own patent.

  1. Technical obsolescence

Rapid Technological advances lead to curtailment of the useful life of patents. Some items may become obsolete even during the validity period of the patent if better technology emerges in the market. This will render your patent useless and extinguish the useful life of patent instantly. However, there is a certain item which is here to stay and have an indefinite useful life like pencils, Velcro etc.

  1. Government Regulations

The useful life of patent will also depend upon the regulating Acts and other related provision. There can be any kind of regulatory or legislative changes made by the government. Any such change will directly impact the useful life of a patent.

  1. Pending Litigation

Any pending to new litigation against the patentee can also limit or influence the useful life of a patent. Such litigation can either be related to the subject matter of the registered patent or not.

  1. Willingness on the part of Patentee to use it

Above all the other mentioned factors influencing the useful life of a patent the most important is the wiliness on the part of the patentee to utilize it and his readiness to invest in it financially as well as risk-wise.

We hope we were able to help some of your queries. You can contact our experts at Enterslice for any further information relating to patents and intellectual property protection.

Raksha Tiwari

Experienced Tax and Corporate Law Professional with 5+ Years of Experience in Corporate Laws, NBFC Advisory and GST Implementation

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