Patents Essay

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A patent  is a right that is granted  by a government to the inventor  of a new invention.  It confirms the inventor’s  priority  in the  invention  and  gives the patent  owner  the  exclusive  right  to  exclude  anyone else from practicing  the invention. The right is granted  only over a limited period  of time, and in exchange  for the right,  what  is referred  to as the “quid  pro quo”  of patent  law, the inventor  agrees to publicly  disclose his invention  and  to describe how it works.

In the United  States, three  types of patents  are distinguished: (1) utility,  (2) design, and  (3) plant patents. Utility patents are the most prevalent type; they  protect   the  functional aspects  of  utilitarian objects.  Almost  anything  that  is new,  useful,  and human-made  can  be  patented,  whether   it  is  a machine, device, method, process, material, or chemical  compound. The  term  of  protection for such inventions is 20 years. In contrast, design patents protect  the unique aesthetic appearance or the aesthetic  features  of a utilitarian article. However, the appearance of an object can be protected only if it is not dictated  by its function.  If the design has some useful functionality, a utility patent  has to be obtained. Plant patents  are a specific limited form of  utility   patents   that   protect   novel  strains   of asexually  reproducing plants.  The term  of protection for plant  and design patents  is 14 years.

Although  this distinction is not  universal,  most countries  that  have an intellectual  property system will normally  afford protection to the subject matter that is covered under these three patents, under some  type  of intellectual  property. A patent  only confers a negative right to the patent  owner, which means that he or she can prevent others from practicing the invention but has no positive right to actually  use it. The reason  is that  the patent  owner’s invention  may refer to knowledge  that  is protected by another patent,  in which case the patent owner  would  have to obtain  the permission  to use what is covered by this other patent. Also, a patent protects  the underlying  intangible  idea and not the physical  embodiment in  the  form  of  a  tangible object. Consequently, the value of a patent  is economically   distinct   from   the   tangible   object   in which  it is embodied.  Today,  patents  are  ubiquitous. Their importance has continuously been growing, and profits generated by patents are enormous. Traditionally, patents have been used by companies  as a shield, as a means  to  protect  the “crown jewels.”  More  recently,  however,  companies have started  to deploy patents  as weapons,  in connection with litigation. In these situations, it is not as much about  the underlying  technology  that a  patent  protects  as  about  the  strategic  potency that  comes with an extensive patent  portfolio.

Justifications

There are three different strands  of moral justification  for the existence  of intellectual  property law. The  first  theory,  the  genesis  of  which  is usually attributed to John Locke, justifies the existence of intellectual  property rights based on the labor  that an individual puts forth. This applies to private property, but  even  more  to  intellectual  property, the creation  of which directly depends on the work of the individual. An alternative approach takes the personality-based justification. According  to  personality theorists, such as Hegel, unique intellectual creations  should  belong  to the person  who  developed them because they are an extension of the individual’s  personality. The  third  justification is the  utilitarian incentives-based theory.  Since intellectual assets have played an increasingly important role in economies in more recent times, the utilitarian  justification has  become  the  most  commonly accepted   explanation  for   intellectual   property rights, and particularly for the patent  system.

The  utilitarian  incentives-based justification is closely linked to what  is called the “appropriability” or “public  goods” problem.  Public goods have two   characteristics  that   distinguish   them   from private   goods:   They   are  “nonexcludable” and “nonrival” in consumption. Nonexcludable means that  it  is  difficult,  if  not  impossible,  to  exclude those who do not pay for the good from enjoying it. Nonrival means  that  an individual’s  consumption does not diminish the availability for other individuals to consume it. Lighthouses and the national defense  are  typical  examples   of  public goods.  Without  government  interference, public goods  would  be  under  produced because  a  producer  will not  be able to reap  the marginal  value of his efforts and investments  in creating the good.

Intellectual creations display the same characteristics  as public  goods.  Once  knowledge  or  an idea is developed,  it is difficult  to  exclude  others from  the  benefits  of  it.  An  idea  can  easily  be shared,  copied, or imitated.  Moreover, an individual’s use does  not  detract  from  another person’s use. In the words  of Thomas  Jefferson,  in a letter from  1813,  “He  who  receives an  idea  from  me, receives instruction himself without lessening mine; as he who  lights  his taper  at  mine,  receives light without darkening me.” In the absence  of protection or other incentives, because creators cannot charge   prices  necessary   to  recoup   their   investments, intellectual creations would be underproduced  and  a much  lower  and  suboptimal level of innovation would be achieved. The intellectual property system  solves  this  problem  by  creating property rights  in intellectual  creations. Property right  enables  an  inventor   to  recover  the  investments necessary to develop his invention and encourages  further  development.

History Of Patent  Law

The  appreciation of human  inventiveness  can  be followed back to the ancient Greeks. The first recorded   patent   for  an  industrial invention   was granted  in 1421,  in Florence, for the manufacture of a barge. In medieval Europe, the granting of monopoly rights  by  the  sovereign  to  individuals for products and  practices  became  so widespread that  it was  perceived  as slowing  down  the  economy. In England,  unhappiness about  the abuse  of the Crown’s  authority to grant such rights became so significant  that  in 1624,  the Stature of Monopolies was  passed  by  the  Parliament. This statute  is often  seen  as  the  start  of  the  modern patent  system: It repealed past patents and monopolies and  preserved  the right  to grant  patents  for completely  novel inventions, thereby  underscoring the  importance of free trade  in contrast to  tight governmental control.

With the English colonists,  patents  came to the United States and were later anchored in the progress clause of the U.S. Constitution that authorized Congress “to  promote the progress  of science and useful arts by securing for limited times to authors and inventors  the exclusive right to their discoveries.” The  first  patent  statute  was  passed  in 1790. Countries in continental Europe followed, and despite skepticism  rooted  in the belief that  patents were inconsistent with the ascendant free-trade spirit,  and  particular strong  opposition in certain countries  (e.g., France, the Netherlands, and Switzerland),  by the end of the 19th  century,  most European countries  had introduced patent  laws.

Requirements For Protection

In  the  United   States,  patents   are  regulated   by federal law under Title 35 of the U.S. Code. For an invention   to  be  patentable, certain  requirements have to be satisfied: The subject matter of the invention  must  be patent  eligible; it needs to be a new,  nonobvious,  and   useful  process,   machine, article  of manufacture, or composition of matter, or any new and  useful improvement thereof;  and the patent  application has to enable others to practice the invention.  Excluded  from  patentable subject matter  are generally laws of nature  and natural phenomena because they are not capable of human invention,  and abstract ideas because they are not useful in the absence of a practical  application. The novelty  requirement is at the heart  of patent  law: For  an inventor  to have  an exclusive  right  to his invention,   he  has  to  add  something   completely new to the pool of general knowledge. For an invention  to be considered  new, it must  not  have been known  to the public in any form. The nonobviousness requirement stipulates  that the invention must  not  have  been  obvious  to  a person  having ordinary skill in the  art  at  the  time  of invention. Last, for the utility requirement to be satisfied, the invention   needs  to  perform   the  function   that  is claimed. The intention is to allow only patents  on inventions  that  have  a genuine  benefit  to  society. An  inventor  who  wishes  to  patent  his  invention also needs to fully disclose what  the invention  is, and how to practice  it. This is an essential element of  the  patent   system.  Its  purpose   is  to  further science and  technology  by enabling  the  public  to build  on  existing  and  divulged  knowledge.  This might  inspire  other  inventors  to invent around or to  improve   on  protected  inventions. Moreover, after the patent  term expires, the knowledge  enters the  public  domain   and  is  added  to  the  sum  of human  knowledge  to the full benefit of society.

Patent  Prosecution

To obtain  a patent,  an application has to be filed. Typically, it will be followed by a substantive examination. The degree of scrutiny  greatly varies across countries.  There are “nonexamining” countries, such as South Africa, where the examination is only to the form,  not  to the substance.  If there are competing  claims to an invention,  the person who  first filed the application will prevail.  In the United States, the person who first invented the invention  used  to  obtain  the  patent,  but  the  law was changed  to a “first-to-file” system in 2013  to align with the rest of the world. Today, patentability requirements across  the world  are similar,  but differences  do  exist.  For  instance,  in most  countries, instead of a nonobvious requirement, there is the “inventive  step”  that  has  to  be satisfied,  and rather  than having to establish the usefulness of an invention,  in Europe,  the “industrial applicability” of an  invention  has  to  be met. An inventor  who seeks  protection in  more  than  one  country   will have  to  file  separate   applications  wherever   he seeks protection. The  different  rights  granted  are independent from  one  another, and  there  is  no guarantee that  because a patent  was issued in one country, it will also be issued in another.

Harmonization  Efforts And International Agreements

Patent laws are regulated  on a territorial basis: It is in a sovereign’s power  to  decide  whether  patents should be issued and, if so, how they are furnished. If patents  are granted  by a government, they afford protection only within that territory and cannot  be enforced outside its borders. Thus, historically, patent laws have differed quite a bit across countries. As  industry   and   economy   have   become   more global  in character, the importance of harmonization, nondiscrimination, substantive patent standards, and procedural simplification have continually increased.  To  this effect, several  international treaties  have  been  adopted. The  oldest intellectual  property treaty is the Paris Convention for  the  Protection of Industrial Property.  It came into  effect in 1883,  and  as the  name  suggests,  it applies to “industrial property,” which also includes patents. It enables  an inventor  to use his original filing date with any subsequent filing in other countries that are part of the Paris Convention. The 1970  Patent  Cooperation Treaty  simplified the filing of multiple  applications on the same invention in different countries by introducing a unified filing procedure and  a standardized application format. Under the European Patent Convention, which was implemented in  1977,  an  inventor   can  obtain   a European patent,  which is not a unitary  right but a bundle  of independent national patents.

By far the most comprehensive intellectual property treaty is the Agreement  on Trade-Related Aspects  of  Intellectual   Property   Rights  administered by the World Trade Organization and negotiated as  part  of  the  Uruguay  Round   trade negotiations spanning  from 1986 to 1994. It is the first agreement  to address  all forms of intellectual property rights, to set substantive minimum  standards,  and  to  include  enforcement   mechanisms. The Agreement  on Trade-Related Aspects of Intellectual Property Rights further strengthened intellectual  property rights in the global arena  and incorporated them into the international trade system. Its merits are highly disputed,  in particular, with regard to the ethical problems  that arise from protecting socially valuable  goods,  such as essential   medicines,   under   the   intellectual   property regime.

Criticisms

Intrinsic  to the patent  system is a delicate balancing act between the patent  system’s benefits and its costs. Although  difficult  to quantify,  there  is general   agreement   that   patents   benefit   a   society through the encouragement of the creation  of new knowledge,  which translates into the advancement of science and  technology  and  economic  growth. However,  this  comes  at  a price,  and  some  critics claim that  the costs the patent  system imposes  on the society outweigh  its benefits. The consequence is countless calls for reforms, and some critics even suggest  that   the  patent   system  should   be  completely abolished. There are many different aspects of the patent  system that  are criticized. The different arguments typically fall into one of three categories:  (1) the  quality  of patents, (2) general criticism about  the patent  system, and (3) humanitarian  and ethical concerns.

The  essence  of  the  patent   quality  criticism  is that  too  many  questionable and  silly patents  are granted.   This   generates   numerous  social  costs, such as an increase  in litigation, legal uncertainty, distrust  in the  patent  system, and  a distortion of the incentives-based justification of the patent  system. Linked  to this is the  general  discontent that there is no utilitarian incentives-based explanation for certain  elements  of the patent  system, such as the term of protection. Why should it be 20 years? And why should the term be the same for all inventions, regardless  of the subject  matter  that  is protected? It takes much more time, money, and effort to develop  a new pharmaceutical drug  compared with  a mechanical  device. There  are  many  other criticisms with regard to particular elements of the patent   system,  such  as  the  existence  of  patent thickets  (overlapping intellectual   property rights that make it difficult for companies  to enter a market),  the  loss  of  innovation because  of  forgone research, or patent trolls (companies that obtain patents  not  to produce  the underlying  technology but to use them as weapons).

Patents are also criticized for undermining basic human   needs  in  the  form  of  reduced   access  to essential medicines. Millions of poor  people across the world die every year from preventable, curable, or treatable illnesses such as malaria  or tuberculosis. Generally, there is no incentive to develop drugs for  diseases  that  predominantly afflict  the  poor, and if the drugs are available, because of monopoly pricing, they are often not affordable to those who need  them.  Another   area  that  has  given  rise  to many ethical and human  rights concerns is the patenting of certain  genetic materials  (e.g., human genes) and agricultural goods (e.g., genetically modified  seeds).

Bibliography:

  1. Bessen, James, Jennifer Ford, and Michael J. Meurer. “The Private and Social Costs of Patent Trolls.” Regulation, v.34/4 (2012).
  2. Hoen, “TRIPS, Pharmaceutical Patents,  and Access to Essential Medicines:  Seattle, Doha  and Beyond.” Chicago Journal of International Law, v.3/1 (2002).
  3. Hunter, Dan. The Oxford Introductions to U.S. Law: Intellectual   New York: Oxford University Press, 2012.
  4. Lemley, Mark , Douglas Lichtman,  and Bhaven N. Sampat. “What to Do About Bad Patents.” Regulation, v.28/4 (2005).
  5. Moore, Intellectual  Property  and Information Control:  Philosophic  Foundations and Contemporary Issues. New Brunswick, NJ: Transaction Publishers, 2004.

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