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