patent
patentA legal device to encourage and reward invention by giving exclusive rights to inventors. In many countries the inventor of a new product or process can apply for a patent, giving the holder the exclusive right for a number of years to produce the good or use the process. This right can be used either through their own business, or by charging a licence fee to other users. This clearly provides an incentive to create inventions. It can be argued, however, that patents slow down the diffusion of new technical knowledge once it has been created. On the other hand, the right of a patentee to charge a fee reduces the incentive to keep new processes secret, which would hinder diffusion even if there were no patent protection.
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