II. THE AUSTRALIAN POSITION: D’ARCY, CARGILL AND MORE
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I have extensive experience in patent and trademark prosecution, patent and trademark infringement litigation, trademark registration and copyright registration. Some of these rights, such as patents, are protected under federal law, while others, such as trade secrets, are a matter of state law. A patent confers a right to exclude anyone else from using an invention, even an innocent infringer who independently develops the same invention without any knowledge of the patent holder's rights.
Trade secrets, in contrast, receive more limited protection and may not be enforced against innocent infringers. Although trade secret rights are weaker than patent rights, the availability of legal protection for trade secrets under state law provides an alternative to protection that some inventors might choose in situations where patent protection is unavailable. One therefore cannot assume that withholding patent protection from research tools will improve their availability.
Given commercial interest in the development and dissemination of research tools, in the absence of patent protection, firms may be more likely to resort to trade secrecy than to dedicate their research tools to the public domain, which could aggravate the problem rather than resolve it. As long as no one else knows the Coca-Cola formula, the Coca-Cola Company does not have to worry about competition from outsiders who did not share the cost of developing it. But secrecy only works for inventions that can be exploited commercially without disclosure, such as manufacturing processes.
Many inventions and discoveries are self-disclosing once they are put on the market in the form of a product, and thereafter may only be protected through a patent. Even when secrecy is feasible, it might not be desirable. From the perspective of an innovating firm, disclosure of underlying technology might help in the marketing of a new product, and from a broader social perspective, secrecy might impede further technological progress in the field.
For some inventions, patents provide an alternative strategy for protecting intellectual property rights that does not require and indeed does not permit secrecy. To get a patent, it is necessary to file an application that includes a full disclosure of the invention and describes how to make and use it. In many parts of the world, this disclosure will be made public 18 months after the filing date of the application. In the US, the disclosure is made public when the patent is issued. Once the patent application is on file, disclosure will not jeopardize the applicant's prospects for obtaining a patent.
The Effect of the Alice Decision on Software and 3D Printing Patents
A patent gives an inventor the rights to exclude others from making, using and selling the invention for a limited term, 20 years from the application filing date in most of the world. During the patent term the inventor may choose to make, use, and sell the patented invention herself assuming this does not violate the patent rights of others or any applicable laws , or to license others to do so on an exclusive or non-exclusive basis, or even to suppress the use of the invention entirely.
One thing an inventor who wants a patent cannot do is keep the invention secret. In the industrial realm, patents are generally believed to promote technological progress in two ways: by providing an economic incentive to make new inventions and to develop them into commercial products and by promoting disclosure of new inventions to the public.
The extent to which the patent system achieves these goals is essentially an empirical question with different answers in different fields. In the absence of a patent system, it is unlikely that invention and technical disclosure would come to a standstill. Patent systems also entail social costs that need to be weighed against the benefits.
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The most obvious of these social costs is that patents create monopolies that increase the prices and reduce the supplies of the products they cover. This may be a tolerable cost for socially useful inventions that would not be made without the incentives of the patent system presumably we would prefer to have these inventions at a high price than not to have them at all , but it is a very high cost for inventions that would be developed even in the absence of patent rights.
Conferring exclusive rights on inventions that would be made without the incentive of patents reduces the use and increases the price of these inventions without furthering technological progress. Patent systems therefore use rules of law that attempt the difficult task of distinguishing between inventions that would occur even without patents and inventions that require the incentive of a patent. These legal rules call for a comparison between the invention and the "prior art," or preexisting knowledge in the field.
The basic requirements for patent protection are novelty, utility, and non-obviousness. Novelty means that the invention did not exist before. Determining whether an invention is new requires searching through certain categories of prior art to determine the state of knowledge in the field at the time that the invention was made.
Sources of prior art include prior patents, publications, and inventions that were previously in public use. If an invention was already known or used before the time that the inventor claims to have made it, the public gains nothing by conferring a patent. The patent will take something away from the public that it was previously free to use without in any way enriching the public storehouse of knowledge. The prior art is also relevant to the standard of nonobviousness.
This standard asks whether the invention constitutes a significant enough advance over what was known previously to justify patent protection. Under US law, the requirement is satisfied if, at the time the invention was made, it would not have been obvious to a person of ordinary skill in the field and who was knowledgeable about the prior art.
This determination looks to the level of inventive skill of others working in the field, as well as the state of the prior art.
In principle, the requirement might be justified as a means of distinguishing between trivial inventions that require no special incentive to call forth, and more elusive and, perhaps, more costly inventions that might not be developed without the enhanced assurance of profitability that patent protection offers. But how the standard will apply in any given case is often difficult to predict, and this uncertainty reduces the value of patents.
The utility requirement limits patent protection to inventions with practical applications, as opposed to basic knowledge. The meaning of this requirement has varied over the years from a minimal standard that the invention not be positively harmful to people to a stricter requirement in recent years of safety and effectiveness that has sometimes approached what the FDA would require for approval of a new drug.
Recent developments in the courts and in the PTO suggest that the utility requirement may be receding from its recent all-time high level as an obstacle to patent protection. The conceptual underpinnings of the utility requirement are not always clear, but in theory it can be justified as a means of distinguishing between basic research discoveries that are more likely to be effectively utilized if left in the public domain and more practical technological applications that may require a patent to ensure adequate incentives for commercial development.
The Supreme Court has stated that discoveries whose only value is as an object of scientific inquiry do not satisfy the utility standard, suggesting that utility could be an important limitation on the use of the patent system to protect research tools. In some cases, the courts have recognized what has come to be known as an experimental use exemption, or research exemption, from infringement liability. On its face, the patent statute does not appear to permit any unlicensed use of a patented invention, in research or otherwise, but language in some judicial opinions nonetheless suggests that use of a patented invention solely for research or experimentation is, in principle, exempt from infringement liability.
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The experimental-use doctrine was first expounded in by Justice Story in dictum 6 in the case of Whittemore v. It is difficult to discern the scope of this exception with any precision, inasmuch as experimental use becomes an issue only in patent infringement actions, and patent holders are unlikely to file a lawsuit against an academic researcher whose use of the invention is commercially insignificant. Judicial pronouncements on the scope of the experimental use exemption address situations in which a patent holder has found a defendant's activities sufficiently annoying to be worth the trouble of pursuing a lawsuit; this factor has undoubtedly skewed the distribution of cases in which the defense arises toward cases with high commercial stakes.
Within this universe, the experimental use defense has been frequently raised, but almost never sustained. Nonetheless, courts have consistently recognized the existence of an experimental use defense in theory, although the defense has almost never succeeded in practice. Recent case law suggests that the experimental use defense may be available only for pure research with no commercial implications, if such a thing exists. In Roche Products v. Bolar Pharmaceutical Company , 8 a decision of the US Court of Appeals for the Federal Circuit, 9 the court rejected the arguments of a generic drug manufacturer that the experimental use defense should apply to its use of a patented drug to conduct clinical trials during the patent term.
The purpose of the trials was to gather data necessary to obtain FDA approval to market a generic version of the drug as soon as the patent expired. The court characterized the defense as "truly narrow," noting that the defendant's use of the drug was "no dilettante affair such as Justice Story envisioned. Although it is not entirely clear what sort of research the court would exclude from infringement liability as a mere "dilettante affair," the language of the decision offers little hope of an exemption for research scientists who use patented inventions with an aim to discover something of potential usefulness.
It certainly suggests that the defense would be unavailable whenever the defendant's research is motivated by a commercial purpose. As a practical matter, this parsimonious approach could seriously limit the availability of the defense in fields of research with commercial significance, in which even academic researchers are often motivated, at least in part, by commercial interests.
Congress has partially abrogated the decision of the Federal Circuit in Roche v. Bolar in the specific context of clinical trials of patented drugs by an amendment to the patent statute. But the amendment did not address the broader question of when the experimental use defense would be available outside of that very narrow setting. Other countries have more broadly available experimental use defenses than the US, often explicitly included in the text of foreign patent statutes.
But even these defenses typically distinguish between experimenting on a patented invention—that is, using it to study its underlying technology and invent around the patent, which is what the exemption covers—and experimenting with a patented invention to study something else, which is not covered by the exemption. In other words, even outside the US, the defense is not available for researchers who make use of patented research tools in their own work, as opposed to those who study the research tools themselves.
It is difficult to imagine how a broader experimental use defense could be formulated that would exempt the use of research tools from infringement liability without effectively eviscerating the value of patents on research tools.
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The problem is that researchers are ordinary consumers of patented research tools, and that if these consumers were exempt from infringement liability, patent holders would have nowhere else to turn to collect patent royalties. Another way of looking at the problem is that one firm's research tool may be another firm's end product. This is particularly likely in contemporary molecular biology, in which research is big business and there is money to be made by developing and marketing research tools for use by other firms.
An excessively broad research exemption could eliminate incentives for private firms to develop and disseminate new research tools, which could on balance do more harm than good to the research enterprise. Molecular biology provides a useful focal point for examining the effect of intellectual property on the dissemination of research tools. It is a dynamic and productive field of research that provides a wealth of new discoveries that are simultaneously inputs into further research and also candidates for commercial development.
The obvious implications of discoveries in molecular biology for human health raise the stakes of striking the right balance between public access and private property, particularly when public attention is riveted upon the rising costs of health care. And it profoundly affects the interests of two different types of commercial firms—young biotechnology firms and large, integrated pharmaceutical firms—both of which are sensitive to intellectual property but for different reasons.
This dichotomy between biotechnology firms and pharmaceutical firms over-simplifies the wide range of firms with interests in molecular biology, but it is nonetheless a useful heuristic assumption to help sort through the interests of different sorts of firms. Young biotechnology firms typically need to raise funds to keep their research operations moving forward before they have products to sell to consumers. With this purpose in mind, they are likely to seek patents on discoveries that are several stages removed from a final product that is ready to be sold to consumers.
Pharmaceutical firms do not need to go to the capital markets to fund their research; they typically fund new research projects out of profits on existing products. For these firms, intellectual property is not a means of raising capital, but simply a means of ensuring an effective commercial monopoly for their products. A monopoly position in a new drug will help them recoup what might amount to hundreds of millions of dollars required for FDA-mandated clinical testing before they can bring that drug to market.
For this purpose, they seek patent rights that cover the downstream products that they sell to consumers, not the upstream discoveries that they may use along the road to product development. Since they have different reasons for requiring intellectual property rights, these different types of firms are likely to be affected differently by different legal rules. We need to keep the interests of both of these types of firms in mind, along with the interests of researchers and the institutions that fund research, as we think about how to manage intellectual property rights in research tools.
Strategies that work for some players could be disastrous for others. No legal consequences flow from designating a particular discovery as a research tool. Research tools are not categorically excluded from patent protection except insofar as they lack patentable utility , nor is the use of patented inventions in research categorically exempted from infringement liability. Nonetheless, there are reasons to be wary of patents on research tools.