(2000; 140 pages) [French] [Spanish]
IV. PATENTABILITY REQUIREMENTS
To qualify for a patent, an inventor must show that his or her invention is novel, manifests an “inventive step” (i.e., that the invention was nonobvious) and is industrially applicable.
The manner in which these criteria are defined and applied is a crucial determinant of the pool of knowledge that is taken out of the public domain. This issue is acutely important for pharmaceuticals. The registration of a large number of patents on pharmaceutical compositions, therapeutic uses, polymorphs, processes and/or forms of administration relating to an active ingredient often permits the owner company to create a high barrier against competition. If aggressively enforced through “strategic”75, or even “sham,” litigation practices76 as a tool to discourage competition by local companies, those (secondary) patents may extend the market power conferred by the original patent77. Such abuses may be particularly severe in developing countries where there is a lack of or limited tradition in controlling such practices under antitrust regulations.
75 See, e.g., Barton, 1995.
76 The doctrine on “sham” litigation applies when a lawsuit is baseless and there is an intent to use it as a tool for monopolization (Federal Trade Commission Staff, 1996).
77 See, for instance, the US Supreme Court decision in Walker Process Equipment Inc. vs. Food Machinery & Chemical Corp. (1965) and subsequent case law on antitrust liability when there is an attempt to enforce invalid patents. See, e.g., Chandra, 1999.
It is hard to undo the granting of overly broad patents and secondary patents. Once a patent has been granted, it is presumed valid. Challenging parties bear the burden of proving that the patent was wrongly issued. Consumers, especially in developing countries, rarely have the resources to challenge overly broad patents, though they bear the cost in higher prices and decreased access to patented goods.
Strong inter-firm competition in the pharmaceutical industry has led to numerous challenges of pharmaceutical patents by affected competitors78. But smaller, generic firms in developing countries often do not have the resources to undertake such costly litigation. Moreover, the wave of mergers and acquisitions that has taken place in the 1990s has dramatically reduced the number of major players and accentuated the oligopolistic structure of the industry. This trend increases the importance of administering the patent system to protect competitors and the public from restrictions derived from patents granted on the basis of insufficiently precise patentability criteria.
78 For an analysis of the vast litigation involving pharmaceutical patents, see e.g., Cook, Doyle and Jabbari, 1991; Wegner, 1994; Hansen and Hirsh, 1997, and Grubb, 1999.
The flexibility or strictness in the application of the patentability criteria may vary across countries and over time. The correct interpretation and application of the patentability criteria are crucial for balancing public and private interests, and also to help avoid excesses that undermine the credibility of the patent system.
The eligibility standards for novelty and inventive step determine the extent to which free competition prevails79. Technologically advanced countries that invest a substantial portion of their GNP in research and development may understandably favour permissive novelty standards and low standards of inventive step. However, even these policies are increasingly controversial given the importance of incremental innovation in some sectors and the growing number of patents that protect trivial developments80. On this issue, it has been shown that a higher innovative step requirement can increase the value of patents, because patents issued under this rule are stronger and less vulnerable to challenge by competitors. In some industries, this effect outweighs any effect of having less patents81.
79See, e.g., Reichman, 1994, p. 2432, 2448-2453.
80 See, e.g., Scherer, 1981, p. 112, recommending more rigorous eligibility standards in order to avoid the protection of trivial developments. For some examples of trivial patents granted in the United States, see Feinberg, 1994. See also Patnews (Internet Patent News Services) of 14.12.99 and other issues, in relation to software and “business” patents, such as an application filed on Aug. 26, 1996, on a method for trading securities between individuals; an application filed in September 1997 (granted in November 1999) on a method of automatically accessing web page information; another one filed on June 1998 on a “Jesus doll for teaching children”. Several patent applications have also been reported in Japan in relation to the “cooking of curry” (e.g. JP7289214) and pizza and its cooking process (such as JP8116934). See also Gleick, 2000.
81 See, e.g., Hunt, 1999.
Less technologically advanced countries may prefer to set higher standards of novelty and inventive step in order to preserve and enhance competition without violating minimum international standards. In so doing, they would simply follow in the footsteps of many of today’s advanced countries which adopted similar policies when they were themselves developing countries.
Policy makers should recognize that there may be subtle relationships between novelty and inventive step. For example, in traditional U.S. patent law (especially before the creation of the Federal Circuit Court of Appeals in 1982), the non-obviousness standard was so high that courts took a relatively soft and permissive attitude to novelty. Today, when the non-obviousness bar is set very low, this permissive tradition may be anticompetitive and harmful to follow-on innovation by not filtering out patent requests that do not sufficiently depart from prior art.
Developing countries should also note that high standards of novelty/inventive step can work against local innovators who cannot themselves meet these standards. One way to address this problem is to adopt a sui generis law that deals with “minor” inventions that fail to meet the patent standard of novelty or inventive step. Examples from the European tradition include sui generis industrial design laws (that protect appearance designs) and utility model laws that can protect “minor” inventions generally. However, recent studies also propose that developing countries should adopt laws to protect unpatentable know-how on the basis of non-exclusive rights. These laws could stimulate follow-on innovation in exchange for compensation without any strong exclusionary right82.
82See, e.g., Reichman 1994, p. 2504-2558 and 1997, p. 58-75.