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.