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Institute for
New Economic Thinking and
Centre for International
Governance Innovation (CIGI)
Law and Innovation: Is Intellectual
Property a Path to Progress
April 12, 2014
Barry Sookman
McCarthy Ttrault LLP
416-601-7949
mailto:[email protected]:[email protected]:[email protected] -
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Introduction
The protection of intellectual property is an important element in promoting innovation and in
supporting markets in the trade and dissemination of innovative and creative products and
services. In some sectors, intellectual property rights is the main asset of the business.
Intellectual property rights are increasing the hard coinage earned by inventors and creators
that are used to make, use and sell innovative products, obtain financing and capital, create well
paying and rewarding jobs, obtain licensing revenues, and prevent free riding.1
While it is generally unquestioned that intellectual property rights play a pivotal role in
advancing innovation, there are divergent views about whether the existing calibration of rights,
particularly in the fields of copyrights and patents is appropriate or requires adjusting. Forexample, the US Congress,2the European Union3and its member states including the UK4and
Ireland,5Australia6and others have been re-examining their copyright laws in light of the
challenges posed by digital technologies. Almost every stakeholder in these debates claims its
proposals foster innovation. The major policy differences often relate to whether the innovation
should permissionless; whether rightsholders should be compensated for new uses of their
works; and the responsibilities, if any, of the innovators for infringements enabled or facilitated
by the uses of new technologies.Aereo's retransmission serviceand theGoogle Books project are
cases in point. The U.S. Congress, after just completing a major overhaul of the U.S. patent
system, is once again examining a new set of patent reforms, among them reforms targeting
patent trolls or NPEs. Stakeholders in those debates who argue for no reform, radical reforms,
or reforms in between, also advance arguments premised on an innovation agenda.7 Intellectual
property rights are also increasingly being raised in trade negotiations which has also raised
issues as to their implications for innovation.
The debates about the proper balance between exclusive intellectual property rights, exceptions
to infringement, and the public domain come from multi-disciplinary perspectives. Many
economists have researched the links between intellectual property rights and innovation. Thecourts, which play a major role in interpreting intellectual property laws, have their own views,
views which sometimes shift or change in response to the cases and challenges they have to deal
with. Given the importance of the roles played by the courts in interpreting IP laws, and in
mediating between different perspectives on what their underlying purposes are, it is important
to understand the judicial views about intellectual property rights.
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This paper has the very modest goal of explaining how some courts have viewed the purposes
and roles of intellectual property laws in relation to promoting innovation. The focus of the
paper is on the law of patents, with particular emphasis on leading appellant decisions from U.S.
and Canadian courts. The approach taken is to highlight the perspectives of the courts by setting
out sample extracts from leading cases on important areas of patent law which reflect the courtsviews about the relationship between patent law concepts and innovation.
Patents and Innovation what the courts have said
Justification for patents
Article I, 8, cl. 8, of the U.S. Constitution gives Congress the power "[t]o 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."
Graham v. John Deere Co. of Kansas City,383 US 1 (1966) At the outset it must be
remembered that the federal patent power stems from a specific constitutional provision
which authorizes the Congress "To promote the Progress of . . . useful Arts, by securing
for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries." Art. I, 8,
cl. 8.The clause is both a grant of power and a limitation. This qualified authority, unlike
the power often exercised in the sixteenth and seventeenth centuries by the English
Crown, is limited to the promotion of advances in the "useful arts." It was written against
the backdrop of the practiceseventually curtailed by the Statute of Monopoliesof the
Crown in granting monopolies to court favorites in goods or businesses which had long
before been enjoyed by the public.
It is considered a bargain (especially in Canadian patent law). The inventor secures exclusive
rights in return for new, ingenious, useful and unobvious disclosures and dedication of the
invention to the public when the term expires.
Apotex Inc. v. Wellcome Foundation Ltd., [2002] 4 SCR 153 patent, as has been saidmany times, is not intended as an accolade or civic award for ingenuity. It is a method by
which inventive solutions to practical problems are coaxed into the public domain by the
promise of a limited monopoly for a limited time. Disclosure is the quid pro quo for
valuable proprietary rights to exclusivity which are entirely the statutory creature of the
Patent Act.Monopolies are associated in the public mind with higher prices. The public
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should not be expected to pay an elevated price in exchange for speculation, or for the
statement of any mere scientific principle or abstract theorem (s. 27(3)), or for the
discovery of things that already exist, or are obvious. The patent monopoly should be
purchased with the hard coinage of new, ingenious, useful and unobvious disclosures.
Bristol-Myers Squibb Co. v. Canada (Attorney General),[2005] 1 SCR 533 It is well
understood that in Canada the grant of a patent is akin to a contract or bargain between
the patentee on the one hand and the government of Canada (representing the interests
of the general public) on the other. The patentee receives the grant of an exclusive right
to use the patented invention in Canada for a specific period of time in return for fully
disclosing the invention to the public by way of the patent specification
The grant of a patent is in the nature of a bargain between the inventor on the one handand the Crown, representing the public, on the other hand. The consideration for the
grant is double: first, there must be a new and useful invention, and secondly, the
inventor must, in return for the grant of a patent, give to the public an adequate
description of the invention with sufficiently complete and accurate details as will enable
a workman, skilled in the art to which the invention relates, to construct or use that
invention when the period of the monopoly has expired.
Teva Canada Ltd. v. Pfizer Canada Inc.,[2012] 3 S.C.R. 625 The patent system is basedon a bargain, or quid pro quo: the inventor is granted exclusive rights in a new and
useful invention for a limited period in exchange for disclosure of the invention so that
society can benefit from this knowledge. This is the basic policy rationale underlying the
Act.
Free World Trust v. lectro Sant Inc., [2000] 2 SCR 1024 Patent protection rests on the
concept of a bargain between the inventor and the public. In return for disclosure of the
invention to the public, the inventor acquires for a limited time the exclusive right to
exploit it. It was ever thus. Even before the Statute of Monopolies (1623), the Crown
rewarded an inventor with a limited monopoly in exchange for public disclosure of a
new invention and a new trade within the kingdom ... or if a man hath made a new
discovery of any thing: Clothworkers of Ipswich Case (1653), Godb. 252, 78 E.R. 147, at
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p. 148, where the court went on to say that the effect of an unjustified monopoly was to
take away free-trade, which is the birthright of every subject.
Scott Paper Co. v. Marcalus Co., 326 US 249 (1945) By the patent laws Congress has
given to the inventor opportunity to secure the material rewards for his invention for alimited time, on condition that he make full disclosure for the benefit of the public of the
manner of making and using the invention, and that upon the expiration of the patent
the public be left free to use the invention. SeeSpecial Equipment Co. v. Coe, 324 U.S.
370, 378.As has been many times pointed out, the means adopted by Congress of
promoting the progress of science and the arts is the limited grant of the patent
monopoly in return for the full disclosure of the patented invention and its dedication to
the public on the expiration of the patent.
Patent rights are statutory and the rights of inventors are only those that are conferred by the
applicable statute.
Apotex Inc. v. Sanofi-Synthelabo Canada Inc., [2008] 3 SCR 265 At the outset, it is
appropriate to refer to the words of Judson J. for this Court in Commissioner of Patents
v. Farbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius & Bruning, 1963
CanLII 2 (SCC), [1964] S.C.R. 49
There is no inherent common law right to a patent. An inventor gets his patent according
to the terms of the Patent Act, no more and no less.
The most recent reference to the law of patents being wholly statutory are the words of
Lord Walker in Synthon B.V. v. SmithKline Beecham plc, [2006] 1 All E.R. 685, [2005]
UKHL 59, at paras. 57-58:
The law of patents is wholly statutory, and has a surprisingly long history. . . . In the
interpretation and application of patent statutes judge-made doctrine has over the yearsdone much to clarify the abstract generalities of the statutes and to secure uniformity in
their application.
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Nevertheless it is salutary to be reminded, from time to time, that the general concepts
which are the common currency of patent lawyers are founded on a statutory text, and
cannot have any other firm foundation.
Patent laws goals have been summarized as having three objectives:
Aronson v. Quick Point Pencil Co.,440 US 257 (1979) First, patent law seeks to foster
and reward invention; second, it promotes disclosure of inventions to stimulate further
innovation and to permit the public to practice the invention once the patent expires;
third, the stringent requirements for patent protection seek to assure that ideas in the
public domain remain there for the free use of the public.
Balancing innovation and monopolies
Patent law is based upon the social and economic rationale of balancing encouraging innovation
and the avoidance of monopolies which can stifle competition.
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 The Patent Clause itself
reflects a balance between the need to encourage innovation and the avoidance of
monopolies which stifle competition without any concomitant advance in the "Progress
of Science and useful Arts." As we have noted in the past, the Clause contains both a
grant of power and certain limitations upon the exercise of that power. Congress may not
create patent monopolies of unlimited duration, nor may it "authorize the issuance of
patents whose effects are to remove existent knowledge from the public domain, or to
restrict free access to materials already available."Graham v. John Deere Co. of Kansas
City, 383 U. S. 1, 6 (1966).
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 From their inception, the
federal patent laws have embodied a careful balance between the need to promote
innovation and the recognition that imitation and refinement through imitation are both
necessary to invention itself and the very lifeblood of a competitive economy.
Graham v. John Deere Co. of Kansas City,383 US 1 (1966) Jefferson's philosophy on the
nature and purpose of the patent monopoly is expressed in a letter to Isaac McPherson
(Aug. 1813), a portion of which we set out in the margin. He rejected a natural-rights
theory in intellectual property rights and clearly recognized the social and economic
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rationale of the patent system. The patent monopoly was not designed to secure to the
inventor his natural right in his discoveries. Rather, it was a reward, an inducement, to
bring forth new knowledge. The grant of an exclusive right to an invention was the
creation of societyat odds with the inherent free nature of disclosed ideasand was not
to be freely given. Only inventions and discoveries which furthered human knowledge,and were new and useful, justified the special inducement of a limited private monopoly.
Jefferson did not believe in granting patents for small details, obvious improvements, or
frivolous devices. His writings evidence his insistence upon a high level of patentability.
Bilski v. Kappos,130 S. Ct. 3218 This Age puts the possibility of innovation in the hands
of more people and raises new difficulties for the patent law. With ever more people
trying to innovate and thus seeking patent protections for their inventions, the patent
law faces a great challenge in striking the balance between protecting inventors and notgranting monopolies over procedures that others would discover by independent,
creative application of general principles.
Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 Given the
above, the respondents argument that the object of the Act leads inexorably to the
broadest reading of the definition of invention possible is problematic and is, in my
view, based on an oversimplification of the patent regime. In the court below, Rothstein
J.A. preferred the approach taken by the majority of the U.S. Supreme Court inChakrabarty, supra. The majority read the language of the Act expansively on the basis
that the Act embodied Thomas Jeffersons philosophy that ingenuity should receive a
liberal encouragement (p. 308). The minority of the court did not wholly accept this
characterization, commenting in respect to the objective of the Act, at p. 319 of the
reasons:
The patent laws attempt to reconcile this Nations deep-seated antipathy to monopolies
with the need to encourage progress. Deepsouth Packing Co. v. Laitram Corp., 406 U.S.
518, 530-531 (1972); Graham v. John Deere Co., 383 U.S.1, 7-10 (1966). Given the
complexity and legislative nature of this delicate task, we must be careful to extend
patent protection no further than Congress has provided. In particular, were there an
absence of legislative direction, the courts should leave to Congress the decisions
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whether and how far to extend the patent privilege into areas where the common
understanding has been that patents are not available.
eBay Inc. v. MERCEXCHANGE, LLC,547 US 388 (2006) In cases now arising trial
courts should bear in mind that in many instances the nature of the patent beingenforced and the economic function of the patent holder present considerations quite
unlike earlier cases. An industry has developed in which firms use patents not as a basis
for producing and selling goods but, instead, primarily for obtaining licensing fees For
these firms, an injunction, and the potentially serious sanctions arising from its
violation, can be employed as a bargaining tool to charge exorbitant fees to companies
that seek to buy licenses to practice the patent. When the patented invention is but a
small component of the product the companies seek to produce and the threat of an
injunction is employed simply for undue leverage in negotiations, legal damages maywell be sufficient to compensate for the infringement and an injunction may not serve
the public interest. In addition injunctive relief may have different consequences for the
burgeoning number of patents over business methods, which were not of much economic
and legal significance in earlier times. The potential vagueness and suspect validity of
some of these patents may affect the calculus under the four-factor test.
The equitable discretion over injunctions, granted by the Patent Act, is well suited to
allow courts to adapt to the rapid technological and legal developments in the patentsystem. For these reasons it should be recognized that district courts must determine
whether past practice fits the circumstances of the cases before them. With these
observations, I join the opinion of the Court
There is an explicit trade-off inherent in the patent system between providing exclusivity and
preventing fee riding for a limited term and the associated potential drawbacks of rising prices,
the need to engage in complex rights clearance exercises and temporary reduced competition.
Mayo Collaborative v. Prometheus Labs.,132 S. Ct. 1289 (2012) Patent protection is,after all, a two-edged sword. On the one hand, the promise of exclusive rights provides
monetary incentives that lead to creation, invention, and discovery. On the other hand,
that very exclusivity can impede the flow of information that might permit, indeed spur,
invention, by, for example, raising the price of using the patented ideas once created,
requiring potential users to conduct costly and time-consuming searches of existing
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patents and pending patent applications, and requiring the negotiation of complex
licensing arrangements.
Vornado Air Systems v. Duracraft Corp.,58 F. 3d 1498 (10th.Cir.1995) Vornado suggests
that no patent law purpose is served by allowing copying of product configurations thatare not necessary to competition. We cannot agree. We find no support in the Patent Act
itself or its application for the proposition that the patent goals are limited to enhancing
competition, at least in the direct sense. To the contrary, patents operate by temporarily
reducing competition. They create monopolies to reward inventors who invent "`things
which are worth to the public the embarrassment of an exclusive patent.'"Graham v.
John Deere Co., 383 U.S. 1, 9, 86 S.Ct. 684, 689, 15 L.Ed.2d 545 (1966)(quoting Thomas
Jefferson, author of the 1793 Patent Act). Although competition ultimately may be
enhanced by the increased product supply that results from operation of the patent law,the system's more obvious objective is to give the public the benefits of technological
progress.
Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 (Binnie J, in
dissent) If the patent were refused on the oncomouse itself, it would be easy for free
riders to circumvent the protection sought to be given to the inventor by thePatent Act
simply by acquiring an oncomouse and breeding it to as many wild mice as desired and
selling the offspring (probably half of which will be oncomice) to the public.
Patent law is assumed to create incentives to invest in, engage in, and to take risks to do
research and development that foster innovation and new goods and services that benefit the
public more than the disadvantages associated with patents.
Teva Canada Ltd. v. Pfizer Canada Inc.,[2012] 3 S.C.R. 625 The patent bargain
encourages innovation and advances science and technology.
Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 There is nodoubt that two of the central objects of the Act are to advance research and development
and to encourage broader economic activity (see Free World Trust v. lectro Sant Inc.,
2000 SCC 66 (CanLII),[2000] 2 S.C.R. 1024, 2000 SCC 66, at para. 42).
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Kewanee Oil Co. v. Bicron Corp.,416 US 470 (1974) The patent laws promote this
progress by offering a right of exclusion for a limited period as an incentive to inventors
to risk the often enormous costs in terms of time, research, and development. The
productive effort thereby fostered will have a positive effect on society through the
introduction of new products and processes of manufacture into the economy, and theemanations by way of increased employment and better lives for our citizens.
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 The applicant whose
invention satisfies the requirements of novelty, nonobviousness, and utility, and who is
willing to reveal to the public the substance of his discovery and "the best mode . . . of
carrying out his invention," 35 U. S. C. 112, is granted "the right to exclude others from
making, using, or selling the invention throughout the United States," for a period of 17
years. 35 U. S. C. 154. The federal patent system thus embodies a carefully craftedbargain for encouraging the creation and disclosure of new, useful, and nonobvious
advances in technology and design in return for the exclusive right to practice the
invention for a period of years.
Graham v. John Deere Co. of Kansas City,383 US 1 (1966) Thomas Jefferson, who as
Secretary of State was a member of the group, was its moving spirit and might well be
called the "first administrator of our patent system." See Federico, Operation of the
Patent Act of 1790, 18 J. Pat. Off. Soc. 237, 238 (1936). He was not only an administratorof the patent system under the 1790 Act, but was also the author of the 1793 Patent Act
Jefferson, like other Americans, had an instinctive aversion to monopolies. It was a
monopoly on tea that sparked the Revolution and Jefferson certainly did not favor an
equivalent form of monopoly under the new government. His abhorrence of monopoly
extended initially to patents as well. From France, he wrote to Madison (July 1788)
urging a Bill of Rights provision restricting monopoly, and as against the argument that
limited monopoly might serve to incite "ingenuity," he argued forcefully that "the benefit
even of limited monopolies is too doubtful to be opposed to that of their general
suppression," V Writings of Thomas Jefferson, at 47 (Ford ed., 1895).
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His views ripened, however, and in another letter to Madison (Aug. 1789) after the
drafting of the Bill of Rights, Jefferson stated that he would have been pleased by an
express provision in this form:
"Art. 9. Monopolies may be allowed to persons for their own productions in literature &their own inventions in the arts, for a term not exceeding years but for no longer term
& no other purpose." Id., at 113
And he later wrote:
"Certainly an inventor ought to be allowed a right to the benefit of his invention for some
certain time. . . . Nobody wishes more than I do that ingenuity should receive a liberal
encouragement." Letter to Oliver Evans (May 1807), V Writings of Thomas Jefferson, at75-76 (Washington ed.)
Int'l Technologies Consultants v. Pilkington plc,137 F. 3d 1382 (9th.Cir.1998) The owner
of the patent is given a limited monopoly. The justification is that the public is best
served by giving inventors monopolies on commercial exploitation of their innovations
for enough time to furnish an incentive to do the work and spend the money creating
them.
Sanofi-Synthelabo v. Apotex, Inc., 470 F. 3d 1368 (Fed.Cir.2006) We have long
acknowledged the importance of the patent system in encouraging innovation. Indeed,
the "encouragement of investment-based risk is the fundamental purpose of the patent
grant, and is based directly on the right to exclude." Patlex Corp. v. Mossinghoff, 758
F.2d 594, 599 (Fed.Cir.1985). The district court relied on the testimony of Dr. Hausman
in finding that the average cost of developing a blockbuster drug is $800 million.
Importantly, the patent system provides incentive to the innovative drug companies to
continue costly development efforts. We therefore find that the court did not clearly err
in concluding that the significant "public interest in encouraging investment in drug
development and protecting the exclusionary rights conveyed in valid pharmaceutical
patents" tips the scales in favor of Sanofi.
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Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 (Binnie J, in
dissent) [T]hat the massive investment of the private sector in biotechnical research is
exactly the sort of research and innovation that thePatent Actwas intended to promote.
As this case demonstrates, even university research has to be paid for, and intellectualproperty rights are an important contributor.
We are told that in the United States (comparable statistics do not seem to be available
in Canada), a health-related biotechnology product on average costs between 200 and
350 million dollars (U.S.) to develop, and takes 7 to 10 years from the research and
development stage to bring it to market (Statistics Canada, Biotechnology Use and
Development 1999 (March 2001), at p. 25). One would think it in the public interest to
shorten the time and reduce the cost of research designed to minimize human suffering,and to reward those who develop research tools (such as the oncomouse) that might
make this possible, provided the inventors disclose their work for others to build on.
The practical application of biotechnology is in large measure the preoccupation of
enterprises that need to profit from their successes to finance continued research on a
broader front. These successes are few and far between (Statistics Canada, supra, at pp.
13-14). It seems Du Pont spent about US$15 million to fund the oncomouse research: C.
Arthur, The onco-mouse that didnt roar (1993), 138 New Scientist 4. Leder, the afore-mentioned co-inventor of the Harvard mouse, made the point to Congress as follows:
[T]he great and costly engine for invention can only be effectively driven with the
support from the private sector, motivated to serve a public need.
The patent system offers the only protection available for the intellectual product of this
research, and thus, the only hope of a fair return against the great financial risks that
investment in biotechnology entails.
There are those who question the level of incentive required to induce sufficient research
in the biomedical field. Professor Gold of McGill University argues:
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The argument for greater patent protection should be understood for what it is: an
attempt to maximize profit, not to maximize levels of innovation. Clearly, a company
would prefer to have as large a monopoly as possible. . . . But patent law is not about
individual profit maximization; it is about maximizing the overall level of innovation in
society. The two do not necessarily go together. (E. R. Gold, Biomedical Patents andEthics: A Canadian Solution (2000), 45 McGill L.J.413, at p. 423)
Nevertheless it is indisputable that vast amounts of money must be found to finance
biomedical research. It is necessary to feed the goose if it is to continue to lay the golden
eggs. ThePatent Actembodies the public policy that those who directly benefit from an
invention should be asked, through the patent system, to pay for it, at least in part.
Momenta Pharmaceuticals v. Amphastar Pharma., 686 F. 3d 1348 Fed.Cir.2012) PerRader CJ (in dissent) Too often patent law is misunderstood as impeding more than
promoting innovation. This academic proposition, called the tragedy of the Anti-
commons in some scholarly presentations, suggests that exclusive rights impede the flow
of information and limit experimentation that might lead to the next generation of
technological advance. Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter
Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698 (1998).
In the first place, in an era of empirical research, one might ask the reason that thisacademic notion has never actually been verified. Although studied, no research has
substantiated this alleged attack on the patent system. In fact, "the effects predicted by
the anti-commons hypothesis are not borne out in the available data." Timothy Caulfield,
Human Gene Patents: Proof of Problems?, 84 Chi.-Kent L.Rev. 133, 137 (2009); see also
American Association for the Advancement of Science, INTERNATIONAL
INTELLECTUAL PROPERTY EXPERIENCES: A REPORT OF FOUR COUNTRIES 12
(2007) (finding the results of a 2006 survey of U.S. and Japanese researchers "offer very
little evidence of an `anticommons problem'" and that "IP-protected technologies
remain relatively accessible to the broad scientific community"). Surveys of academic
researchers have revealed that "only 1 percent ... report having to delay a project, and
none abandoned a project due to others' patents." Wesley M. Cohen & John P. Walsh,
Real Impediments to Academic Biomedical Re search, in 8 INNOVATION POLICY AND
THE ECONOMY 1, 10-11 (Adam B. Jaffe, Josh Lerner, & Scott Stern eds. 2008), available
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at http://www.nber. org/&mtilde;arschke/mice/Papers/cohenwalsh.pdf (citing John P.
Walsh et al., The View from the Bench: Patents, Material Transfers and Biomedical
Research, 309 SCIENCE 2002 (2005)). In other words, patents on research tools and
biomedical innovations do not significantly slow the pace of research and do not deter
researchers from pursuing promising projects.
The reason that patents have not been proven to impede more than stimulate
technological advance is simple: it does not happen. It does not happen for several
reasons. First, experiments advancing technology rarely, if ever, generate commercial
value. Thus patent owners have little, if any, incentive to license or inhibit research.
Stated otherwise, even if a patent owner wanted to sue or license potential researchers,
experiments do not produce income or a source of damages. See id. at 12.
Second, in the modern age of technology, the character of technological advance has
changed. The era when the Bell Labs or some other tech center could hire the most
promising engineers and essentially invent everything for the world has passed. With the
vast specialization of all fields of research, advances in technology require great
cooperation. A new product or a new direction in biotechnology or electronics will be
produced by cooperation between a professor in Chengdu, China, a young programmer
in Bangaluru, India, an engineer at a large corporation in Munich, Germany, a graduate
student at Tokyo University, and a team at a small start-up company in Silicon Valley.The patent system can help inform each of them of the other and bring together their
incremental advances to achieve the next generation of progress in some tiny corner of
human progress.
Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 (Binnie J, in
dissent) There is much scholarly controversy in Canada over the role of intellectual
property in biotechnology: E. R. Gold, Body Parts: Property Rights and the Ownership of
Human Biological Materials (1996); E. R. Gold, Making Room: Reintegrating Basic
Research, Health Policy, and Ethics Into Patent Law in T. A. Caulfield and B. Williams-
Jones, eds., The Commercialization of Genetic Research: Ethical, Legal, and Policy
Issues (1999), 63; T. A. Caulfield, Underwhelmed: Hyperbole, Regulatory Policy, and
the Genetic Revolution (2000), 45 McGill L.J. 437; B. M. Knoppers, Reflections: The
Challenge of Biotechnology and Public Policy (2000), 45 McGill L.J. 559; P. R. Mooney,
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The Impetus for and Potential of Alternative Mechanisms for the Protection of
Biotechnological Innovations (March 2001), at p. 13.
Some thoughtful critics suggest that patents in this field may in fact deter rather than
promote innovation: M. A. Heller and R. S. Eisenberg, Can Patents Deter Innovation?The Anticommons in Biomedical Research (1998), 280 Science 698; Gold, Biomedical
Patents and Ethics: A Canadian Solution, supra.
On a more technical level, it is pointed out that a 20-year patent is a very long time in the
life cycle of biotechnology. A shorter patent life, with conditions more tailored to the
industry, would, it is said, provide sufficient incentive. Then there are those who
advocate the farmers privilege to avoid farmers being subject to patent enforcement in
the case of the progeny of patented plants and animals. Others advocate protection forinnocent bystanders who inadvertently make use of a genetically engineeredplant or
animal, unaware of its being patented.
The rules associated with patents are, for the most part, generally applicable across different
technological domains. However, certain other public policy considerations may be taken into
account and Congress (and Parliament) can refine the rules as public policy requires, subject in
the U.S. to complying with the Constitution.
Mayo Collaborative v. Prometheus Labs.,132 S. Ct. 1289 (2012) At the same time, patentlaw's general rules must govern inventive activity in many different fields of human
endeavor, with the result that the practical effects of rules that reflect a general effort to
balance these considerations may differ from one field to another. See Bohannan &
Hovenkamp, Creation without Restraint, at 98-100.
In consequence, we must hesitate before departing from established general legal rules
lest a new protective rule that seems to suit the needs of one field produce unforeseen
results in another. And we must recognize the role of Congress in crafting more finelytailored rules where necessary. Cf. 35 U.S.C. 161-164 (special rules for plant patents).
We need not determine here whether, from a policy perspective, increased protection for
discoveries of diagnostic laws of nature is desirable.
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Graham v. John Deere Co. of Kansas City,383 US 1 (1966) Within the limits of the
constitutional grant, the Congress may, of course, implement the stated purpose of the
Framers by selecting the policy which in its judgment best effectuates the constitutional
aim. This is but a corollary to the grant to Congress of any Article I power.Gibbons v.
Ogden, 9 Wheat. 1.Within the scope established by the Constitution, Congress may setout conditions and tests for patentability.
Association for Molecular Pathology v USPTO,689 F.3d 1303 (Fed.Cir.2012) There is no
collective right of adverse possession to intellectual property, and we should not create
one. Our role is to interpret the law that Congress has written in accordance with the
governing precedents. I would do so and would affirm the district court's rulings as to
the BRCA gene and BRCA gene segment claims.
Merck & Co., Inc. v. Apotex Inc.,2006 FCA 323 In support of their submission, Merck
and Astra also argue thatsubsection 55.2(1)is an exemption from the primary purpose
of theAct,which they say is to protect the exclusive rights of a patentee, and therefore
should be strictly construed. Again, I do not agree. In Apotex Inc. v. Wellcome
Foundation Ltd.,2002 SCC 77 (CanLII),[2002] 4 S.C.R. 153, at paragraph 37, that Court
held that patent law seeks to find a balance between encouraging innovation and sharing
the products of innovation with the public rather than simply seeking to protect the
patentee:
Moreover, in Harvard College v. Canada (Commissioner of Patents),2002 SCC 76
(CanLII),[2002] 4 S.C.R. 45, the Supreme Court of Canada also acknowledged that the
manner in which Canada has administered its patent regime reveals that the promotion
of ingenuity has at times been balanced against other considerations.Subsection 55.2(1)
is, accordingly, not an exemption from the purpose of theAct,but is an integral part
thereof by seeking to balance the rights of patentees with those of the public.
Accordingly, I can see no basis for strictly construingsubsection 55.2(1)as Merck and
Astra suggest.
It is assumed that free exploitation of ideas will be the rule to which the protection of patents is
the exception.
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Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 The attractiveness of such a
bargain, and its effectiveness in inducing creative effort and disclosure of the results of
that effort, depend almost entirely on a backdrop of free competition in the exploitation
of unpatented designs and innovations. The novelty and nonobviousness requirements
of patentability embody a congressional understanding, implicit in the Patent Clauseitself, that free exploitation of ideas will be the rule, to which the protection of a federal
patent is the exception.
Why disclosures of inventions are beneficial
A goal of patent law is to promote the disclosure of inventions. This is assumed to have several
beneficial results.
It results in inventions that would not be disclosed or devised in the absence of a patent
system.
Graham v. John Deere Co. of Kansas City,383 US 1 (1966) The difficulty of formulating
conditions for patentability was heightened by the generality of the constitutional grant
and the statutes implementing it, together with the underlying policy of the patent
system that "the things which are worth to the public the embarrassment of an exclusive
patent," as Jefferson put it, must outweigh the restrictive effect of the limited patent
monopoly. The inherent problem was to develop some means of weeding out thoseinventions which would not be disclosed or devised but for the inducement of a patent.
It results in knowledge that can be freely exploited when the patent expires. The benefit enures
both to the public that uses the invention to make products and to consumers who benefit from
exploitation by others.
Kewanee Oil Co. v. Bicron Corp.,416 US 470 (1974) In return for the right of exclusion
this "reward for inventions,"Universal Oil Co. v. Globe Co., 322 U. S. 471, 484 (1944)
the patent laws impose upon the inventor a requirement of disclosure. To insure
adequate and full disclosure so that upon the expiration of the 17-year period "the
knowledge of the invention enures to the people, who are thus enabled without
restriction to practice it and profit by its use,"United States v. Dubilier Condenser Corp.,
289 U. S. 178, 187 (1933),the patent laws require that the patent application shall
include a full and clear description of the invention and "of the manner and process of
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making and using it" so that any person skilled in the art may make and use the
invention. 35 U. S. C. 112.
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 Soon after the adoption of the
Constitution, the First Congress enacted the Patent Act of 1790, which allowed the grantof a limited monopoly of 14 years to any applicant that "hath . . . invented or discovered
147*147 any useful art, manufacture, . . . or device, or any improvement therein not
before known or used." 1 Stat. 109, 110. In addition to novelty, the 1790 Act required that
the invention be "sufficiently useful and important" to merit the 14-year right of
exclusion. Ibid. Section 2 of the Act required that the patentee deposit with the Secretary
of State, a specification and if possible a model of the new invention, "which specification
shall be so particular, and said models so exact, as not only to distinguish the invention
or discovery from other things before known and used, but also to enable a workman orother person skilled in the art or manufacture. . . to make, construct, or use the same, to
the end that the public may have the full benefit thereof, after the expiration of the
patent term."
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 Moreover, the ultimate goal
of the patent system is to bring new designs and technologies into the public domain
through disclosure.
Scott Paper Co. v. Marcalus Co., 326 US 249 (1945) The aim of the patent laws is not only
that members of the public shall be free to manufacture the product or employ the
process disclosed by the expired patent, but also that the consuming public at large shall
receive the benefits of the unrestricted exploitation, by others, of its disclosures.
By the force of the patent laws not only is the invention of a patent dedicated to the
public upon its expiration, but the public thereby becomes entitled to share in the good
will which the patentee has built up in the patented article or product through the
enjoyment of his patent monopoly. Hence we have held that the patentee may not
exclude the public from participating in that good will or secure, to any extent, a
continuation of his monopoly by resorting to the trademark law and registering as a
trademark any particular descriptive matter appearing in the specifications, drawings or
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claims of the expired patent, whether or not such matter describes essential elements of
the invention or claims.
The public disclosure through patent applications is immediately available for others to build
upon. It speeds the progress of scientific endeavor and facilitates experimentation.
Momenta Pharmaceuticals v. Amphastar Pharma., 686 F. 3d 1348 Fed.Cir.2012) Per
Rader CJ (in dissent) Thus, patents properly remain a tool for research and
experimentation because the system encourages publication and sharing of research
results. Disclosure of how to make and use the invention is the "quid pro quo" of the
patent grant. SeeJEM Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142,
122 S.Ct. 593, 151 L.Ed.2d 508 (2001).In exchange for disclosure, the inventor receives a
limited term of exclusivity to benefit from commercialization of his invention. Without
this promise of exclusivity, researchers at corporations would be forced to turn to secrecy
as the best protection for their inventions. Even academic researchers may delay
publication of results in order to maintain an edge over the competition, Cohen & Walsh,
supra at 14, and the race to the patent office helps counteract this tendency toward
secrecy by rewarding earlier disclosure. "The information in patents is added to the store
of knowledge with the publication/issuance of the patent.... [It] is not insulated from
analysis, study, and experimentation for the twenty years until patent expiration."
Classen, 659 F.3d at 1072.Rather, information shared through patent applications is
immediately available for others to build upon. It speeds the progress of scientific
endeavor. In other words, the patent system's modern benefits facilitate experimentation
far more than any hypothetical inhibition.
The public disclosure requirements to obtain a patent will stimulate further innovations.
Kewanee Oil Co. v. Bicron Corp.,416 US 470 (1974) When a patent is granted and the
information contained in it is circulated to the general public and those especially skilled
in the trade, such additions to the general store of knowledge are of such importance to
the public weal that the Federal Government is willing to pay the high price of 17 years of
exclusive use for its disclosure, which disclosure, it is assumed, will stimulate ideas and
the eventual development of further significant advances in the art.
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The patent system seeks not only superior inventions but also but also a multiplicity of
inventions.
Vornado Air Systems v. Duracraft Corp.,58 F. 3d 1498 (10th.Cir.1995) In this respect, it is
significant that the framers of the patent system did not require an inventor todemonstrate an invention's superiority to existing products in order to qualify for a
patent. That they did not do so tells us that the patent system seeks not only superior
inventions but also a multiplicity of inventions. A variety of choices is more likely to
satisfy the desires of a greater number of consumers than is a single set of products
deemed "optimal" in some average sense by patent examiners and/or judges. And the
ability to intermingle and extrapolate from many inventors' solutions to the same
problem is more likely to lead to further technological advances than is a single, linear
approach seeking to advance one "superior" line of research and development.
The incentives provided by patents leads to inventions being discovered earlier than they
otherwise would have been.
Kewanee Oil Co. v. Bicron Corp.416 US 470 (1974) The ripeness-of-time concept of
invention, developed from the study of the many independent multiple discoveries in
history, predicts that if a particular individual had not made a particular discovery others
would have, and in probably a relatively short period of time. If something is to be
discovered at all very likely it will be discovered by more than one person. Singletons andMultiples in Science (1961), in R. Merton, The Sociology of Science 343 (1973); J. Cole &
S. Cole, Social Stratification in Science 12-13, 229-230 (1973); Ogburn & Thomas, Are
Inventions Inevitable?, 37 Pol. Sci. Q. 83 (1922). Even were an inventor to keep his
discovery completely to himself, something that neither the patent nor trade secret laws
forbid, there is a high probability that it will be soon independently developed. If the
invention, though still a trade secret, is put into public use, the competition is alerted to
the existence of the inventor's solution to the problem and may be encouraged to make
an extra effort to independently find the solution thus known to be possible. Theinventor faces pressures not only from private industry, but from the skilled scientists
who work in our universities and our other great publicly supported centers of learning
and research.
Perspectives on patent eligibility
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Patent eligibility is interpreted as being intentionally broad to promote innovation.
Bilski v. Kappos,130 S. Ct. 3218 Congress plainly contemplated that the patent laws
would be given wide scope."Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S.Ct. 2204,
65 L.Ed.2d 144 (1980).Congress took this permissive approach to patent eligibility toensure that "`ingenuity should receive a liberal encouragement.'" Id., at 308-309,100
S.Ct. 2204(quoting 5 Writings of Thomas Jefferson 75-76 (H. Washington ed. 1871)).
Diamond v. Chakrabarty,447 US 303 The relevant legislative history also supports a
broad construction. The Patent Act of 1793, authored by Thomas Jefferson, defined
statutory subject matter as "any new and useful art, machine, manufacture, or
composition of matter, or any new or useful improvement [thereof]." Act of Feb. 21,
1793, 1, 1 Stat. 319. The Act embodied Jefferson's philosophy that "ingenuity should
receive a liberal encouragement." 309*309 5 Writings of Thomas Jefferson 75-76
(Washington ed. 1871). SeeGraham v. John Deere Co., 383 U. S. 1, 7-10 (1966).
Subsequent patent statutes in 1836, 1870 and 1874 employed this same broad language.
In 1952, when the patent laws were recodified, Congress replaced the word "art" with
"process," but otherwise left Jefferson's language intact.
CLS Bank Intern. v. Alice Corp. Pty. Ltd.,717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS
granted. Congress plainly contemplated that the patent laws would be given wide
scope.");Bilski, 130 S.Ct. at 3225("Congress took this permissive approach to patent
eligibility to ensure that `ingenuity should receive a liberal encouragement.'" (quoting
Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204)).
Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 I agree that
the definition of invention in thePatent Actis broad. Because the Act was designed in
part to promote innovation, it is only reasonable to expect the definition of invention to
be broad enough to encompass unforeseen and unanticipated technology. I cannot
however agree with the suggestion that the definition is unlimited in the sense that it
includes anything under the sun that is made by man
Parliament did not leave the definition of invention open, but rather chose to define it
exhaustively. Regardless of the desirability of a certain activity, or the necessity of
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creating incentives to engage in that activity, a product of human ingenuity must fall
within the terms of the Act in order for it to be patentable.
Patent eligibility principles limit what can be patented to ensure that what can be patented is
broad but not unlimited. In the U.S., the courts' precedents provide three judicially createdexceptions to 101's broad patent-eligibility principles.Association for Molecular Pathology v
USPTO,689 F.3d 1303 (Fed.Cir.2012). The Court concepts covered by these exceptions are
`part of the storehouse of knowledge of all men . . . free to all men and reserved exclusively to
none.'"Bilski, 130 S. Ct. at 3225
Laws of nature, natural phenomena, and abstract ideas are not patentable.
Diamond v. Chakrabarty,447 US 303 (1980) This is not to suggest that 101 has no
limits or that it embraces every discovery. The laws of nature, physical phenomena, andabstract ideas have been held not patentableThus, a new mineral discovered in the
earth or a new plant found in the wild is not patentable subject matter. Likewise,
Einstein could not patent his celebrated law that E=mc[2]; nor could Newton have
patented the law of gravity. Such discoveries are "manifestations of . . . nature, free to all
men and reserved exclusively to none.
Diamond v. Diehr, 450 U.S. 175 (1981).This Court has undoubtedly recognized limits to
101 and every discovery is not embraced within the statutory terms. Excluded fromsuch patent protection are laws of nature, natural phenomena, and abstract ideas "A
principle, in the abstract, is a fundamental truth; an original cause; a motive; these
cannot be patented, as no one can claim in either of them an exclusive right."
Mayo Collaborative v. Prometheus Labs.,132 S. Ct. 1289 (2012) We find that the
process claims at issue here do not satisfy these conditions. In particular, the steps in the
claimed processes (apart from the natural laws themselves) involve well-understood,
routine, conventional activity previously engaged in by researchers in the field. At thesame time, upholding the patents would risk disproportionately tying up the use of the
underlying natural laws, inhibiting their use in the making of further discoveries
The Court has repeatedly emphasized this last mentioned concern, a concern that patent
law not inhibit further discovery by improperly tying up the future use of laws of nature
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These statements reflect the fact that, even though rewarding with patents those who
discover new laws of nature and the like might well encourage their discovery, those laws
and principles, considered generally, are "the basic tools of scientific and technological
work."Benson, supra, at 67, 93 S.Ct. 253.And so there is a danger that the grant ofpatents that tie up their use will inhibit future innovation premised upon them, a danger
that becomes acute when a patented process amounts to no more than an instruction to
"apply the natural law," or otherwise forecloses more future invention than