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University of Minnesota Law School
Cotter, Thomas F.



A. Definition (35 U.S.C. § 154(a)1)

a. A patent is a type of property right granted by gov. that grants the holder a neg.right to exclude/demand royalties from others making, using, importing, selling claimed invention during statutory patent term.

i. Blocking patents- patentees can be excluded form practicing their invention! Where rights overlap (i.e. patent on broad basic tech. and another on improvement) both have right to exclude

b. Invention= RTP (actual (built working model) vs. constructive (enabling patent disclosure)) + conception

c. Basic requirements:

i. Patentable Subject Matter (§§ 100, 101, specific exclusion)

ii. Utility (§§101, 112(a))

iii. Enablement,Written Description, and BestMode (§ § 112(a))

iv. Novelty (§102) & Statutory Bar

v. Non-obvious (§ 103)

vi. Right to exclude (§ 154(a))/ Infringement § 271

B. Types of patents

a. Utility Patents (most patents, “useful” inventions)

b. Design Patents (decorative, rather than useful, inventions)

c. Plant Patents (patents on living plants per PPA with special infringement defenses)

C. History

a. First reference in 4th cen. BC (Aristotle noted patent system idea from Hippodamus- system of rewards to those who discover things useful to the state (broad reaching)- skeptical of this to cause malfeasance

Theme: practical utilitarianism- reward creator (incentivize making) of a useful thingàsociety gets more useful things

TENSION: if citizens seek only indiv. honors, rather than community health, community might suffer. According to the authors this is inherent in system where social benefit via technological progress achieved by means of private reward

b. Patent system rooted in Italian and British traditions.

i. First system appeared in Venice in 1474- Renaissance- emphasis on individual

ii. 16th c. patent law arrives in GB as a mercantilist instrument- ‘Letters Patent”- public, available to scrutiny- inducement for foreign artisans to bring continental technologies into England!

c. King James I- widespread feeling- abuse of exclusive rightsàStatute of Monopolies 1623- 1st modern patent act- forbade king from granting monopolies, except for those true inventions in section 6.

i. First to invent system

ii. Moral Utility exception

iii. Registration rather than examination system, few patents granted

iv. Liardet v. Johnson (1778) Added “clearly and completely” describe invention rqmt at start of Industrial Rev.when value of patents shifted from the THING to the info. BEHIND the thing

d. Came to US via British Law àConstitution ART. 1, § 8, cl. 8 establishes nat’l patent system to “promote progress of science and the useful arts by securing for a limited time to authors and inventors the exclusive right to their respective writings and discoveries”

i. First Patent Act passed 1790 (examination), amended 1793 registration system

ii. 1836 Patent Act switched to examination system

iii. 1883 – Paris Convention for Protection of IP

iv. 1920’s –30’s anti-monopoly sentiment extended to patents (longer in SCOTUS)

v. 1952 Patent Act Reform

vi. 1970’s – Patent Cooperation Treaty, European Patent Convention and EPO

vii. 1980 – Biotech Revolution, creation of the Fed. Cir., Information Age patents

viii. 1994 – TRIPS Agreement

1. Changed international to be more like U.S.

a. Non-obviousness, utility, all commercial fields within PSM (pharma)

2. Changed U.S. to be more like International

a. Term: 20 years from filing instead of 17 from issue

b. Priority: Int’l evidence allowed to determine date of invention

c. Publication: 18 month publication rule § 122

d. Infringement by import/export § 271

e. Created provisional applications

ix. 2012 – Leahy-Smith AIA switches to first to file system, March 16, 2013

D. Policy/Theories

a. Locke Labor Theory- Natural, moral rights flow out of things we invest labor in. Patent law is an end-in-and-of-itself in accordance w/ ‘natural’ order of things. Taking fruits of others’ labor akin to slavery!

i. But can this be extended to IP?

1. Yes- commons of ideas, things in PD, inventor invests labor in creating something new.

2. Other side (Cotter): ideas, inventive principles, knowledge embodied in the physical good are non-rivalous/ non-excludable (see below)

b. Utilitarian/Instrumental Law Theory: we care about these exclusive rights to the extent they achieve particular goal. Property rights are a means to achieve socially beneficial end.

i. What is patent law encouraging? Invention, disclosure, innovation, financial investments

ii. Why isn’t market incentive enough? à public goods/free rider problem b/c copying is cheap

1. W.o patent law to correct for market failure, < invention created/disclosed. If invention is social good, granting inventors exclusive rights to repel fee riders to recoup $ helps.

c. Prospect Theory- Kitsch- exclusive rights permit patentees to efficiently coordinate improvements.

i. Advantage; avoids # of people investing in same thing in a disorganized manner.

ii. Other side- maybe patent racing is good? More discovery, faster?

E. Benefits of patent system- patent is a quid pro quo. . .so what is the public benefit associated w/ the exclusivity?

a. Invention- $ to invent (R&D), $ of copying is low= incentive to cop, free riders! Patents encourage invention via exclusive rights for a limited period of time so less worry re: free riders and recoup $$

b. Disclosure- patent is an open letter that contributes to “storehouse of common knowledge”, others can learn from it, figure out how to improve upon it; if want to use, can license, or use when patent expires

c. Innovation (Invention is coming up w/ the inventive principle; innovation is developing a practical application/commercially marketable embodiment of the invention)

i. Patents stimulate the initial invention (i.e. inventive principles) but also innovation (practical applications) and commercially marketable embodiments

d. Financial – patents inducing financing- empirical EV saying start ups w/ patent portfolios to better in attracting venture capital- In limited information world, speculation of future market; patent portfolios provide arguably some signal that patent firm is a worthwhile $.

F. Alternative Theory- even in absence of patent system, some invention will occur!

a. Not all inventions $! People invented pre-patent system! Other ways to induce invention.

i. First mover advantage- common in situations when copying $ is high; network effects

ii. Trade secret law- these are weaker rights; industry dependent

iii. Contract Law- Patent rights=property rights- right to exclude- potentially stronger than contract

G. Patent system is decentralized (market decides)- why shouldn’t government do this?

a. Inefficient- not enough people; lack of info- funding entity wouldn’t know what to invent

b. Politically problematic- inventing only what the government ‘wants’

c. Government can still provide incentive systems (prizes, grants, roles)

i. Important exception: things w/ high public good and less commercial value

H. Costs of the System:

a. Access/transaction $- exclusive rights limits # of people that have access and information to practice the invention; any given invention may have # components – negotiating the thicket can be $

i. This is where basic/applied research patentability comes into play- deeper you go, more cost

b. Community health could sufferà e.g. vaccines aren’t going to earn a lot of money but are very useful

c. Administrative $-not as important in US but still some in a highly technical marketplace for enforcement.

d. Monopoly $- patents are statutory monopolies of exclusive rights- tho economically isn’t always the case

i. Distributive ConsequencesàHigher $ for consumers

ii. Social inefficiency consequenceà Under perfect competition, prices = marginal cost. Monopolist makes supra competitive profit relativ to output as compared to perfect competition.

1. Consumers costs increase when the monopolist gainsà dead weight loss

I. Patent Prosecution: the administrative processing of patent applications by the PTO

a. Takes average of 2-3 yr but may take longer if you have an interference action (no IA under AIA)

b. Initial application is basically seen as a “first offer” in a series of negotiations.

i. Applicant is allowed 2 examinations before a final rejection. § 132

1. Can amend before final rejection

ii. App that examiner believes contains > 1 invention subject to restriction rqmt.

1. Applicant must elect which of the multiple ‘inventions’ to pursue

2. Non-elected claims then be field separately in a divisional app § 121

c. Term generally ends 20 yrs after filing (TRIPS). Term commences on issue 154(a)(2).

i. Maintenance fees are required to keep this up

ii. A patentee who believes claims are too broad/narrow can seek reissue so long as the deficiency occurred ‘w/o deceptive intent’ during original prosecution.

iii. Anyone can seek a reexamination of a patent in certain circumstances.

d. Most applications published after pending for 18 months § 112

e. After final rejection, inventor can:

i. Appeal: Administrative remedy thru Board of Patent Appeals & Interferences

1. Then Appeal Board to Fed. Cir. (SOR clear error); or

2. Sue the PTO in civil district court

ii. Abandon

iii. File a continuation

1. Changes made only to claims: Continuation and treated as though filed on the date of the parent application- § 120

2. Changes made to disclosures: Continuation-in-part. Only if amendments do not add “new matter,” does the CIP get benefit of earlier filing date

f. You get infringement litigation in two ways:

i. Alleged infringer files DJ action

ii. Patent owner files infringement suit

iii. Issued patents enjoy a presumption of validity; BOP lies with the challenger by C&

in other nations you want to obtain patent.

e. Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs)

i. Each member of WTO is a party to TRIPs (and many other WTO agreements).

ii. Covers patents, copyrights, trademarks, and some other subject matter.

iii. Patent provisions required few changes to US, more extensive to other countries

f. But there were still areas in which US patent law differed—e.g. “first to invent” for awarding patents.

i. AIA makes changes; “old” U.S. law still applies to patents granted on apps filed pre-3/16/2013.

ii. Aside from Congressional axn, judicial reform of patent system proceeds apace.

iii. S. Court has shown a renewed interest in patent law over the past decade or so.

iv. Patent law is still a relatively young, and constantly evolving, field.

PATENTABLE SUBJECT MATTER- what inventions are eligible for patent protection?

35 U.S.C. 101: 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 rqmts of this title.

35 U.S.C. 100: (a) The term “invention” means invention or discovery.

(b) The term “process” means process, art or method, and includes a new use of a known process, machine, manufacture, comp. of matter, or material.

A. DEFINITION: § 101 and § 100 define the categories of PSM, which cts have construed broadly (Chakrabarty). Courts have created 3 statutory exemptions to PSM:

a. (1) laws of nature (Morse, Telephone, Mayo, Myriad)

b. (2) physical phenomena (Parke-Davis, Funk, Chakrabarty, Myriad)

c. (3) abstract ideas (Benson, Bilski, Diehr, Allapat, Mayo, Myriad)

B. OVERVIEW: PSM doctrine has been in flux and goes thru periods of narrow (i.e. Funk Bros, Benson) and broad construction (Chakrabarty). Some indication from SCOTUS that we are entering an era of narrow construction (Mayo), but the Fed. Cir. has pushed back against this (Myriad)

a. NOTE: Doctrine has a decidedly “common law” flavor as opposed to strictly statutory.

i. Bilski provides a textual basis for judicially made exceptions (rqmt inventions be ‘new/useful’)

ii. These exceptions are the primary doctrinal tool that judges use to limit PSM

iii. Ct often rejects bright line approach to the doctrine (Chakrabarty, Bilski, CLS)

b. Congress has also created categories of unpatentable subject matter based on policy

i. 42 USC § 2181: Atomic weapons patent bar (concern about disclosure)

ii. § 122: Secrecy of inventions with national security impacts

iii. § 287(3) Prevents infringement recovery on medical activity patents v. dr./healthcare entities

C. LAWS OF NATURE: The discovery of a principle in natural philosophy/physical science is not patentable-Morse

a. Policy

i. LON etc. are building blocks for new invention (need robust PD for new invention)

ii. Not same incentive for discovery vs. human inventionàpatent encourages creativity/ingenuity

iii. Patent system best encourages investment in applied sciences as opposed to basic science

1. Scientific origins of a particular industrial application can be difficult to trace

2. Would create burden on open communication (necessary in the science world)

3. Maybe scientists don’t have $$ incentive ass’d w/ patent system (passion for job!)

a. But maybe would help attract venture capitalists? Get new lab rqmt?

4. Informal norms of respect in the science world- define quasi property rights

iv. Net: allowing patents to read on LON would ^ $ higher than nec. than to induce invention

v. Blocking patents- patent system allows pioneer patentee to be granted patent, improvers also. They hold blocking patents- improver/patentee can’t practice w/o each others’ permission

1. Risksà Decrease innovation to overcome block thru x- licensing/patent pools.

vi. At what point should an invention/discovery be patentable?