A company can create one or more research and development centers. A research center spends time and resources building up R&D points for an intermediate good.

Every intermediate good in the game can be patented. At the start of every game day, the company with the most amount of R&D points for a good receives the patent for the good. If, subsequently, another company surpasses the patent holder, that company gets the patent.

The company that holds a patent for an intermediate good receives royalties each day, amounting to either $100 or 25% of the day's production costs whichever is greater, from all companies that have factories producing the intermediate good. Conversely, every company that produces an intermediate good that infringes on a patent must pay royalty to the patent holder. Royalties are calculated and transferred automatically by the system.

Royalties are only payable when a factory that is infringing a patent produces output. If a factory is not producing output and is selling out of stock, then no royalties have to be paid.

Patents can be used, one, to establish barriers to entry to a market, two, to build a horizontal conglomerate, and three, to create a company that focuses exclusively on research.

Patents only apply to intermediate goods. Goods produced by a factory for sale to a shop are not patentable. For instance, an electronic component is an intermediate good. It is a good that is used to produce another good such as a TV. A TV is not an intermediate good even though it is produced in a factory because a TV eventually sells in a shop to consumers. Thus, producing a TV in a factory will never involve paying patent royalties. This rule means that it is possible to run factories that do not have to pay any patent royalties.