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Proprietary technologies are any types of systems, tools, or technical processes that are developed by and for a specific business entity. Technologies of this type are often developed as part of the ongoing research efforts of a business, but may also come about due to the ingenuity of employees who serve in positions not directly connected with the research and development effort. In any event, the ideas developed and submitted by employees are usually considered the intellectual property of the employer, thus allowing them to qualify as proprietary technology.
It is important to note that proprietary technology may be developed for exclusive use within the company, or be used to create a product that provides the business with an absolute advantage in the marketplace. For example, if a business develops a specific formula for a cleaning agent that uses ingredients not used by similar products, there is a good chance that new cleaner would allow the business to capture additional market share, based on the uniqueness of the formula. Since the formula uses ingredients that are unique in the industry, it would be possible to patent the formula and thus hold proprietary rights to the use of that formula.
In general, proprietary technology, whether developed for use within the business or for sale to customers, is closely guarded. Only company officials who have a need to know the particulars of the technology will have access to the details of the process or development of the technology. In addition to security measures taken in-house, it is not unusual for the business to file for copyrights, patents, and other legal registrations which effectively prevent any other entity from using the technology, without the express permission of the technology owner.
Many companies in a number of industries hold proprietary technology. One of the best examples is the pharmaceutical industry. Many drug companies develop new medications for use with specific illnesses. Patents on those medications, as well as copyrights on the brand names, are obtained, essentially providing the companies with proprietary rights to both the use of the formula and the chemical and brand names of the drugs. A company can then determine whether to market a drug exclusively, or allow other companies to produce the drug in generic form, using information supplied by the patent holder. In either case, the owner of the technology benefits from having exclusive rights and control of the proprietary product, and effectively prevents the unauthorized use of the proprietary technology by competitors.