A patent (/ˈpætənt/ or /ˈpeɪtənt/) is a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time, in exchange for the public disclosure of the invention. An invention is a solution to a specific technological problem, and may be a product or a process.[1]:17 Patents are a form of intellectual property.
The procedure for granting patents, requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a patent application must include one or more claims that define the invention. These claims must meet relevant patentability requirements, such as novelty and non-obviousness. The exclusive right granted to a patentee in most countries is the right to prevent others from making, using, selling, or distributing the patented invention without permission.[2]
Under the World Trade Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights, patents should be available in WTO member states for any invention, in all fields of technology,[3] and the term of protection available should be a minimum of twenty years.[4] Nevertheless, there are variations on what is patentable subject matter from country to country.
In modern usage, the term patent usually refers to the right granted to anyone who invents any new, useful, and non-obvious process, machine, article of manufacture, or composition of matter. Some other types of intellectual
Patents in force in 2000
In 500 BC, in the Greek city of Sybaris
(in what is now southern Italy), "Encouragement was held out to all who
should discover any new refinement in luxury, the profits arising from
which were secured to the inventor by patent for the space of a year."[6]
The Florentine architect Filippo Brunelleschi received a three-year patent for a barge with hoisting gear, that carried marble along the Arno River in 1421.[7] In 1449, King Henry VI granted the first English patent with a license of 20 years to John of Utynam for introducing the making of colored glass to England.[8]
Patents in the modern sense originated in 1474, when the Republic of Venice enacted a decree that new and inventive devices, once put into practice, had to be communicated to the Republic to obtain the right to prevent others from using them.[9]
England followed with the Statute of Monopolies in 1624, under King James I, which declared that patents could only be granted for "...projects of new invention." During the reign of Queen Anne (1702–14), lawyers of the English Court developed the requirement that a written description of the invention must be submitted.[10] The patent systems in many other countries, including Australia, are based on British law and can be traced back to the Statute of Monopolies.[11]
In 1641, Samuel Winslow was granted the first patent in North America by the Massachusetts General Court for a new process for making salt.[12]
In France, patents were granted by the monarchy and by other institutions like the "Maison du Roi".[13] The Academy examined novelty.[14] Examinations were generally done in secret with no requirement to publish a description of the invention. Actual use of the invention was deemed adequate disclosure to the public.[15] The modern French patent system was created during the Revolution in 1791. Patents were granted without examination since inventor's right was considered as a natural one[16]
In the United States, during the colonial period and Articles of Confederation years (1778–89), several states adopted their own patent systems. The U.S. Constitution authorizes the American patent system in Article One, Section 8(8) which states:
A patent, being an exclusionary right, does not necessarily give the patent owner the right to exploit the patent. For example, many inventions are improvements of prior inventions that may still be covered by someone else's patent.[17] If an inventor obtains a patent on improvements to an existing invention which is still under patent, they can only legally use the improved invention if the patent holder of the original invention gives permission, which they may refuse.
Some countries have "working provisions" that require the invention be exploited in the jurisdiction it covers. Consequences of not working an invention vary from one country to another, ranging from revocation of the patent rights to the awarding of a compulsory license awarded by the courts to a party wishing to exploit a patented invention. The patentee has the opportunity to challenge the revocation or license, but is usually required to provide evidence that the reasonable requirements of the public have been met by the working of invention.
An accused infringer has the right to challenge the validity of the patent allegedly being infringed in a countersuit. A patent can be found invalid on grounds described in the relevant patent laws, which vary between countries. Often, the grounds are a subset of requirements for patentability in the relevant country. Although an infringer is generally free to rely on any available ground of invalidity (such as a prior publication, for example), some countries have sanctions to prevent the same validity questions being relitigated. An example is the UK Certificate of contested validity.
Patent licensing agreements are contracts in which the patent owner (the licensor) agrees to grant the licensee the right to make, use, sell, and/or import the claimed invention, usually in return for a royalty or other compensation. It is common for companies engaged in complex technical fields to enter into multiple license agreements associated with the production of a single product. Moreover, it is equally common for competitors in such fields to license patents to each other under cross-licensing agreements in order to share the benefits of using each other's patented inventions.
The plate of the Martin ejector seat of a military aircraft, stating that the design is covered by multiple patents in Britain, South Africa, Canada and "others". Dübendorf Museum of Military Aviation.
The inventors, their successors or their assignees become the
proprietors of the patent when and if it is granted. If a patent is
granted to more than one proprietor, the laws of the country in question
and any agreement between the proprietors may affect the extent to
which each proprietor can exploit the patent. For example, in some
countries, each proprietor may freely license or assign their rights in
the patent to another person while the law in other countries prohibits
such actions without the permission of the other proprietor(s).
The ability to assign ownership rights increases the liquidity of a patent as property. Inventors can obtain patents and then sell them to third parties.[21] The third parties then own the patents and have the same rights to prevent others from exploiting the claimed inventions, as if they had originally made the inventions themselves.
Commonly, a nation forms a patent office with responsibility for operating that nation's patent system, within the relevant patent laws. The patent office generally has responsibility for the grant of patents, with infringement being the remit of national courts.
The authority for patent statutes in different countries varies. In the UK, substantive patent law is contained in the Patents Act 1977 as amended.[23] In the United States, the Constitution empowers Congress to make laws to "promote the Progress of Science and useful Arts..." The laws Congress passed are codified in Title 35 of the United States Code and created the United States Patent and Trademark Office.
There is a trend towards global harmonization of patent laws, with the World Trade Organization (WTO) being particularly active in this area. The TRIPs Agreement has been largely successful in providing a forum for nations to agree on an aligned set of patent laws. Conformity with the TRIPs agreement is a requirement of admission to the WTO and so compliance is seen by many nations as important. This has also led to many developing nations, which may historically have developed different laws to aid their development, enforcing patents laws in line with global practice.
In addition, there are international treaty procedures, such as the procedures under the European Patent Convention (EPC) [constituting the European Patent Organisation (EPOrg)], that centralize some portion of the filing and examination procedure. Similar arrangements exist among the member states of ARIPO and OAPI, the analogous treaties among African countries, and the nine CIS member states that have formed the Eurasian Patent Organization. A key international convention relating to patents is the Paris Convention for the Protection of Industrial Property, initially signed in 1883. The Paris Convention sets out a range of basic rules relating to patents, and although the convention does not have direct legal effect in all national jurisdictions, the principles of the convention are incorporated into all notable current patent systems. The most significant aspect of the convention is the provision of the right to claim priority: filing an application in any one member state of the Paris Convention preserves the right for one year to file in any other member state, and receive the benefit of the original filing date. Another key treaty is the Patent Cooperation Treaty (PCT), administered by WIPO and covering more than 140 countries.
The application also includes one or more claims that define what a patent covers or the "scope of protection".
After filing, an application is often referred to as "patent pending". While this term does not confer legal protection, and a patent cannot be enforced until granted, it serves to provide warning to potential infringers that if the patent is issued, they may be liable for damages.[24][25][26]
Once filed, a patent application is "prosecuted". A patent examiner reviews the patent application to determine if it meets the patentability requirements of that country. If the application does not comply, objections are communicated to the applicant or their patent agent or attorney through an Office action, to which the applicant may respond. The number of Office actions and responses that may occur vary from country to country, but eventually a final rejection is sent by the patent office, or the patent application is granted, which after the payment of additional fees, leads to an issued, enforceable patent. In some jurisdictions, there are opportunities for third parties to bring an opposition proceeding between grant and issuance, or post-issuance.
Once granted the patent is subject in most countries to renewal fees to keep the patent in force. These fees are generally payable on a yearly basis. Some countries or regional patent offices (e.g. the European Patent Office) also require annual renewal fees to be paid for a patent application before it is granted.
The European Patent Office estimated in 2005 that the average cost of obtaining a European patent (via a Euro-direct application, i.e. not based on a PCT application) and maintaining the patent for a 10 year term was around €32,000.[27] Since the London Agreement entered into force on May 1, 2008, this estimation is however no longer up-to-date, since fewer translations are required.
In the United States, in 2000 cost of obtaining patent (patent prosecution) was estimated from $10,000 to $30,000 per patent.[28] When patent litigation is involved (which in year 1999 happened in about 1,600 cases compared to 153,000 patents issued in the same year[28]), costs increase significantly: while 95% of patent litigation cases are settled out of court,[29] but when the case reaches the court, direct legal costs of patent litigation are on average in the order of a million dollars per case, not including associated business costs.[30]
A trade secret is the act of not disclosing the methods by which a complex invention works or how a chemical is formulated. Trade secrets are protected by nondisclosure agreements and employment law that prevents reverse engineering and information leaks such as breaches of confidentiality and corporate espionage. Compared to patents, the advantages of trade secrets are that a trade secret is not limited in time (it "continues indefinitely as long as the secret is not revealed to the public",[31] whereas a patent is only in force for a specified time, after which others may freely copy the invention), a trade secret does not imply any registration costs,[31] has an immediate effect,[31] does not require compliance with any formalities,[31] and does not imply any disclosure of the invention to the public.[31] The disadvantages of trade secrets include that "others may be able to legally discover the secret and be thereafter entitled to use it",[32] "others may obtain patent protection for legally discovered secrets",[32] and a trade secret is more difficult to enforce than a patent.[32]
Another effect of modern patent usage is to both enable and incentivize competitors to design around (or to "invent around" according to R S Praveen Raj) the patented invention.[37] This may promote healthy competition among manufacturers, resulting in gradual improvements of the technology base.[38] This may help augment national economies and confer better living standards to the citizens. The 1970 Indian Patent Act allowed the Indian pharmaceutical industry to develop local technological capabilities in this industry. This act transformed India from a bulk importer of pharmaceutical drugs to a leading exporter. The rapid evolution of Indian pharmaceutical industry since the mid-1970s highlights the fact that the design of the patent act was instrumental in building local capabilities even in a poor country like India.[39]
Patents have also been criticized for being granted on already-known inventions, with some complaining in the United States that the USPTO fails "to do a serious job of examining patents, thus allowing bad patents to slip through the system."[28] On the other hand, some argue that because of low number of patents going into litigation, increasing quality of patents at patent prosecution stage increases overall legal costs associated with patents, and that current USPTO policy is a reasonable compromise between full trial on examination stage on one hand, and pure registration without examination, on the other hand.[28]
Enforcement of patents - especially patents perceived as being overly broad - by patent trolls, has brought criticism of the patent system,[41][42] though some commentators suggest that patent trolls are not bad for the patent system at all but instead realign market participant incentives, make patents more liquid, and clear the patent market.[43]
Some have raised ethical objections specifically with respect to pharmaceutical patents and the high prices for medication that they enable their proprietors to charge, which poor people in the developed world, and developing world, cannot afford.[44][45] Critics also question the rationale that exclusive patent rights and the resulting high prices are required for pharmaceutical companies to recoup the large investments needed for research and development.[44] One study concluded that marketing expenditures for new drugs often doubled the amount that was allocated for research and development.[46] Other critics claim that patents reward and abet misplaced pharmaceutical R&D priorities, which they describe as being directed to creating incremental improved treatments for diseases prevalent in wealthy countries and away from diseases that cause devastation in the developing world.[47]
In response to these criticisms, one review concluded that less than 5 percent of medicines on the World Health Organization's list of essential drugs are under patent.[48] Also, the pharmaceutical industry has contributed US$2 billion for healthcare in developing countries, providing HIV/AIDS drugs at lower cost or even free of charge in certain countries, and has used differential pricing and parallel imports to provide medication to the poor.[48] Other groups are investigating how social inclusion and equitable distribution of research and development findings can be obtained within the existing intellectual property framework, although these efforts have received less exposure.[48]
Some public campaigns for improving access to medicines and genetically modified food have expressed a concern for "preventing the over-reach" of IP protection including patent protection, and "to retain a public balance in property rights".[49][50] Some economists[51] and scientists[52] and law professors[53] have raised concerns that patents retard technical progress and innovation. Others claim that patents have had no effect on research, based on surveys of scientists.[54][55]
According to James Bessen, the costs of patent litigation exceed their investment value in all industries except chemistry and pharmaceuticals. For example, in the software industry, litigation costs are twice the investment value.[56]
property rights are also called patents in some jurisdictions: industrial design rights are called design patents in the US, plant breeders' rights are sometimes called plant patents, and utility models and Gebrauchsmuster are sometimes called petty patents or innovation patents.
The additional qualification utility patent is sometimes used (primarily in the US) to distinguish the primary meaning from these other types of patents. Particular species of patents for inventions include biological patents, business method patents, chemical patents and software patents.
The procedure for granting patents, requirements placed on the patentee, and the extent of the exclusive rights vary widely between countries according to national laws and international agreements. Typically, however, a patent application must include one or more claims that define the invention. These claims must meet relevant patentability requirements, such as novelty and non-obviousness. The exclusive right granted to a patentee in most countries is the right to prevent others from making, using, selling, or distributing the patented invention without permission.[2]
Under the World Trade Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights, patents should be available in WTO member states for any invention, in all fields of technology,[3] and the term of protection available should be a minimum of twenty years.[4] Nevertheless, there are variations on what is patentable subject matter from country to country.
Definition
The word patent originates from the Latin patere, which means "to lay open" (i.e., to make available for public inspection). More directly, it is a shortened version of the term letters patent, which was a royal decree granting exclusive rights to a person, predating the modern patent system. Similar grants included land patents, which were land grants by early state governments in the USA, and printing patents, a precursor of modern copyright.In modern usage, the term patent usually refers to the right granted to anyone who invents any new, useful, and non-obvious process, machine, article of manufacture, or composition of matter. Some other types of intellectual
History
Main article: History of patent law
The Florentine architect Filippo Brunelleschi received a three-year patent for a barge with hoisting gear, that carried marble along the Arno River in 1421.[7] In 1449, King Henry VI granted the first English patent with a license of 20 years to John of Utynam for introducing the making of colored glass to England.[8]
Patents in the modern sense originated in 1474, when the Republic of Venice enacted a decree that new and inventive devices, once put into practice, had to be communicated to the Republic to obtain the right to prevent others from using them.[9]
England followed with the Statute of Monopolies in 1624, under King James I, which declared that patents could only be granted for "...projects of new invention." During the reign of Queen Anne (1702–14), lawyers of the English Court developed the requirement that a written description of the invention must be submitted.[10] The patent systems in many other countries, including Australia, are based on British law and can be traced back to the Statute of Monopolies.[11]
In 1641, Samuel Winslow was granted the first patent in North America by the Massachusetts General Court for a new process for making salt.[12]
In France, patents were granted by the monarchy and by other institutions like the "Maison du Roi".[13] The Academy examined novelty.[14] Examinations were generally done in secret with no requirement to publish a description of the invention. Actual use of the invention was deemed adequate disclosure to the public.[15] The modern French patent system was created during the Revolution in 1791. Patents were granted without examination since inventor's right was considered as a natural one[16]
In the United States, during the colonial period and Articles of Confederation years (1778–89), several states adopted their own patent systems. The U.S. Constitution authorizes the American patent system in Article One, Section 8(8) which states:
- The Congress shall have power...To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries...
Law
| Intellectual property law |
|---|
| Primary rights |
| Sui generis rights |
| Related topics |
Effects
A patent is not a right to practise or use the invention.[17] Rather, a patent provides the right to exclude others[17] from making, using, selling, offering for sale, or importing the patented invention for the term of the patent, which is usually 20 years from the filing date[4] subject to the payment of maintenance fees. A patent is a limited property right the government gives inventors in exchange for their agreement to share details of their inventions with the public. Like any other property right, it may be sold, licensed, mortgaged, assigned or transferred, given away, or simply abandoned.A patent, being an exclusionary right, does not necessarily give the patent owner the right to exploit the patent. For example, many inventions are improvements of prior inventions that may still be covered by someone else's patent.[17] If an inventor obtains a patent on improvements to an existing invention which is still under patent, they can only legally use the improved invention if the patent holder of the original invention gives permission, which they may refuse.
Some countries have "working provisions" that require the invention be exploited in the jurisdiction it covers. Consequences of not working an invention vary from one country to another, ranging from revocation of the patent rights to the awarding of a compulsory license awarded by the courts to a party wishing to exploit a patented invention. The patentee has the opportunity to challenge the revocation or license, but is usually required to provide evidence that the reasonable requirements of the public have been met by the working of invention.
Enforcement
Patents can generally only be enforced through civil lawsuits (for example, for a U.S. patent, by an action for patent infringement in a United States federal court), although some countries (such as France and Austria) have criminal penalties for wanton infringement.[18] Typically, the patent owner seeks monetary compensation for past infringement, and seeks an injunction that prohibits the defendant from engaging in future acts of infringement. To prove infringement, the patent owner must establish that the accused infringer practises all the requirements of at least one of the claims of the patent. (In many jurisdictions the scope of the patent may not be limited to what is literally stated in the claims, for example due to the doctrine of equivalents).An accused infringer has the right to challenge the validity of the patent allegedly being infringed in a countersuit. A patent can be found invalid on grounds described in the relevant patent laws, which vary between countries. Often, the grounds are a subset of requirements for patentability in the relevant country. Although an infringer is generally free to rely on any available ground of invalidity (such as a prior publication, for example), some countries have sanctions to prevent the same validity questions being relitigated. An example is the UK Certificate of contested validity.
Patent licensing agreements are contracts in which the patent owner (the licensor) agrees to grant the licensee the right to make, use, sell, and/or import the claimed invention, usually in return for a royalty or other compensation. It is common for companies engaged in complex technical fields to enter into multiple license agreements associated with the production of a single product. Moreover, it is equally common for competitors in such fields to license patents to each other under cross-licensing agreements in order to share the benefits of using each other's patented inventions.
Ownership
In most countries, both natural persons and corporate entities may apply for a patent. In the United States, however, only the inventor(s) may apply for a patent although it may be assigned to a corporate entity subsequently[19] and inventors may be required to assign inventions to their employers under an employment contract. In most European countries, ownership of an invention may pass from the inventor to their employer by rule of law if the invention was made in the course of the inventor's normal or specifically assigned employment duties, where an invention might reasonably be expected to result from carrying out those duties, or if the inventor had a special obligation to further the interests of the employer's company.[20]
The ability to assign ownership rights increases the liquidity of a patent as property. Inventors can obtain patents and then sell them to third parties.[21] The third parties then own the patents and have the same rights to prevent others from exploiting the claimed inventions, as if they had originally made the inventions themselves.
Governing laws
See also: Patent law by countries and regions
The grant and enforcement of patents are governed by national laws,
and also by international treaties, where those treaties have been given
effect in national laws. Patents are granted by national or regional
patent offices.[22]
A given patent is therefore only useful for protecting an invention in
the country in which that patent is granted. In other words, patent law
is territorial in nature. When a patent application is published, the
invention disclosed in the application becomes prior art and enters the public domain
(if not protected by other patents) in countries where a patent
applicant does not seek protection, the application thus generally
becoming prior art against anyone (including the applicant) who might
seek patent protection for the invention in those countries.Commonly, a nation forms a patent office with responsibility for operating that nation's patent system, within the relevant patent laws. The patent office generally has responsibility for the grant of patents, with infringement being the remit of national courts.
The authority for patent statutes in different countries varies. In the UK, substantive patent law is contained in the Patents Act 1977 as amended.[23] In the United States, the Constitution empowers Congress to make laws to "promote the Progress of Science and useful Arts..." The laws Congress passed are codified in Title 35 of the United States Code and created the United States Patent and Trademark Office.
There is a trend towards global harmonization of patent laws, with the World Trade Organization (WTO) being particularly active in this area. The TRIPs Agreement has been largely successful in providing a forum for nations to agree on an aligned set of patent laws. Conformity with the TRIPs agreement is a requirement of admission to the WTO and so compliance is seen by many nations as important. This has also led to many developing nations, which may historically have developed different laws to aid their development, enforcing patents laws in line with global practice.
In addition, there are international treaty procedures, such as the procedures under the European Patent Convention (EPC) [constituting the European Patent Organisation (EPOrg)], that centralize some portion of the filing and examination procedure. Similar arrangements exist among the member states of ARIPO and OAPI, the analogous treaties among African countries, and the nine CIS member states that have formed the Eurasian Patent Organization. A key international convention relating to patents is the Paris Convention for the Protection of Industrial Property, initially signed in 1883. The Paris Convention sets out a range of basic rules relating to patents, and although the convention does not have direct legal effect in all national jurisdictions, the principles of the convention are incorporated into all notable current patent systems. The most significant aspect of the convention is the provision of the right to claim priority: filing an application in any one member state of the Paris Convention preserves the right for one year to file in any other member state, and receive the benefit of the original filing date. Another key treaty is the Patent Cooperation Treaty (PCT), administered by WIPO and covering more than 140 countries.
Application and prosecution
Main articles: Patent application and Patent prosecution
A patent is requested by filing a written application
at the relevant patent office. The person or company filing the
application is referred to as "the applicant". The applicant may be the
inventor or its assignee. The application contains a description of how
to make and use the invention that must provide sufficient detail
for a person skilled in the art (i.e., the relevant area of technology)
to make and use the invention. In some countries there are requirements
for providing specific information such as the usefulness of the
invention, the best mode of performing the invention known to the inventor, or the technical problem or problems solved by the invention. Drawings illustrating the invention may also be provided.The application also includes one or more claims that define what a patent covers or the "scope of protection".
After filing, an application is often referred to as "patent pending". While this term does not confer legal protection, and a patent cannot be enforced until granted, it serves to provide warning to potential infringers that if the patent is issued, they may be liable for damages.[24][25][26]
Once filed, a patent application is "prosecuted". A patent examiner reviews the patent application to determine if it meets the patentability requirements of that country. If the application does not comply, objections are communicated to the applicant or their patent agent or attorney through an Office action, to which the applicant may respond. The number of Office actions and responses that may occur vary from country to country, but eventually a final rejection is sent by the patent office, or the patent application is granted, which after the payment of additional fees, leads to an issued, enforceable patent. In some jurisdictions, there are opportunities for third parties to bring an opposition proceeding between grant and issuance, or post-issuance.
Once granted the patent is subject in most countries to renewal fees to keep the patent in force. These fees are generally payable on a yearly basis. Some countries or regional patent offices (e.g. the European Patent Office) also require annual renewal fees to be paid for a patent application before it is granted.
Costs
The costs of preparing and filing a patent application, prosecuting it until grant and maintaining the patent vary from one jurisdiction to another, and may also be dependent upon the type and complexity of the invention, and on the type of patent.The European Patent Office estimated in 2005 that the average cost of obtaining a European patent (via a Euro-direct application, i.e. not based on a PCT application) and maintaining the patent for a 10 year term was around €32,000.[27] Since the London Agreement entered into force on May 1, 2008, this estimation is however no longer up-to-date, since fewer translations are required.
In the United States, in 2000 cost of obtaining patent (patent prosecution) was estimated from $10,000 to $30,000 per patent.[28] When patent litigation is involved (which in year 1999 happened in about 1,600 cases compared to 153,000 patents issued in the same year[28]), costs increase significantly: while 95% of patent litigation cases are settled out of court,[29] but when the case reaches the court, direct legal costs of patent litigation are on average in the order of a million dollars per case, not including associated business costs.[30]
Alternatives to applying for a patent
A defensive publication is the act of publishing a detailed description of a new invention without patenting it, so as to establish prior art and public identification as the creator/originator of an invention, although a defensive publication can also be anonymous. A defensive publication prevents others from later being able to patent the invention.A trade secret is the act of not disclosing the methods by which a complex invention works or how a chemical is formulated. Trade secrets are protected by nondisclosure agreements and employment law that prevents reverse engineering and information leaks such as breaches of confidentiality and corporate espionage. Compared to patents, the advantages of trade secrets are that a trade secret is not limited in time (it "continues indefinitely as long as the secret is not revealed to the public",[31] whereas a patent is only in force for a specified time, after which others may freely copy the invention), a trade secret does not imply any registration costs,[31] has an immediate effect,[31] does not require compliance with any formalities,[31] and does not imply any disclosure of the invention to the public.[31] The disadvantages of trade secrets include that "others may be able to legally discover the secret and be thereafter entitled to use it",[32] "others may obtain patent protection for legally discovered secrets",[32] and a trade secret is more difficult to enforce than a patent.[32]
Economics
For more details on this topic, see Economics and patents.
Rationale
Primary incentives embodied in the patent system include incentives to invent in the first place; to disclose the invention once made; to invest the sums necessary to experiment, produce and market the invention; and to design around and improve upon earlier patents.[33]- Patents provide incentives for economically efficient research and development (R&D). A study conducted annually by the IPTS shows that the 2,000 largest global companies invested more than 430 billion euros in 2008[34] in their R&D departments. If the investments can be considered as inputs of R&D, real products and patents are the outputs. Based on these groups, a project named Corporate Invention Board, had measured and analyzed the patent portfolios to produce an original picture[35] of their technological profiles. Supporters of patents argue that without patent protection, R&D spending would be significantly less or eliminated altogether, limiting the possibility of technological advances or breakthroughs.[citation needed]Corporations would be much more conservative about the R&D investments they made, as third parties would be free to exploit any developments. This second justification is closely related to the basic ideas underlying traditional property rights.[33][specify]
- In accordance with the original definition of the term "patent," patents facilitate and encourage disclosure of innovations into the public domain for the common good. If inventors did not have the legal protection of patents, in many cases, they would prefer or tend to keep their inventions secret[citation needed]. Awarding patents generally makes the details of new technology publicly available, for exploitation by anyone after the patent expires, or for further improvement by other inventors. Furthermore, when a patent's term has expired, the public record ensures that the patentee's invention is not lost to humanity.[33][specify]
- In many industries (especially those with high fixed costs and either low marginal costs or low reverse engineering costs — computer processors, and pharmaceuticals for example), once an invention exists, the cost of commercialization (testing, tooling up a factory, developing a market, etc.) is far more than the initial conception cost. (For example, the internal "rule of thumb" at several computer companies in the 1980s was that post-R&D costs were 7-to-1). Unless there is some way to prevent copies from competing at the marginal cost of production, companies don't invest in making the invention a product.[33][not in citation given]
Another effect of modern patent usage is to both enable and incentivize competitors to design around (or to "invent around" according to R S Praveen Raj) the patented invention.[37] This may promote healthy competition among manufacturers, resulting in gradual improvements of the technology base.[38] This may help augment national economies and confer better living standards to the citizens. The 1970 Indian Patent Act allowed the Indian pharmaceutical industry to develop local technological capabilities in this industry. This act transformed India from a bulk importer of pharmaceutical drugs to a leading exporter. The rapid evolution of Indian pharmaceutical industry since the mid-1970s highlights the fact that the design of the patent act was instrumental in building local capabilities even in a poor country like India.[39]
Criticism
Main articles: Societal views on patents and Criticism of intellectual property
As state-granted monopolies, patents have been criticized as inconsistent with free trade. On that basis, in 1869 the Netherlands abolished patents, and did not reintroduce them until 1912.[40]Patents have also been criticized for being granted on already-known inventions, with some complaining in the United States that the USPTO fails "to do a serious job of examining patents, thus allowing bad patents to slip through the system."[28] On the other hand, some argue that because of low number of patents going into litigation, increasing quality of patents at patent prosecution stage increases overall legal costs associated with patents, and that current USPTO policy is a reasonable compromise between full trial on examination stage on one hand, and pure registration without examination, on the other hand.[28]
Enforcement of patents - especially patents perceived as being overly broad - by patent trolls, has brought criticism of the patent system,[41][42] though some commentators suggest that patent trolls are not bad for the patent system at all but instead realign market participant incentives, make patents more liquid, and clear the patent market.[43]
Some have raised ethical objections specifically with respect to pharmaceutical patents and the high prices for medication that they enable their proprietors to charge, which poor people in the developed world, and developing world, cannot afford.[44][45] Critics also question the rationale that exclusive patent rights and the resulting high prices are required for pharmaceutical companies to recoup the large investments needed for research and development.[44] One study concluded that marketing expenditures for new drugs often doubled the amount that was allocated for research and development.[46] Other critics claim that patents reward and abet misplaced pharmaceutical R&D priorities, which they describe as being directed to creating incremental improved treatments for diseases prevalent in wealthy countries and away from diseases that cause devastation in the developing world.[47]
In response to these criticisms, one review concluded that less than 5 percent of medicines on the World Health Organization's list of essential drugs are under patent.[48] Also, the pharmaceutical industry has contributed US$2 billion for healthcare in developing countries, providing HIV/AIDS drugs at lower cost or even free of charge in certain countries, and has used differential pricing and parallel imports to provide medication to the poor.[48] Other groups are investigating how social inclusion and equitable distribution of research and development findings can be obtained within the existing intellectual property framework, although these efforts have received less exposure.[48]
Some public campaigns for improving access to medicines and genetically modified food have expressed a concern for "preventing the over-reach" of IP protection including patent protection, and "to retain a public balance in property rights".[49][50] Some economists[51] and scientists[52] and law professors[53] have raised concerns that patents retard technical progress and innovation. Others claim that patents have had no effect on research, based on surveys of scientists.[54][55]
According to James Bessen, the costs of patent litigation exceed their investment value in all industries except chemistry and pharmaceuticals. For example, in the software industry, litigation costs are twice the investment value.[56]
Proposed alternatives to the patent system
Alternatives have been discussed to address the issue of financial incentivization to replace patents. Mostly, they are related to some form of direct or indirect government funding. One example is the idea of providing "prize money" (from a "prize fund" sponsored by the government) as a substitute for the lost profits associated with abstaining from the monopoly given by a patent.[57] Another approach is to remove the issue of financing development from the private sphere altogether, and to cover the costs with direct government funding.[58]property rights are also called patents in some jurisdictions: industrial design rights are called design patents in the US, plant breeders' rights are sometimes called plant patents, and utility models and Gebrauchsmuster are sometimes called petty patents or innovation patents.
The additional qualification utility patent is sometimes used (primarily in the US) to distinguish the primary meaning from these other types of patents. Particular species of patents for inventions include biological patents, business method patents, chemical patents and software patents.
