Knowledge is the most important factor that is driving development in the new era; says Joseph Stiglitz and Bruce Greenwald in their book 'Creating a Learning Society'. An iPhone can be produced with around six thousand rupees in terms of material cost. But its price is nearly Fifty five thousand Rupess because there is big royalty payments to large number of inventors who have invented its different components.
This means it is not the traditional factors of production like land, labour or capital that creates value in a modern economy. It is knowledge – which is embedded in the form of invention. Invention is an intellectual property. To protect inventors, governments give intellectual property rights to them. Patent is the intellectual property right for inventions. On the other hand, Copyright is the intellectual property right for writing books etc.
Patent is the most powerful intellectual property right as inventions have tremendous industrial applications and thus scope for getting big money. Every country will have an intellectual property regime comprised of laws and institutions that facilitate inventions and other intellectual works. For patent, there will be a patent system that includes the Patent Act. Basically, patents are of two types – product patent and process patent.