Intellectual Property Primer

a lex-warrier initiative

Patent – bane or boon?

This article is contributed by Shri. R.S. Praveen RajSenior Scientist, CSIR – NIIST, Thiruvananthapuram (India). He worked as Examiner of Patents & Designs (prior to joining CSIR) in Indian Patent office – Chennai branch, which is under Office of the Controller General of Patents, Designs, Trademarks and Geographical Indications (Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Govt. of India)

The philosophy behind the grant of Patent is “Suffer less evil for more good” and the purpose is to stimulate the investment in industrial innovation. When somebody invents a new product or process, which is capable of industrial application and discloses it to the Public through patent office, the Government may grant a Patent i.e. the right to exclude his competitors from the commercial exploitation of the invention within the country so that the expenses involved in the R & D could be recovered.

By virtue of the grant Patentee gets the exclusive right to prevent the third parties (not having his consent) from the act of making, using, offering for sale, selling or importing the patented product or process within the territory of grant. Therefore, Patent confers the right to preclude the competitors and not essentially to the commercial exploitation by himself. This makes patent a kind of monopoly granted by the Government (Sovereign).

Origin of the patent system

Although, there is evidence suggesting that something like patents was used among some ancient Greek cities the origin of patents for invention is obscure. It is found that the first recorded ‘patent’ for an industrial invention was granted in 1421 in Florence (A city in central Italy) to an architect and Engineer Filippo Brunellesche (A three-year monopoly on the manufacture of a barge with hoisting gear to move marble).

However,Britain owns the longest continuous patent tradition, which finds its root in the 15th century when the English Crown started making specific grants of privilege termed “Letters Patent” to manufacturers and traders providing them with a “monopoly” to produce particular goods or provide particular services. Patent (‘patere’ in Latin) means to be open’i.e. open to public inspection.

So, “Letters patent” were the open letters addressed by the sovereign “to all people to whom these presents shall come” marked with the King’s Great Seal granting a right, monopoly, title, or status to someone or some entity such as a corporation. (This grant is the opposite of letters close, which are personal in nature and sealed so that only the recipient can read the contents of the letter).

The earliest known English patent for invention was granted by Henry VI to Flemish-born John of Utynam in 1449. The patent gave John a 20-year monopoly for a method of making stained glass, required for the windows of Eton College that had not been previously known in England. This was the start of a long tradition by the English crown of the granting of “letters patent” which granted “monopolies” to favoured persons who helped the king in war or otherwise.

This power intended to raise money for the crown (and the Grantee also), was widely abused as the crown granted patent in respect of all sorts of goods (salt, for example), and court began to limit the circumstances in which they could be granted. After public outcry, King ‘James I’ was forced to revoke all the existing monopolies and declare that they were only to be used for ‘projects of new invention’.

Parliament eventually restricted the crown’s power explicitly through the ‘Statute of Monopolies 1623’ under King ‘James I’  so that the King could only issue letters patents to the inventors or introducers of original inventions for a fixed number of years. Section 6 of the Statute refers to “manner[s] of new manufacture . . . [by] inventors”, and this section remains the foundation for patent law in England and Australia. In the reign of Queen Anne the rules were changed again so that a written description of the article was given for the grant. The Statute of Monopolies was later developed to produce modern patent law.

Patent: Is it really a monopoly?

The patents are sometimes referred to as monopolies but that is not always true. In economics a monopoly (Greek monos (one) + polein (to sell)) is defined as a market situation where there is only one provider of a product or service. In other words monopoly is “the exclusive control of a commodity or service in a given market’ held by force or by virtue of grant from the sovereign. It concentrates income to the holder of the monopoly at the expense of those who do not hold that monopoly and hence interferes with freedom of trade.

Patent cannot be viewed as a monopoly as it is not granted to something, which is already in public domain. So nothing is taken out of the Public. People can compete with a patented product with advanced technology even while a patent is in force but they need to bring out the products based on different ideas. Thus a patent behaves like a grant of real property right, in that the owner of a house may exclude others from using it, but he certainly does not have a monopoly over the real estate market.

Also when we cannot establish the time at which monopoly will end and competition will begin, we limit the time for which a patent is granted. That is, we are setting the time at which the inventor will no longer be able to demand a price in excess of the zero marginal cost of his intellectual property. Therefore, Patent gives the ability to preclude competition and not the monopoly in the abstract.

Necessity of a patent system

In order to invent something new and to develop it to a stage that is commercially viable huge investments in terms of money and labour are necessary in addition to the intellectual activity. But, when the invention is revealed it comes to public domain and hence the inventor has to meet with competition from his rival manufactures and therefore the return of investment is not guaranteed.

That is why many people try to work the invention secretly; but the risk of his invention being subjected to ‘reverse engineering’ persists. There comes the importance of patent system that can avert an impasse to technical advancement, which might occur otherwise. Therefore Patent system provides a social benefit, since we obtain some inventions that otherwise would not have been made. It bestows monetary reward for revealing technological innovation along with accolades for the inventor (Patent is an award for the inventor and a reward for the investor).

Grant of patent for inventions attracts investment because the commercial exploitation of the invention is possible to its fullest extent during the term of patent. Another major advantage of the patent system is that it promotes invent around concept. Patent is granted only when the invention and its operation or use and the method by which it is to be performed are fully disclosed to the patent office.

When the patentee launches the product (in which the invention is incorporated) in the market, his rival manufactures may lose the market if the product is technically advanced and cheap as compared to the existing one. The patentee can prevent others from manufacturing the same product by legal means.  But the competitors have the option to ‘invent around’ that essential product i.e. they can conduct further research and development around that product and can bring out a better invention which may result in cheaper and better product.

This is possible because the invention is already revealed through the patent office in a form understandable to a ‘person skilled in the art (technology)’ and the patentee cannot prevent the further research on the product. It paves the way for a healthy competition among the manufacturers resulting in day-to-day improvement of technology. Ultimately it enhances the economic growth of the country and life standard of the people.

Danger in the patent system

Patent system jeopardizes the developing countries and under developed countries whose technology is far behind that of developed countries. As we know patent is the right to exclude the competitors from making or importing the patented product and not exactly the exclusive right for the commercial exploitation within the country. Moreover the number of patent applications made by the foreigners in these countries amount to more than three fourth of the total.

Nationals of the developed countries may take out a patent in a developing country purely to protect the market from rival manufacturers and work the patent simply by importing the products to the developing country. It affects the domestic industry of such countries very badly because the advanced technology products imported by the patentee may be cheaper and better in quality to that of the domestic one. These domestic products cannot survive in such a market situation where consumers prefer to buy the advanced technology products, which are cheaper.

As most of the third world countries are far behind the first world countries by more than a quarter century in technology this situation may result in the total collapse of the domestic industry and hence unemployment when the patent holders enjoy the monopoly in these countries making it a mere market for dumping their products manufactured on large scale. That is why it becomes necessary that ‘the invention should be worked within the territory of the country on a commercial scale and to the fullest extent that is reasonably practicable’.

In order to prevent the abuse of patent as a monopoly for the importation of the patented article ‘patent law’ of the said countries should incorporate the provisions for ‘compulsory license’ and revocation of the patent. It is also very essential that such countries should take measures for the advancement of Research & Development and patent awareness within the country.