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What are the Different Types of Proprietary Products?

By Carol Francois
Updated May 16, 2024
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Proprietary products are specifically licensed and exclusively owned by a company or person. There are specific rights associated with proprietary ownership that protect the owner from the creation of imitation products that possess the same features and functions. There are four types of proprietary products: pharmaceuticals, software, patented and trademarked.

The primary benefit of having proprietary products is related to the revenue received from the sale or use of the products. All potential clients are forced to conduct business with the owners. This allows the owners of a proprietary product to control the market and set the price for that product.

While there are specific restrictions on the creation of imitation products, there is nothing to stop the competition from making a similar product. Most businesses realize that the advantage of a proprietary product is one of timing. The competition will need time to conduct research, design, test and then create a similar product. During this period, the proprietary product owners are the only suppliers, allowing them to focus on generating the maximum sales possible.

Pharmaceutical products are always proprietary when first released. This is because of the level of testing and approvals from various levels of government that are mandatory before the product can be marketed and sold. In many situations, product development is tightly controlled through all of the stages of research and testing.

The vast majority of commercially sold computer programs are proprietary products. The code is hidden, so that programmers and developers cannot analyze how the functions are provided and copy the work into their own projects. While key features can be duplicated, this requires time, effort and skill to complete. During this time, the company that with the proprietary product has an advantage in the marketplace.

Products that have been issued a patent number are protected and can be used only by others with the permission of the patent holder. This permission usually is granted only after payment is received. In many circumstances, patents are issued for portions of a larger device. While the entire device might not be useful for other purposes, a small aspect can have applications in other areas.

Trademarked products or names are the exclusive property of the trademark holder and cannot be used by another company without permission. There are entire companies dedicated to tracking down the usage of trademarked products and requesting payment from the various companies and media outlets. Most large organizations make a list of the trademarked products that they plan to use and obtain permission in advance.

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Discussion Comments

By ceilingcat — On Jul 10, 2012

@Azuza - I could be wrong, but I'm pretty sure that restriction is because companies have to do certain tests on their drugs. After all, since the formula isn't open to the public, they have to create their own version from scratch. I'm personally glad these safeguards are in place, even though it does mean spending more money.

Anyway, I think it's interesting that products can really only be proprietary for a certain amount of time. I guess companies really need to market that and take advantage of it while it lasts!

By Azuza — On Jul 10, 2012

@strawCake - I'm not an expert in this topic, but I'm pretty sure that for something to be an imitation it has to be exactly the same. I've used both Microsoft Office and Open Office, and I think they look and function differently, even if they both allow you to create files of the same type. I mean, I can make a PDF file using my computer, but that doesn't mean my computer is somehow imitating an Adobe product.

Anyway, I think consumers really lose out because of proprietary products in pharmaceuticals. From what I understand, when a new drug comes out, other companies have to wait a certain number of years before coming out with a generic. During that time, customers have to pay full price for the "brand name" drug. And that can often be really expensive!

By strawCake — On Jul 09, 2012

I think the idea of a proprietary product is kind of interesting, especially because the line between a similar product and an imitation product is pretty thin, I think.

For example, Microsoft has a suit of proprietary software products meant for office use, including Word, Excel, and Powerpoint. However, there are open source programs that are pretty much interchangeable with the Microsoft products.

I've personally been using Open Office instead of Microsoft Office for years! You can create files in the exact same type as Microsoft Office, and even open those same files in Office. So I'm not exactly sure how it's not an imitation.

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