INTRODUCTION
In its original “modern” conception the patent system was, in the words of the American Constitution, “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”. The purpose was to stimulate invention, by rewarding inventors with a right to exclude others from the use of their invention, where the reward should relate to the usefulness of the invention to society. The disclosure of information in the patent was also seen as stimulating technical progress.
Over time, the emphasis has shifted towards viewing the patent system as a means of generating the resources required to finance R&D and to protect investments. Since the patent system offers a standard level of protection in all the fields it covers, there can be no direct link between the value of the right granted for a particular invention and the costs incurred in R&D. There may be a link between the value of the monopoly and its social utility, if the demand in the market is taken as a reliable indicator of the latter. But, for developing countries in particular, this is far from being the case. The patent system cannot stimulate inventions that are useful to society if the potential beneficiaries cannot pay for them, or someone else is not prepared to pay on their behalf.
As we noted in the Overview, there are concerns about the way the system has evolved which apply to developed countries as well as developing countries. These relate in particular to the application of the patent system to the new generation of technologies, particularly in the life sciences and information technology. The development of biotechnology has been accompanied by the more widespread patenting of living things, whose patentability was confirmed in the US by the Supreme Court case of Diamond versus Chakrabarty in 1980.[1] S[D1]imilarly the development and growing sophistication of information and communications technology has been accompanied by the extension of patenting to computer software in the US.
This extension to new technologies, has been accompanied by greater use of the patent system. In the US, and to a lesser extent worldwide, the number of patents granted has been rapidly rising. Between 1981 and 2001, the number of patents granted in the US has increased from 71000 to over 184000, an increase of 159%. In the last five years the rise has accelerated, the number of patents granted has increased by over 50%, compared to an increase of under 14% in the previous five years. This increase appears to reflect growth in the intensity of patenting (for example, per dollar spent on research), rather than a 50% increase in the number of inventions. In the 1990s, US R&D expenditures increased in real terms by nearly 41%, while patents granted rose by over 72% in the decade to 2001.[2]
The patent system is designed as a tool to provide an incentive to technical progress. The effectiveness with which it can do this will depend on the fit between the nature of the incentive and the processes by which technological development takes place. But whereas the patent system has uniform criteria to judge patent applications, the pattern of technical progress may vary significantly in different fields. The patent system fits best a model of progress where the patented product, which can be developed for sale to consumers, is the discrete outcome of a linear research process. The safety razor and the ballpoint pen are examples, and new drugs also share some of these characteristics.
By contrast in many industries, and in particular those that are knowledge-based, the process of innovation may be cumulative, and iterative, drawing on a range of prior inventions invented independently, and feeding into further independent research processes by others.[3] Knowledge evolves through the application of many minds, building often incrementally on the work of others. Sir Isaac Newton modestly wrote a long time ago: “If I have seen further it is by standing on the shoulders of giants.”[4] Moreover much research consists of the relatively routine development of existing technologies. For instance, gene sequencing, formerly a labour intensive manual technique, is now a fully automated process, involving little creativity. The development of software is very much a case of building incrementally on what exists already. Indeed, the Open Source Software Movement depends precisely on this characteristic to involve a network of independent programmers in iterative software development on the basis of returning the improved product to the common pool.
In practice, it is often difficult to distinguish between “discrete” and “incremental” or “cumulative” research processes, because research is carried out in so many ways and there is often a serendipitous element. But for the most part, the “cumulative” model now seems to fit more research than the “discrete” model. A patent system, which evolved with the latter concept in mind, may not be optimal for the former. Thus, as Merges and Nelson point out:
“Ultimately it is important to bear in mind that every
potential inventor is also a potential infringer. Thus a
"strengthening" of property rights will not always increase incentives
to invent; it may do so for some pioneers, but it will also greatly increase an
improver's chances of becoming enmeshed in litigation… When a broad patent is granted…its scope
diminishes incentives for others to stay in the invention game, compared again
with a patent whose claims are trimmed more closely to the inventor's actual
results. This would not be undesirable if the evidence indicated that control
of subsequent developments by one party made subsequent inventive effort more
effective. But the evidence, we think, points the other way.”[5]
The crucial issue here is the extent to which the patent system as it has now evolved in the developed world, and which the developing world is being pressed to adopt, will provide appropriate incentives for invention. One of the fundamental dilemmas here is the large number of patents on technologies that may be outputs of one research process, but are possible inputs into one or several downstream processes. One example is the issue of patenting “research tools.”[6]
In concert with the expansion of patenting in the private sector, public research institutions have been accelerating the transfer of the technologies that they develop by patenting. In the US, this approach was encouraged by the introduction of the Bayh-Dole Act in 1980, and the policy has since spread to other developed countries and, increasingly, to the more technologically advanced developing countries. Patents awarded annually to US universities have increased nearly tenfold, from less than 350 in the 1970s to over 3000 in 2000. The share of patents granted to academics in the US has increased from 0.5% to 2% of the total over the same period.[7] This policy, according to some, has stimulated a flow of inventions from universities and promoted their commercialisation, to the wider economic benefit of society. For others, it raises concerns about the possible restriction of access to research findings or their utilisation by others; the possible distortion of research priorities in the public sector, and as to whether the increase in patenting is a valid indicator of the acceleration of technology transfer. We consider what these concerns about the patent system in developed countries mean for developing countries.
First, in order to avoid the possibility of encountering similar problems to the developed world, developing countries should try to devise patent systems to take account of their particular economic and social circumstances. Both patent offices and legislatures in developing countries need be fully aware of the commercial and social impact of the approach they take in devising and implementing patent policy. The more technologically advanced developing countries may wish to adopt systems that provide extensive patent protection as incentives for R&D. On the other hand, they would also wish to avoid those aspects of the system which could provide disincentives to R&D, in particular follow-on innovation. They would wish to avoid resources being diverted to litigation and disputes about patents of doubtful validity, and rent-seeking[8] behaviour amongst rights holders of doubtful social benefit. Such systems would need to have adequate safeguards to ensure a competitive environment, and to minimise costs for consumers. Because much of the scientific and technological expertise in developing countries is concentrated in the public sector, there will need to be careful consideration of the implications of patenting by research institutions and universities. Countries which have a weak scientific and technological infrastructure will have less reason to adopt extensive patent protection, given that most of their technology is imported.
Secondly, a very difficult issue concerns how the interests of developing countries should be reconciled with the current pressures to harmonise the international patent system with the standards of the developed countries. This issue is raised by both the increase in the number of patent applications which is imposing heavy demands on the resources of many patent offices, and the recognition that there is considerable duplication of effort in the system, particularly with regard to the need to submit multiple applications for a single invention in different jurisdictions. Such duplication could be avoided by harmonising differences in standards and criteria in search and examination procedures. For some, the ultimate goal is an international patent, valid throughout the world and based on a single application process. But if, as we argue, developing countries should be encouraged to devise patent systems that suit their individual circumstances and objectives, which themselves will vary according to their stage of development, how should developing countries then proceed?
The crucial questions for developing countries which arise from the discussion above are:
· How should developing countries frame their patent legislation and practice? What measures can developing countries adopt in general to minimize the possible adverse effects of patenting regimes?
· Should developing countries encourage their public sector research institutions to patent their inventions?
· To what extent does the patent system inhibit research relevant to developing countries? Is the patenting of research tools a problem for developing countries?
· What would be the optimal approach for developing countries to take in relation to patent harmonisation?
Introduction
We believe that in considering the design of their patent systems, developing countries should adopt a pro-competitive strategy that, as one observer suggests, is tilted towards second comers rather than distant patentees.[9] This is especially important in those areas of technology such as pharmaceuticals and agriculture where, as we have already considered, the cost of providing strong protection is likely to be greatest. Such a pro-competitive strategy is best realised by seeking to restrict the scope of patent protection provided.
This should be
achieved, within the constraints of international and bilateral obligations,
by:
·
limiting the
scope of subject matter that can be patented
·
applying
standards such that only patents which meet strict requirements for
patentability are granted and that the breadth of each patent is commensurate
with the inventive contribution and the disclosure made
·
facilitating
competition by restricting the ability of the patentees to prohibit others
from building on or designing around
patented inventions
·
providing
extensive safeguards to ensure that patent rights are not exploited
inappropriately
·
considering the
suitability of other forms of protection to encourage local innovation.
We consider below how these objectives can be put into practice.
Historically, as we have seen, countries have adapted their patent regimes to encourage, discourage or more often prohibit patents in certain areas of technology. The advent of TRIPS, with its requirement for a more consistent approach to different fields of technology,[10] has reduced the options available to patent legislators. Nevertheless drafters of patent legislation still have a significant array of tools, even if some of them have been blunted by TRIPS. Numerous books and texts detailing the range of options available under TRIPS have been produced.[11] In the following paragraphs we describe some of these options and consider their relevance to the type of pro-competitive patent regime that we recommend for the majority of developing countries. We also consider how some of the recommendations relating to patent policy made in the preceding chapters on health and agriculture can be implemented.
TRIPS requires that “patents shall be available for any inventions, whether products or processes, in all fields of technology provided they are new, involve an inventive step (non obvious) and are capable of industrial application (useful).”[12] It does not however define the term “invention”, nor does it prescribe how the three criteria for patentability are to be defined. Indeed we would note that it is not uncommon for different courts in Europe, even when applying identical law, to come to different conclusions on whether a patent is or is not obvious. There is therefore ample scope for developing countries to determine for themselves how strictly the common standards under TRIPS should be applied and how the evidential burden should be allocated.
Developed and developing countries have historically provided that certain things do not constitute inventions for the purpose of patent protection. Included in these are those set out, for example, in Article 52 of the European Patent Convention (EPC):
a) discoveries, scientific theories and mathematical methods;
b) aesthetic creations;
c) schemes, rules and methods for performing mental acts, playing games or doing business, and programmes for computers;
d) presentations of information.
Article 52(4) of the EPC also provides that methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body shall not be regarded as inventions which are susceptible of industrial application. Article 53(b) of the EPC provides that patents shall not be granted for plant or animal varieties or essentially biological processes for the production of plants and animals
Even though subsequent EPO practice and jurisprudence have to some extent diluted the scope of these Articles,[13] it would seem entirely reasonable for most developing countries to adopt this list of exclusions as a minimum. Indeed we have already gone further by concluding in Chapter 3 that developing countries should not generally make patent protection available for all plants and animals.[14] A number of developing countries have also sought to limit further what constitutes a patentable invention. For example, the Common Industrial Property Regime of the Andean Pact countries provides that the following shall not be considered as inventions:
“Any living thing, either complete or partial, as found
in nature, natural biological processes, and biological material, as existing
in nature, or able to be separated, including the genome or germ plasm of any
living thing.”[15]
Similar provisions can be found in the legislation of Brazil and Argentina. We consider further below the question of what rules should apply to the patentability of genetic material.
The debate surrounding patent protection for certain inventions particularly those covering biological material is clearly about more than economics. For a significant number of people, in both developed and developing countries, the idea of patenting living organisms is morally wrong. This is often associated with the view that living things should not be patented because they can, by definition, only be discovered, not invented. In recent discussions within Europe on the protection to be afforded to biotechnological inventions, groups opposing patents on “life” were actively involved.[16] The final text of the resulting EC Directive[17] made some provision for excluding certain groups of inventions[18] from patent protection on moral grounds but it still allowed patents on plants and animals and genetic material. A similar debate in a developing country where domestic economic interests favouring patents on living things are likely to be weaker and where cultural and religious values often differ, might lead to a different outcome. In such a case a decision to deny patents on ethical grounds might be made for inventions claiming genetic material such as human genes. However, an exclusion of this type would be sustainable on the basis of the morality exception of Article 27.2 of TRIPS only if the prevention of the “commercial exploitation” of the invention denied a patent is deemed necessary. It is therefore debatable whether the exclusion can be applied while at the same time permitting the sale or other commercial exploitation of the invention.
Some ethical concerns about gene-based technologies may extend only to the possibility of someone claiming a monopoly over the technology, rather than to its commercial exploitation. In which case seeking an exclusion from patent protection may best be achieved by a strict application of the criteria for patentability. These include, as we have discussed above, clearly defining what constitutes a patentable invention as opposed to an unpatentable discovery, and ensuring that the concepts of novelty, inventive step and industrial utility are properly applied. We recognise that, in practice, the distinction between a discovery and an invention can be difficult to define, and this is a continuing challenge to legislators.
Issues of morality may also arise in respect of patents other than those in the biotechnology field. For example, the UK and Kenya have recently decided to reject, on moral grounds, patents on landmines.
In Chapter 4 we recommend that an absolute standard of novelty be provided such that the prior art against which novelty is judged includes disclosure through use anywhere in the world. Also, in Chapter 2, we caution against developing countries simply taking over from the comparatively recent European jurisprudence the counter-intuitive notion that a product may be regarded as new, if a new use is identified for it. Such an approach is not required by TRIPS and different views can reasonably be taken of whether it is desirable to extend protection in this way, which developing countries will wish to consider with care.
In certain jurisdictions, disclosure of an invention by the inventor in the
period, usually 12 months, preceding the filing of a patent for that invention
will not destroy the novelty of that patent. This grace period, which may be limited to disclosure only at
internationally recognised exhibitions or may cover any disclosure, is intended
to allow the patentee to seek backing or test the market for his
invention. However, in the absence of
any international harmonisation on grace periods, an inventor risks losing
patent rights in a jurisdiction not recognising grace periods because of
disclosure in one that does. For those
developing countries having few prospective patentees, there may therefore be
little to gain from providing a grace period.
At present an invention is typically considered to be inventive if it is not obvious to a person skilled in the art.[19] Some would argue that this standard as it is now applied, for example by the USPTO or the EPO, is too low resulting in a proliferation of patents for trivial inventions which may not contribute to the over-riding objective of the patent system which is the advancement of science for public benefit.
We are not aware of any
significantly higher standard being applied currently elsewhere. However, there are examples of higher
standards being applied in the past.
For example, in the first half of the 20th Century, the US
applied a “flash of creative genius” standard which would probably render the
majority of patents currently issued invalid.
For developing countries, the currently prevalent low standard of inventive step raises two concerns. The first is that as applied in developed countries, it could hinder research of importance to developing countries. The second concern is that developing countries would be expected to apply a similar standard in their own regimes. We would urge developing countries to think carefully before doing so and to explore whether a different higher standard is more desirable. One suggestion that has been made would be to require the patent applicant to demonstrate that the proposed invention reflects a standard of inventiveness higher than that which is normal in the industry involved.[20] The objective of any standard should be to ensure that routine increments to knowledge, involving minimal creative input, should not generally be patentable.
Developing countries will need to consider the possible impact of any higher standard of inventive step on the ability of domestic enterprises to protect their own innovations. We return to this issue when we consider the importance of second tiers of protection such as utility models.
The requirement that the invention has an industrial application (or utility in the US) is perhaps the only patentability requirement to have been made more stringent in recent times. This has arisen essentially because of the difficulty of determining whether certain biotechnology-related inventions, such as those covering genes or proteins, really have any industrial application. Often any such application is not evident from the invention itself. The USPTO has recently provided guidance on how utility should be assessed in cases involving DNA sequences.[21] In such cases, utility can be established only if the patent application discloses a specific, substantial and credible utility. Such a requirement is now to some extent also being applied by the EPO.[22] It is to be hoped that this new standard will prevent patents being granted on inventions for which only a speculative application is disclosed, but it may be that it does not go far enough and the impact of the new Guidelines will therefore need to be closely monitored.
Developing countries providing patent protection for biotechnological inventions [PT2]should assess whether they are effectively susceptible to industrial application, taking account of the USPTO guidelines as appropriate.
The contract with society for the granting of a patent is that a limited monopoly period will be awarded in return for which the applicant will fully disclose his invention. The extent of the disclosure considered necessary to satisfy the applicant’s part of the contract varies amongst countries. In some countries including the US, the applicant is required not only to fully disclose his invention in a manner that would enable another party to put it into practice, but must also disclose the best mode for doing so. The sanction for non-compliance is usually the loss of the patent.
Developing countries should adopt the best mode provision to ensure
that the patent applicant does not withhold information that would be useful to
third parties. [PT3]
A further issue relating to disclosure concerns the possible requirement to disclose the source of any biological material used in the invention which we discuss in Chapter 4.
The relationship between the extent of the disclosure and the scope or breadth of protection sought is another important issue. Patent regimes typically require that the invention be disclosed in the patent application in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art. The claims made should also be supported by the description of the invention. The standard applied in the UK, for instance, is that a fair statement of claim is one which is not so broad that it goes beyond the invention nor yet so narrow as to deprive the patent applicant of a just reward for the disclosure of his invention.[23] The UK Courts have also recently stated that the disclosure must be sufficient to enable all aspects of the claimed invention to be performed, and the disclosure of a single manner of putting the invention into practice will not always be sufficient.[24]
But what is meant by a broad claim? Take the example of an inventor of a new compound for the treatment of headaches. She discloses the potential use for her compound in her patent application, but her claims extend beyond that use to the compound itself, and all its potential uses. During the life of the patent, someone else establishes that the compound is also useful in treating heart disease. Is it right that the patentee can then prevent the compound being used, without her authorisation, for purposes she had not foreseen? Are such broad claims really justified on the basis of limited disclosure?
Patent laws in developed countries have typically justified this type of broad claiming on the basis that the inventor has made available to others two things: the compound itself and the first use of it. Whilst the issue of the breadth of claims is a generic one, it arises particularly in relation to the patenting of genes. As noted above, some take the view that an isolated gene (even when one or more of its functions have been determined) should not be patentable because it pre-exists in nature and would constitute a discovery rather than an invention. However, if a country opts for allowing patents over genes, it is crucial to define the possible scope of protection. At present, if a researcher isolates a gene and is granted a patent, for example, for the use of that gene as a diagnostic for a particular disease, depending upon the precise wording of the claim and the approach that the local law takes to interpretation of the patent, she may be able to assert rights over all uses of that gene, including those as yet undiscovered. Given that the isolation and identification of a gene is now a more routine procedure since the human and other genomes have been sequenced, the researcher stands to gain a level of protection which is considerably greater than her contribution. Moreover, because it is difficult for others to ‘invent around’ a gene, the researcher may be able to exercise a powerful monopoly.
A recent report on DNA patents, after considering the issue in detail, suggested that “consideration be given to the concept of limiting the scope of product patents that assert rights over naturally-occurring DNA sequences to the uses referred to in the patent claims, where the grounds for inventiveness concern the use of the sequence only and not the derivation or elucidation of the sequence itself”.[25] This would lead to the researcher being awarded only the rights to the uses that she has set out in the specification, and not all uses.
This issue is as relevant to developing countries as it is to developed countries. Therefore we suggest that developing countries conduct their own investigation into ways of ensuring that the scope of patent claims in their own jurisdictions are consistent with the disclosure. Developing countries might also wish to press for consideration of this issue within WIPO, possibly as part of the ongoing discussions on greater patent harmonisation.
If developing countries allow patents over genes as such, regulations
or guidelines should provide that claims be limited to the uses effectively
disclosed in the patent specification, so as to encourage further research and
commercial application of any new uses of the gene.
But measures to address the issue about breadth, as noted, extend beyond gene patents and should encompass broad patents in all fields of technology. While TRIPS forbids discrimination in terms of fields of technology, it is also desirable from a more general perspective to ensure that broad claims do not unfairly hamper research and competition in any field.
Applying the Standards
We have so far suggested
that developing countries should consider adopting higher standards of
patentability than those currently provided in many developed countries. But it is not sufficient just to incorporate
these standards in the legislation. It is necessary also to apply them. In
Chapter 7 we address the issues relating to
capacity, such as the scarcity of qualified personnel, which might
constrain a developing country from implementing an effective patent
policy. We also consider the type of
measures, such as contracting out the examination of patents, which might be
used to address some of these problems.
We also discuss the possibility of re-registering patents granted
elsewhere, although with such a solution it will be necessary to ensure that
sufficiently high standards are applied when examining the patent.
Whatever type of system
is adopted, it might be appropriate for developing countries to consider
providing some form of low cost opposition or re-examination procedure.[26] In Chapter 4 we highlight the value of such
procedures in overturning invalid patents covering known traditional
knowledge. The type of opposition or
re-examination procedure that a developing country might consider adopting
could be a hybrid of the types of system currently available in some developing
countries, the US and in Europe. For
example, a system that allows an opposition to be made before grant, and the
patent to be challenged at any point during the patent term through an
administrative type procedure on the basis of any question relating to
patentability, might be desirable.
When undertaking the
examination of patent applications, developing countries should seriously
consider requiring the applicant to disclose all relevant information
concerning other corresponding applications filed elsewhere for the invention.
Developing countries should also consider supplementing the judgement of patent
examiners by inviting other available experts to comment on patent
applications. In Brazil, applications
for pharmaceutical-related patents are passed for evaluation to the Ministry of
Health who may be in a better position to comment on, for example, the
inventiveness of the claimed invention.
Exceptions to Patent Rights
In Chapter 2, we recommend that developing countries introduce the so-called “Bolar exception” to patent rights to facilitate early entry of generic competition in the pharmaceutical field. We have also suggested that providing an international exhaustion regime (i.e. permitting parallel imports of patented products) may be beneficial for developing countries. Such exceptions are however not the only ones that developing countries should consider. Most European countries, for example, provide that certain acts, such as those done for private and non-commercial purposes or those relating to experimentation on the subject matter of the patent (including for commercial purposes) shall not be considered infringements of a patent. The intent behind these exceptions, which is equally relevant for developing countries, is to encourage further innovation by enabling others to build on or design around the patented invention.
A further exception that already exists in a few developing countries provides freedom to use patented inventions for teaching purposes. Justification for such an exception might come from the copyright field where “fair use” of copyrighted works for educational purposes is well established. Indeed with the growing encroachment of patents into areas previously the sole domain of copyright, for example computer programmes, the relevance of an educational exception in the patent field may increase.
We have so far