A more thorough explanation:

Definition: A patent granted for a discovery or invention that has never been used commercially. It may receive less protection under the law than a patent granted for a device that is actually used in industry. As a prior-art reference, a paper patent may carry less weight with examiners than one for an invention that has been commercially exploited because it may suggest that the invention did not work as claimed.

Example: John invents a new type of engine that he believes will revolutionize the automobile industry. He applies for a patent but never actually builds or sells the engine. His patent is granted, but it is considered a paper patent because the invention was never used commercially.

Explanation: This example illustrates how a paper patent is granted for an invention that has not been used commercially. John's patent may not carry as much weight with examiners because he never actually built or sold the engine, so it is unclear if the invention actually works as claimed.