Source: http://www.barrysookman.com/2014/04/13/law-and-innovation-is-intellectual-property-a-path-to-progress/
Timestamp: 2019-04-25 22:47:40+00:00

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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.
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. For example, the US Congress, the European Union and its member states including the UK and Ireland, Australia and 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 service and the Google 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. 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. The courts, 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.
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 courts’ views about the relationship between patent law concepts and innovation.
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 practices—eventually curtailed by the Statute of Monopolies—of 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.,  4 SCR 153 patent, as has been said many 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 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.
The grant of a patent is in the nature of a bargain between the inventor on the one hand and 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.,  3 S.C.R. 625 The patent system is based on 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. Électro Santé Inc.,  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 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 a limited 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. See Special 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.
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 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 years done much to clarify the abstract generalities of the statutes and to secure uniformity in their application.
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.
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.
Patent law is based upon the social and economic rationale of balancing encouraging innovation and the avoidance of monopolies which can stifle competition.
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 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 society—at odds with the inherent free nature of disclosed ideas—and 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 not granting monopolies over procedures that others would discover by independent, creative application of general principles.
The patent laws attempt to reconcile this Nation’s 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 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 being enforced 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 may well 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.
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 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 that are 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),  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 the Patent 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.,  3 S.C.R. 625 The patent bargain encourages innovation and advances science and technology.
Harvard College v. Canada (Commissioner of Patents),  4 S.C.R. 45 There is no doubt 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. Électro Santé Inc., 2000 SCC 66 (CanLII),  2 S.C.R. 1024, 2000 SCC 66, at para. 42).
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 crafted bargain 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.
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).
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.
Harvard College v. Canada (Commissioner of Patents),  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 the Patent Act was intended to promote.
As this case demonstrates, even university research has to be paid for, and intellectual property 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.
[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….
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. The Patent Act embodies 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) Per Rader 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 this academic 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 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),  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, 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 for “innocent bystanders” who inadvertently make use of a genetically engineered plant 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, patent law’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.
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 set out 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.
Moreover, in Harvard College v. Canada (Commissioner of Patents), 2002 SCC 76 (CanLII),  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 the Act, 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 construing subsection 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.
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 Clause itself, that free exploitation of ideas will be the rule, to which the protection of a federal patent is the exception.
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 those inventions 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.
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 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. See JEM 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.
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 to demonstrate 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.
Patent eligibility is interpreted as being intentionally broad to promote innovation.
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). See Graham 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)).
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 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.
Laws of nature, natural phenomena, and abstract ideas are not patentable.
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 of patents 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 the underlying discovery could reasonably justify.
Mental processes cannot be patented. Gottschalk v. Benson, 409 U.S. 63, 67 (1972).
Products of nature cannot be patented. Chakrabarty, 447 U.S. at 313 (“[T]he relevant distinction for purposes of § 101 is . . . between products of nature . . . and human-made inventions.”).
There are exceptions to patentability in Canada as well.
Tennessee Eastman Co. et al. v. Commissioner of Patents,  SCR 111 The provisions of the Patent Act (R.S.C. 1952, c. 203, now R.S.C., c. P-4) relevant to this case include first, the definition of “invention” namely subs. (d) of s. 2 above referred to “invention” means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter… This must be read subject to s. 28(3) which is as follows: No patent shall issue for an invention that has an illicit object in view, or for any mere scientific principle or abstract theorem.Having come to the conclusion that methods of medical treatment are not contemplated in the definition of “invention” as a kind of “process”, the same must, on the same basis, be true of a method of surgical treatment. In this connection, I would note that in Imperial Chemical Industries v. Commissioner of Patents, the Exchequer Court decided that an anaesthetic was a substance “intended for medicine” within the meaning of s.41(1), relying on the decision of this Court in Parke Davis & Co. v. Fine Chemicals of Canada Ltd. in which it was held that the word “medicine” should be interpreted broadly so as to include the product in bulk as well as in dosage form.
Harvard College v. Canada (Commissioner of Patents),  4 S.C.R. 45 The sole question in this appeal is whether the words “manufacture” and “composition of matter”, in the context of the Patent Act, are sufficiently broad to include higher life forms. If these words are not sufficiently broad to include higher life forms, it is irrelevant whether this Court believes that higher life forms such as the oncomouse ought to be patentable. The grant of a patent reflects the interest of Parliament to promote certain manifestations of human ingenuity. As Binnie J. indicates in his reasons, there are a number of reasons why Parliament might want to encourage the sort of biomedical research that resulted in the oncomouse. But there are also a number of reasons why Parliament might want to be cautious about encouraging the patenting of higher life forms. In my view, whether higher life forms such as the oncomouse ought to be patentable is a matter for Parliament to determine. This Court’s views as to the utility or propriety of patenting non-human higher life forms such as the oncomouse are wholly irrelevant.
Having considered the relevant factors, I conclude that Parliament did not intend to include higher life forms within the definition of “invention” found in the Patent Act. In their grammatical and ordinary sense alone, the words “manufacture” and “composition of matter” are somewhat imprecise and ambiguous. However, it is my view that the best reading of the words of the Act supports the conclusion that higher life forms are not patentable. As I discuss below, I do not believe that a higher life form such as the oncomouse is easily understood as either a “manufacture” or a “composition of matter”. For this reason, I am not satisfied that the definition of “invention” in the Patent Act is sufficiently broad to include higher life forms. This conclusion is supported by the fact that the patenting of higher life forms raises unique concerns which do not arise in respect of non-living inventions and which are not addressed by the scheme of the Act. Even if a higher life form could, scientifically, be regarded as a “composition of matter”, the scheme of the Act indicates that the patentability of higher life forms was not contemplated by Parliament. Owing to the fact that the patenting of higher life forms is a highly contentious and complex matter that raises serious practical, ethical and environmental concerns that the Act does not contemplate, I conclude that the Commissioner was correct to reject the patent application. This is a policy issue that raises questions of great significance and importance and that would appear to require a dramatic expansion of the traditional patent regime. Absent explicit legislative direction, the Court should not order the Commissioner to grant a patent on a higher life form.
The exceptions to patentability are not applied too aggressively in the U.S. to avoid “swallowing patent law entirely”.
Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289 (2012) The Court has recognized, however, that too broad an interpretation of this exclusionary principle could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.
CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS granted. Thus, even inventions that fit within one or more of the statutory categories are not patent eligible if drawn to a law of nature, a natural phenomenon, or an abstract idea. The underlying concern is that patents covering such elemental concepts would reach too far and claim too much, on balance obstructing rather than catalyzing innovation. But danger also lies in applying the judicial exceptions too aggressively because “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012). Taken too far, the exceptions could swallow patent law entirely.
CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS granted. “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101 (2006). Short and unadorned, § 101 appears deceptively simple on its face, yet its proper application to computer-implemented inventions and in various other fields of technology has long vexed this and other courts.
Patent laws requirements that an invention be novel, nonobvious, useful, and be fully described are intended to balance the goals of stimulating innovation without impeding progress.
Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 Taken together, the novelty and nonobviousness requirements express a congressional determination that the purposes behind the Patent Clause are best served by free competition and exploitation of either that which is already available to the public or that which may be readily discerned from publicly available material. See Aronson v. Quick Point Pencil Co., 440 U. S. 257, 262 (1979) (“[T]he stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the use of the public”).
Harvard College v. Canada (Commissioner of Patents),  4 S.C.R. 45 (Binnie J, in dissent) The check on the indiscriminate grant of patents lies in the established criteria of utility, novelty and non-obviousness. Those are the criteria judged by Parliament to be relevant to its statutory purpose, which is to encourage ingenuity by rewarding its disclosure.
The novelty requirement ensures that patent law does not impede innovation by ensuring that information in the public domain cannot be removed by patent law (or in the U.S.) State law.
Kewanee Oil Co. v. Bicron Corp., 416 US 470 (1974) “The Court has also articulated another policy of the patent law: that which is in the public domain cannot be removed therefrom by action of the States.
“[F]ederal law requires that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent.” Lear, Inc. v. Adkins, 395 U. S., at 668.
Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 For Jefferson, a central tenet of the patent system in a free market economy was that “a machine of which we were possessed, might be applied by every man to any use of which it is susceptible.” 13 Writings of Thomas Jefferson 335 (Memorial ed. 1904). He viewed a grant of patent rights in an idea already disclosed to the public as akin to an ex post facto law, “obstruct[ing] others in the use of what they possessed before.” Id., at 326-327. Jefferson also played a large role in the drafting of our Nation’s second Patent Act, which became law in 1793. The Patent Act of 1793 carried over the requirement that the subject of a patent application be “not known or used before the application.” Ch. 11, 1 Stat. 318, 319. A defense to an infringement action was created where “the thing, thus secured by patent, was not originally discovered by the patentee, but had been in use, or had been described in some public work 148*148 anterior to the supposed discovery of the patentee.” Id., at 322. Thus, from the outset, federal patent law has been about the difficult business “of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.” 13 Writings of Thomas Jefferson, supra, at 335.
Sections 102(a) and (b) operate in tandem to exclude from consideration for patent protection knowledge that is already available to the public. They express a congressional determination that the creation of a monopoly in such information would not only serve no socially useful purpose, but would in fact injure the public by removing existing knowledge from public use. From the Patent Act of 1790 to the present day, the public sale of an unpatented article has acted as a complete bar to federal protection of the idea embodied in the article thus placed in public commerce.
The “not obvious” requirement refuses protection to new developments where the differences between the subject matter sought to be patented and the prior art are such that the subject matter would have been obvious to a person of ordinary skill in the art.
Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 In addition to the requirements of novelty and utility, the federal patent law has long required that an innovation not be anticipated by the prior art in the field. Even if a particular combination of elements is “novel” in the literal sense of the term, it will not qualify for federal patent protection if its contours are so traced by the existing technology in the field that the “improvement is the work of the skillful mechanic, not that of the inventor.” Hotchkiss v. Greenwood, 11 How. 248, 267 (1851). In 1952, Congress codified this judicially developed requirement in 35 U. S. C. § 103, which refuses protection to new developments where “the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person of ordinary skill in the art to which said subject matter pertains.” The nonobviousness requirement extends the field of unpatentable material beyond that which is known to the public under § 102, to include that which could readily be deduced from publicly available material by a person of ordinary skill in the pertinent field of endeavor. See Graham, 383 U. S., at 15.
Apotex Inc. v. Sanofi-Synthelabo Canada Inc.,  3 SCR 265 The definition of invention in s. 2 of the Act is relevant because at the time the pre-October 1, 1989 version of the Act was in force, there was no statutory provision expressly providing that obvious inventions were unpatentable. As explained by Professor D. Vaver in Intellectual Property Law: Copyright, Patents, Trade-marks (1997), at p. 136:Until very recently, the Patent Act did not expressly say that obvious inventions were unpatentable. Courts implied this criterion from the notion of “invention”. Inventions implied inventive ingenuity, without which an advance was obvious; and patents are not granted for the obvious.
The disclosure requirement serves the purpose of enabling third parties to make and use the invention and to know the boundaries of the invention. The public is supposed to know what is “safe and lawful”.
Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) As a member of the patent board for several years, Jefferson saw clearly the difficulty in “drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not.” The board on which he served sought to draw such a line and formulated several rules which are preserved in Jefferson’s correspondence.Despite the board’s efforts, Jefferson saw “with what slow progress a system of general rules could be matured.” Because of the “abundance” of cases and the fact that the investigations occupied “more time of the members of the board than they could spare from higher duties, the whole was turned over to the judiciary, to be matured into a system, under which every one might know when his actions were safe and lawful.” Letter to McPherson, supra, at 181, 182. Apparently Congress agreed with Jefferson and the board that the courts should develop additional conditions for patentability. Although the Patent Act was amended, revised or codified some 50 times between 1790 and 1950, Congress steered clear of a statutory set of requirements other than the bare novelty and utility tests reformulated in Jefferson’s draft of the 1793 Patent Act.
Bristol-Myers Squibb Co. v. Canada (Attorney General),  1 SCR 533 The function of the description contained in the specification is both to enable the construction and use of the devices contained therein after the expiry of the patent, and also to enable others to ascertain with some measure of exactness the boundaries of the exclusive privilege upon which they may not trespass during the existence of the grant.
Patents with claims that are too broad, questionable validity or are vague have the potential to stifle innovation and result in patent thickets.
Free World Trust v. Électro Santé Inc.,  2 SCR 1024 The scope of patent protection must not only be fair, it must be reasonably predictable. A patent is, after all, a public instrument issued under statutory authority which may result in severe financial consequences for its infringement. The scope of its prohibition should be made clear so that members of the public may know where they can go with impunity. As was said in another public law connection by Gonthier J. in R. v. Nova Scotia Pharmaceutical Society, 1992 CanLII 72 (SCC),  2 S.C.R. 606, at p. 639, precision in public enactments is required to “sufficiently delineate an area of risk”.
The patent system is designed to advance research and development and to encourage broader economic activity. Achievement of these objectives is undermined however if competitors fear to tread in the vicinity of the patent because its scope lacks a reasonable measure of precision and certainty. A patent of uncertain scope becomes “a public nuisance” (R.C.A. Photophone, Ld. v. Gaumont-British Picture Corp. (1936), 53 R.P.C. 167 (Eng. C.A.), at p. 195). Potential competitors are deterred from working in areas that are not in fact covered by the patent even though costly and protracted litigation (which in the case of patent disputes can be very costly and protracted indeed) might confirm that what the competitors propose to do is entirely lawful. Potential investment is lost or otherwise directed. Competition is “chilled”. The patent owner is getting more of a monopoly than the public bargained for. There is a high economic cost attached to uncertainty and it is the proper policy of patent law to keep it to a minimum.
* I would like to thank Claire Gowdy, an articling student with McCarthy Tetrault for her research assistance with this paper.
 See, Intellectual Property and the U.S. Economy: Industries in Focus, Economics and Statistics Administration and the USPTO, March 2012; Intellectual property rights intensive industries: contribution to economic performance and employment in the European Union Industry-Level Analysis Report, European Patent Office and the EU Office for Harmonization in the Internal Markets, September 2013; WIPO Studies on the Economic Contribution of the Copyright Industries (2013); Copyright Industries in the U.S. Economy: The 2013 Report, Canadian International Council, Rights and Rents: Why Canada must harness its intellectual property resources.
 See, U.S. House of Representatives Subcommittee on Courts, Intellectual Property, and the Internet, Scope of Fair Use, January, 28, 2014, http://judiciary.house.gov/index.cfm/2014/1/the-scope-of-fair-use, and Section 512 of Title 17, March 13, 2014, http://judiciary.house.gov/index.cfm/2014/3/section-512-of-title-17, USPTO, Green Paper on Copyright Policy, Creativity and Innovation in the Digital Economy Julsy 2013.
I really like what you said about how many economists have researched the links between intellectual property rights and innovation. My friend is a multi-media artist who makes small sculptures, but her field is rife with people stealing and recasting the work, so she’s hesitant to market her work because she doesn’t want it stolen. Thank you for the information about how important it is to understand the judicial views about intellectual property rights.

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