Sookman INET CIGI Law and Innovation Paper

8/12/2019 Sookman INET CIGI Law and Innovation Paper

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Institute for

New Economic Thinking and

Centre for International

Governance Innovation (CIGI)

Law and Innovation: Is Intellectual

Property a Path to Progress

April 12, 2014

Barry Sookman

McCarthy Ttrault LLP

[email protected]

416-601-7949
mailto:[email protected]:[email protected]:[email protected]


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Page 1 of 34DOCS 13337704

Introduction

The protection of intellectual property is an important element in promoting innovation and in

supporting markets in the trade and dissemination of innovative and creative products and

services. In some sectors, intellectual property rights is the main asset of the business.

Intellectual property rights are increasing the hard coinage earned by inventors and creators

that are used to make, use and sell innovative products, obtain financing and capital, create well

paying and rewarding jobs, obtain licensing revenues, and prevent free riding.1

While it is generally unquestioned that intellectual property rights play a pivotal role in

advancing innovation, there are divergent views about whether the existing calibration of rights,

particularly in the fields of copyrights and patents is appropriate or requires adjusting. Forexample, the US Congress,2the European Union3and its member states including the UK4and

Ireland,5Australia6and others have been re-examining their copyright laws in light of the

challenges posed by digital technologies. Almost every stakeholder in these debates claims its

proposals foster innovation. The major policy differences often relate to whether the innovation

should permissionless; whether rightsholders should be compensated for new uses of their

works; and the responsibilities, if any, of the innovators for infringements enabled or facilitated

by the uses of new technologies.Aereo's retransmission serviceand theGoogle Books project are

cases in point. The U.S. Congress, after just completing a major overhaul of the U.S. patent

system, is once again examining a new set of patent reforms, among them reforms targeting

patent trolls or NPEs. Stakeholders in those debates who argue for no reform, radical reforms,

or reforms in between, also advance arguments premised on an innovation agenda.7 Intellectual

property rights are also increasingly being raised in trade negotiations which has also raised

issues as to their implications for innovation.

The debates about the proper balance between exclusive intellectual property rights, exceptions

to infringement, and the public domain come from multi-disciplinary perspectives. Many

economists have researched the links between intellectual property rights and innovation. Thecourts, which play a major role in interpreting intellectual property laws, have their own views,

views which sometimes shift or change in response to the cases and challenges they have to deal

with. Given the importance of the roles played by the courts in interpreting IP laws, and in

mediating between different perspectives on what their underlying purposes are, it is important

to understand the judicial views about intellectual property rights.
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This paper has the very modest goal of explaining how some courts have viewed the purposes

and roles of intellectual property laws in relation to promoting innovation. The focus of the

paper is on the law of patents, with particular emphasis on leading appellant decisions from U.S.

and Canadian courts. The approach taken is to highlight the perspectives of the courts by setting

out sample extracts from leading cases on important areas of patent law which reflect the courtsviews about the relationship between patent law concepts and innovation.

Patents and Innovation what the courts have said

Justification for patents

Article I, 8, cl. 8, of the U.S. Constitution gives Congress the power "[t]o 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."

Graham v. John Deere Co. of Kansas City,383 US 1 (1966) At the outset it must be

remembered that the federal patent power stems from a specific constitutional provision

which authorizes the Congress "To promote the Progress of . . . useful Arts, by securing

for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries." Art. I, 8,

cl. 8.The clause is both a grant of power and a limitation. This qualified authority, unlike

the power often exercised in the sixteenth and seventeenth centuries by the English

Crown, is limited to the promotion of advances in the "useful arts." It was written against

the backdrop of the practiceseventually curtailed by the Statute of Monopoliesof the

Crown in granting monopolies to court favorites in goods or businesses which had long

before been enjoyed by the public.

It is considered a bargain (especially in Canadian patent law). The inventor secures exclusive

rights in return for new, ingenious, useful and unobvious disclosures and dedication of the

invention to the public when the term expires.

Apotex Inc. v. Wellcome Foundation Ltd., [2002] 4 SCR 153 patent, as has been saidmany times, is not intended as an accolade or civic award for ingenuity. It is a method by

which inventive solutions to practical problems are coaxed into the public domain by the

promise of a limited monopoly for a limited time. Disclosure is the quid pro quo for

valuable proprietary rights to exclusivity which are entirely the statutory creature of the

Patent Act.Monopolies are associated in the public mind with higher prices. The public
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should not be expected to pay an elevated price in exchange for speculation, or for the

statement of any mere scientific principle or abstract theorem (s. 27(3)), or for the

discovery of things that already exist, or are obvious. The patent monopoly should be

purchased with the hard coinage of new, ingenious, useful and unobvious disclosures.

Bristol-Myers Squibb Co. v. Canada (Attorney General),[2005] 1 SCR 533 It is well

understood that in Canada the grant of a patent is akin to a contract or bargain between

the patentee on the one hand and the government of Canada (representing the interests

of the general public) on the other. The patentee receives the grant of an exclusive right

to use the patented invention in Canada for a specific period of time in return for fully

disclosing the invention to the public by way of the patent specification

The grant of a patent is in the nature of a bargain between the inventor on the one handand the Crown, representing the public, on the other hand. The consideration for the

grant is double: first, there must be a new and useful invention, and secondly, the

inventor must, in return for the grant of a patent, give to the public an adequate

description of the invention with sufficiently complete and accurate details as will enable

a workman, skilled in the art to which the invention relates, to construct or use that

invention when the period of the monopoly has expired.

Teva Canada Ltd. v. Pfizer Canada Inc.,[2012] 3 S.C.R. 625 The patent system is basedon a bargain, or quid pro quo: the inventor is granted exclusive rights in a new and

useful invention for a limited period in exchange for disclosure of the invention so that

society can benefit from this knowledge. This is the basic policy rationale underlying the

Act.

Free World Trust v. lectro Sant Inc., [2000] 2 SCR 1024 Patent protection rests on the

concept of a bargain between the inventor and the public. In return for disclosure of the

invention to the public, the inventor acquires for a limited time the exclusive right to

exploit it. It was ever thus. Even before the Statute of Monopolies (1623), the Crown

rewarded an inventor with a limited monopoly in exchange for public disclosure of a

new invention and a new trade within the kingdom ... or if a man hath made a new

discovery of any thing: Clothworkers of Ipswich Case (1653), Godb. 252, 78 E.R. 147, at
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p. 148, where the court went on to say that the effect of an unjustified monopoly was to

take away free-trade, which is the birthright of every subject.

Scott Paper Co. v. Marcalus Co., 326 US 249 (1945) By the patent laws Congress has

given to the inventor opportunity to secure the material rewards for his invention for alimited time, on condition that he make full disclosure for the benefit of the public of the

manner of making and using the invention, and that upon the expiration of the patent

the public be left free to use the invention. SeeSpecial Equipment Co. v. Coe, 324 U.S.

370, 378.As has been many times pointed out, the means adopted by Congress of

promoting the progress of science and the arts is the limited grant of the patent

monopoly in return for the full disclosure of the patented invention and its dedication to

the public on the expiration of the patent.

Patent rights are statutory and the rights of inventors are only those that are conferred by the

applicable statute.

Apotex Inc. v. Sanofi-Synthelabo Canada Inc., [2008] 3 SCR 265 At the outset, it is

appropriate to refer to the words of Judson J. for this Court in Commissioner of Patents

v. Farbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius & Bruning, 1963

CanLII 2 (SCC), [1964] S.C.R. 49

There is no inherent common law right to a patent. An inventor gets his patent according

to the terms of the Patent Act, no more and no less.

The most recent reference to the law of patents being wholly statutory are the words of

Lord Walker in Synthon B.V. v. SmithKline Beecham plc, [2006] 1 All E.R. 685, [2005]

UKHL 59, at paras. 57-58:

The law of patents is wholly statutory, and has a surprisingly long history. . . . In the

interpretation and application of patent statutes judge-made doctrine has over the yearsdone much to clarify the abstract generalities of the statutes and to secure uniformity in

their application.
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Nevertheless it is salutary to be reminded, from time to time, that the general concepts

which are the common currency of patent lawyers are founded on a statutory text, and

cannot have any other firm foundation.

Patent laws goals have been summarized as having three objectives:

Aronson v. Quick Point Pencil Co.,440 US 257 (1979) First, patent law seeks to foster

and reward invention; second, it promotes disclosure of inventions to stimulate further

innovation and to permit the public to practice the invention once the patent expires;

third, the stringent requirements for patent protection seek to assure that ideas in the

public domain remain there for the free use of the public.

Balancing innovation and monopolies

Patent law is based upon the social and economic rationale of balancing encouraging innovation

and the avoidance of monopolies which can stifle competition.

Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 The Patent Clause itself

reflects a balance between the need to encourage innovation and the avoidance of

monopolies which stifle competition without any concomitant advance in the "Progress

of Science and useful Arts." As we have noted in the past, the Clause contains both a

grant of power and certain limitations upon the exercise of that power. Congress may not

create patent monopolies of unlimited duration, nor may it "authorize the issuance of

patents whose effects are to remove existent knowledge from the public domain, or to

restrict free access to materials already available."Graham v. John Deere Co. of Kansas

City, 383 U. S. 1, 6 (1966).

Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 From their inception, the

federal patent laws have embodied a careful balance between the need to promote

innovation and the recognition that imitation and refinement through imitation are both

necessary to invention itself and the very lifeblood of a competitive economy.

Graham v. John Deere Co. of Kansas City,383 US 1 (1966) Jefferson's philosophy on the

nature and purpose of the patent monopoly is expressed in a letter to Isaac McPherson

(Aug. 1813), a portion of which we set out in the margin. He rejected a natural-rights

theory in intellectual property rights and clearly recognized the social and economic
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rationale of the patent system. The patent monopoly was not designed to secure to the

inventor his natural right in his discoveries. Rather, it was a reward, an inducement, to

bring forth new knowledge. The grant of an exclusive right to an invention was the

creation of societyat odds with the inherent free nature of disclosed ideasand was not

to be freely given. Only inventions and discoveries which furthered human knowledge,and were new and useful, justified the special inducement of a limited private monopoly.

Jefferson did not believe in granting patents for small details, obvious improvements, or

frivolous devices. His writings evidence his insistence upon a high level of patentability.

Bilski v. Kappos,130 S. Ct. 3218 This Age puts the possibility of innovation in the hands

of more people and raises new difficulties for the patent law. With ever more people

trying to innovate and thus seeking patent protections for their inventions, the patent

law faces a great challenge in striking the balance between protecting inventors and notgranting monopolies over procedures that others would discover by independent,

creative application of general principles.

Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 Given the

above, the respondents argument that the object of the Act leads inexorably to the

broadest reading of the definition of invention possible is problematic and is, in my

view, based on an oversimplification of the patent regime. In the court below, Rothstein

J.A. preferred the approach taken by the majority of the U.S. Supreme Court inChakrabarty, supra. The majority read the language of the Act expansively on the basis

that the Act embodied Thomas Jeffersons philosophy that ingenuity should receive a

liberal encouragement (p. 308). The minority of the court did not wholly accept this

characterization, commenting in respect to the objective of the Act, at p. 319 of the

reasons:

The patent laws attempt to reconcile this Nations deep-seated antipathy to monopolies

with the need to encourage progress. Deepsouth Packing Co. v. Laitram Corp., 406 U.S.

518, 530-531 (1972); Graham v. John Deere Co., 383 U.S.1, 7-10 (1966). Given the

complexity and legislative nature of this delicate task, we must be careful to extend

patent protection no further than Congress has provided. In particular, were there an

absence of legislative direction, the courts should leave to Congress the decisions
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whether and how far to extend the patent privilege into areas where the common

understanding has been that patents are not available.

eBay Inc. v. MERCEXCHANGE, LLC,547 US 388 (2006) In cases now arising trial

courts should bear in mind that in many instances the nature of the patent beingenforced and the economic function of the patent holder present considerations quite

unlike earlier cases. An industry has developed in which firms use patents not as a basis

for producing and selling goods but, instead, primarily for obtaining licensing fees For

these firms, an injunction, and the potentially serious sanctions arising from its

violation, can be employed as a bargaining tool to charge exorbitant fees to companies

that seek to buy licenses to practice the patent. When the patented invention is but a

small component of the product the companies seek to produce and the threat of an

injunction is employed simply for undue leverage in negotiations, legal damages maywell be sufficient to compensate for the infringement and an injunction may not serve

the public interest. In addition injunctive relief may have different consequences for the

burgeoning number of patents over business methods, which were not of much economic

and legal significance in earlier times. The potential vagueness and suspect validity of

some of these patents may affect the calculus under the four-factor test.

The equitable discretion over injunctions, granted by the Patent Act, is well suited to

allow courts to adapt to the rapid technological and legal developments in the patentsystem. For these reasons it should be recognized that district courts must determine

whether past practice fits the circumstances of the cases before them. With these

observations, I join the opinion of the Court

There is an explicit trade-off inherent in the patent system between providing exclusivity and

preventing fee riding for a limited term and the associated potential drawbacks of rising prices,

the need to engage in complex rights clearance exercises and temporary reduced competition.

Mayo Collaborative v. Prometheus Labs.,132 S. Ct. 1289 (2012) Patent protection is,after all, a two-edged sword. On the one hand, the promise of exclusive rights provides

monetary incentives that lead to creation, invention, and discovery. On the other hand,

that very exclusivity can impede the flow of information that might permit, indeed spur,

invention, by, for example, raising the price of using the patented ideas once created,

requiring potential users to conduct costly and time-consuming searches of existing
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patents and pending patent applications, and requiring the negotiation of complex

licensing arrangements.

Vornado Air Systems v. Duracraft Corp.,58 F. 3d 1498 (10th.Cir.1995) Vornado suggests

that no patent law purpose is served by allowing copying of product configurations thatare not necessary to competition. We cannot agree. We find no support in the Patent Act

itself or its application for the proposition that the patent goals are limited to enhancing

competition, at least in the direct sense. To the contrary, patents operate by temporarily

reducing competition. They create monopolies to reward inventors who invent "`things

which are worth to the public the embarrassment of an exclusive patent.'"Graham v.

John Deere Co., 383 U.S. 1, 9, 86 S.Ct. 684, 689, 15 L.Ed.2d 545 (1966)(quoting Thomas

Jefferson, author of the 1793 Patent Act). Although competition ultimately may be

enhanced by the increased product supply that results from operation of the patent law,the system's more obvious objective is to give the public the benefits of technological

progress.

Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 (Binnie J, in

dissent) If the patent were refused on the oncomouse itself, it would be easy for free

riders to circumvent the protection sought to be given to the inventor by thePatent Act

simply by acquiring an oncomouse and breeding it to as many wild mice as desired and

selling the offspring (probably half of which will be oncomice) to the public.

Patent law is assumed to create incentives to invest in, engage in, and to take risks to do

research and development that foster innovation and new goods and services that benefit the

public more than the disadvantages associated with patents.

Teva Canada Ltd. v. Pfizer Canada Inc.,[2012] 3 S.C.R. 625 The patent bargain

encourages innovation and advances science and technology.

Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 There is nodoubt that two of the central objects of the Act are to advance research and development

and to encourage broader economic activity (see Free World Trust v. lectro Sant Inc.,

2000 SCC 66 (CanLII),[2000] 2 S.C.R. 1024, 2000 SCC 66, at para. 42).
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Kewanee Oil Co. v. Bicron Corp.,416 US 470 (1974) The patent laws promote this

progress by offering a right of exclusion for a limited period as an incentive to inventors

to risk the often enormous costs in terms of time, research, and development. The

productive effort thereby fostered will have a positive effect on society through the

introduction of new products and processes of manufacture into the economy, and theemanations by way of increased employment and better lives for our citizens.

Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 The applicant whose

invention satisfies the requirements of novelty, nonobviousness, and utility, and who is

willing to reveal to the public the substance of his discovery and "the best mode . . . of

carrying out his invention," 35 U. S. C. 112, is granted "the right to exclude others from

making, using, or selling the invention throughout the United States," for a period of 17

years. 35 U. S. C. 154. The federal patent system thus embodies a carefully craftedbargain for encouraging the creation and disclosure of new, useful, and nonobvious

advances in technology and design in return for the exclusive right to practice the

invention for a period of years.

Graham v. John Deere Co. of Kansas City,383 US 1 (1966) Thomas Jefferson, who as

Secretary of State was a member of the group, was its moving spirit and might well be

called the "first administrator of our patent system." See Federico, Operation of the

Patent Act of 1790, 18 J. Pat. Off. Soc. 237, 238 (1936). He was not only an administratorof the patent system under the 1790 Act, but was also the author of the 1793 Patent Act

Jefferson, like other Americans, had an instinctive aversion to monopolies. It was a

monopoly on tea that sparked the Revolution and Jefferson certainly did not favor an

equivalent form of monopoly under the new government. His abhorrence of monopoly

extended initially to patents as well. From France, he wrote to Madison (July 1788)

urging a Bill of Rights provision restricting monopoly, and as against the argument that

limited monopoly might serve to incite "ingenuity," he argued forcefully that "the benefit

even of limited monopolies is too doubtful to be opposed to that of their general

suppression," V Writings of Thomas Jefferson, at 47 (Ford ed., 1895).
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Page 10 of 34DOCS 13337704

His views ripened, however, and in another letter to Madison (Aug. 1789) after the

drafting of the Bill of Rights, Jefferson stated that he would have been pleased by an

express provision in this form:

"Art. 9. Monopolies may be allowed to persons for their own productions in literature &their own inventions in the arts, for a term not exceeding years but for no longer term

& no other purpose." Id., at 113

And he later wrote:

"Certainly an inventor ought to be allowed a right to the benefit of his invention for some

certain time. . . . Nobody wishes more than I do that ingenuity should receive a liberal

encouragement." Letter to Oliver Evans (May 1807), V Writings of Thomas Jefferson, at75-76 (Washington ed.)

Int'l Technologies Consultants v. Pilkington plc,137 F. 3d 1382 (9th.Cir.1998) The owner

of the patent is given a limited monopoly. The justification is that the public is best

served by giving inventors monopolies on commercial exploitation of their innovations

for enough time to furnish an incentive to do the work and spend the money creating

them.

Sanofi-Synthelabo v. Apotex, Inc., 470 F. 3d 1368 (Fed.Cir.2006) We have long

acknowledged the importance of the patent system in encouraging innovation. Indeed,

the "encouragement of investment-based risk is the fundamental purpose of the patent

grant, and is based directly on the right to exclude." Patlex Corp. v. Mossinghoff, 758

F.2d 594, 599 (Fed.Cir.1985). The district court relied on the testimony of Dr. Hausman

in finding that the average cost of developing a blockbuster drug is $800 million.

Importantly, the patent system provides incentive to the innovative drug companies to

continue costly development efforts. We therefore find that the court did not clearly err

in concluding that the significant "public interest in encouraging investment in drug

development and protecting the exclusionary rights conveyed in valid pharmaceutical

patents" tips the scales in favor of Sanofi.
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dissent) [T]hat the massive investment of the private sector in biotechnical research is

exactly the sort of research and innovation that thePatent Actwas intended to promote.

As this case demonstrates, even university research has to be paid for, and intellectualproperty rights are an important contributor.

We are told that in the United States (comparable statistics do not seem to be available

in Canada), a health-related biotechnology product on average costs between 200 and

350 million dollars (U.S.) to develop, and takes 7 to 10 years from the research and

development stage to bring it to market (Statistics Canada, Biotechnology Use and

Development 1999 (March 2001), at p. 25). One would think it in the public interest to

shorten the time and reduce the cost of research designed to minimize human suffering,and to reward those who develop research tools (such as the oncomouse) that might

make this possible, provided the inventors disclose their work for others to build on.

The practical application of biotechnology is in large measure the preoccupation of

enterprises that need to profit from their successes to finance continued research on a

broader front. These successes are few and far between (Statistics Canada, supra, at pp.

13-14). It seems Du Pont spent about US$15 million to fund the oncomouse research: C.

Arthur, The onco-mouse that didnt roar (1993), 138 New Scientist 4. Leder, the afore-mentioned co-inventor of the Harvard mouse, made the point to Congress as follows:

[T]he great and costly engine for invention can only be effectively driven with the

support from the private sector, motivated to serve a public need.

The patent system offers the only protection available for the intellectual product of this

research, and thus, the only hope of a fair return against the great financial risks that

investment in biotechnology entails.

There are those who question the level of incentive required to induce sufficient research

in the biomedical field. Professor Gold of McGill University argues:
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Page 12 of 34DOCS 13337704

The argument for greater patent protection should be understood for what it is: an

attempt to maximize profit, not to maximize levels of innovation. Clearly, a company

would prefer to have as large a monopoly as possible. . . . But patent law is not about

individual profit maximization; it is about maximizing the overall level of innovation in

society. The two do not necessarily go together. (E. R. Gold, Biomedical Patents andEthics: A Canadian Solution (2000), 45 McGill L.J.413, at p. 423)

Nevertheless it is indisputable that vast amounts of money must be found to finance

biomedical research. It is necessary to feed the goose if it is to continue to lay the golden

eggs. ThePatent Actembodies the public policy that those who directly benefit from an

invention should be asked, through the patent system, to pay for it, at least in part.

Momenta Pharmaceuticals v. Amphastar Pharma., 686 F. 3d 1348 Fed.Cir.2012) PerRader CJ (in dissent) Too often patent law is misunderstood as impeding more than

promoting innovation. This academic proposition, called the tragedy of the Anti-

commons in some scholarly presentations, suggests that exclusive rights impede the flow

of information and limit experimentation that might lead to the next generation of

technological advance. Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter

Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698 (1998).

In the first place, in an era of empirical research, one might ask the reason that thisacademic notion has never actually been verified. Although studied, no research has

substantiated this alleged attack on the patent system. In fact, "the effects predicted by

the anti-commons hypothesis are not borne out in the available data." Timothy Caulfield,

Human Gene Patents: Proof of Problems?, 84 Chi.-Kent L.Rev. 133, 137 (2009); see also

American Association for the Advancement of Science, INTERNATIONAL

INTELLECTUAL PROPERTY EXPERIENCES: A REPORT OF FOUR COUNTRIES 12

(2007) (finding the results of a 2006 survey of U.S. and Japanese researchers "offer very

little evidence of an `anticommons problem'" and that "IP-protected technologies

remain relatively accessible to the broad scientific community"). Surveys of academic

researchers have revealed that "only 1 percent ... report having to delay a project, and

none abandoned a project due to others' patents." Wesley M. Cohen & John P. Walsh,

Real Impediments to Academic Biomedical Re search, in 8 INNOVATION POLICY AND

THE ECONOMY 1, 10-11 (Adam B. Jaffe, Josh Lerner, & Scott Stern eds. 2008), available
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at http://www.nber. org/&mtilde;arschke/mice/Papers/cohenwalsh.pdf (citing John P.

Walsh et al., The View from the Bench: Patents, Material Transfers and Biomedical

Research, 309 SCIENCE 2002 (2005)). In other words, patents on research tools and

biomedical innovations do not significantly slow the pace of research and do not deter

researchers from pursuing promising projects.

The reason that patents have not been proven to impede more than stimulate

technological advance is simple: it does not happen. It does not happen for several

reasons. First, experiments advancing technology rarely, if ever, generate commercial

value. Thus patent owners have little, if any, incentive to license or inhibit research.

Stated otherwise, even if a patent owner wanted to sue or license potential researchers,

experiments do not produce income or a source of damages. See id. at 12.

Second, in the modern age of technology, the character of technological advance has

changed. The era when the Bell Labs or some other tech center could hire the most

promising engineers and essentially invent everything for the world has passed. With the

vast specialization of all fields of research, advances in technology require great

cooperation. A new product or a new direction in biotechnology or electronics will be

produced by cooperation between a professor in Chengdu, China, a young programmer

in Bangaluru, India, an engineer at a large corporation in Munich, Germany, a graduate

student at Tokyo University, and a team at a small start-up company in Silicon Valley.The patent system can help inform each of them of the other and bring together their

incremental advances to achieve the next generation of progress in some tiny corner of

human progress.


dissent) There is much scholarly controversy in Canada over the role of intellectual

property in biotechnology: E. R. Gold, Body Parts: Property Rights and the Ownership of

Human Biological Materials (1996); E. R. Gold, Making Room: Reintegrating Basic

Research, Health Policy, and Ethics Into Patent Law in T. A. Caulfield and B. Williams-

Jones, eds., The Commercialization of Genetic Research: Ethical, Legal, and Policy

Issues (1999), 63; T. A. Caulfield, Underwhelmed: Hyperbole, Regulatory Policy, and

the Genetic Revolution (2000), 45 McGill L.J. 437; B. M. Knoppers, Reflections: The

Challenge of Biotechnology and Public Policy (2000), 45 McGill L.J. 559; P. R. Mooney,
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Page 14 of 34DOCS 13337704

The Impetus for and Potential of Alternative Mechanisms for the Protection of

Biotechnological Innovations (March 2001), at p. 13.

Some thoughtful critics suggest that patents in this field may in fact deter rather than

promote innovation: M. A. Heller and R. S. Eisenberg, Can Patents Deter Innovation?The Anticommons in Biomedical Research (1998), 280 Science 698; Gold, Biomedical

Patents and Ethics: A Canadian Solution, supra.

On a more technical level, it is pointed out that a 20-year patent is a very long time in the

life cycle of biotechnology. A shorter patent life, with conditions more tailored to the

industry, would, it is said, provide sufficient incentive. Then there are those who

advocate the farmers privilege to avoid farmers being subject to patent enforcement in

the case of the progeny of patented plants and animals. Others advocate protection forinnocent bystanders who inadvertently make use of a genetically engineeredplant or

animal, unaware of its being patented.

The rules associated with patents are, for the most part, generally applicable across different

technological domains. However, certain other public policy considerations may be taken into

account and Congress (and Parliament) can refine the rules as public policy requires, subject in

the U.S. to complying with the Constitution.

Mayo Collaborative v. Prometheus Labs.,132 S. Ct. 1289 (2012) At the same time, patentlaw's general rules must govern inventive activity in many different fields of human

endeavor, with the result that the practical effects of rules that reflect a general effort to

balance these considerations may differ from one field to another. See Bohannan &

Hovenkamp, Creation without Restraint, at 98-100.

In consequence, we must hesitate before departing from established general legal rules

lest a new protective rule that seems to suit the needs of one field produce unforeseen

results in another. And we must recognize the role of Congress in crafting more finelytailored rules where necessary. Cf. 35 U.S.C. 161-164 (special rules for plant patents).

We need not determine here whether, from a policy perspective, increased protection for

discoveries of diagnostic laws of nature is desirable.
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Graham v. John Deere Co. of Kansas City,383 US 1 (1966) Within the limits of the

constitutional grant, the Congress may, of course, implement the stated purpose of the

Framers by selecting the policy which in its judgment best effectuates the constitutional

aim. This is but a corollary to the grant to Congress of any Article I power.Gibbons v.

Ogden, 9 Wheat. 1.Within the scope established by the Constitution, Congress may setout conditions and tests for patentability.

Association for Molecular Pathology v USPTO,689 F.3d 1303 (Fed.Cir.2012) There is no

collective right of adverse possession to intellectual property, and we should not create

one. Our role is to interpret the law that Congress has written in accordance with the

governing precedents. I would do so and would affirm the district court's rulings as to

the BRCA gene and BRCA gene segment claims.

Merck & Co., Inc. v. Apotex Inc.,2006 FCA 323 In support of their submission, Merck

and Astra also argue thatsubsection 55.2(1)is an exemption from the primary purpose

of theAct,which they say is to protect the exclusive rights of a patentee, and therefore

should be strictly construed. Again, I do not agree. In Apotex Inc. v. Wellcome

Foundation Ltd.,2002 SCC 77 (CanLII),[2002] 4 S.C.R. 153, at paragraph 37, that Court

held that patent law seeks to find a balance between encouraging innovation and sharing

the products of innovation with the public rather than simply seeking to protect the

patentee:

Moreover, in Harvard College v. Canada (Commissioner of Patents),2002 SCC 76

(CanLII),[2002] 4 S.C.R. 45, the Supreme Court of Canada also acknowledged that the

manner in which Canada has administered its patent regime reveals that the promotion

of ingenuity has at times been balanced against other considerations.Subsection 55.2(1)

is, accordingly, not an exemption from the purpose of theAct,but is an integral part

thereof by seeking to balance the rights of patentees with those of the public.

Accordingly, I can see no basis for strictly construingsubsection 55.2(1)as Merck and

Astra suggest.

It is assumed that free exploitation of ideas will be the rule to which the protection of patents is

the exception.
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Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 The attractiveness of such a

bargain, and its effectiveness in inducing creative effort and disclosure of the results of

that effort, depend almost entirely on a backdrop of free competition in the exploitation

of unpatented designs and innovations. The novelty and nonobviousness requirements

of patentability embody a congressional understanding, implicit in the Patent Clauseitself, that free exploitation of ideas will be the rule, to which the protection of a federal

patent is the exception.

Why disclosures of inventions are beneficial

A goal of patent law is to promote the disclosure of inventions. This is assumed to have several

beneficial results.

It results in inventions that would not be disclosed or devised in the absence of a patent

system.

Graham v. John Deere Co. of Kansas City,383 US 1 (1966) The difficulty of formulating

conditions for patentability was heightened by the generality of the constitutional grant

and the statutes implementing it, together with the underlying policy of the patent

system that "the things which are worth to the public the embarrassment of an exclusive

patent," as Jefferson put it, must outweigh the restrictive effect of the limited patent

monopoly. The inherent problem was to develop some means of weeding out thoseinventions which would not be disclosed or devised but for the inducement of a patent.

It results in knowledge that can be freely exploited when the patent expires. The benefit enures

both to the public that uses the invention to make products and to consumers who benefit from

exploitation by others.

Kewanee Oil Co. v. Bicron Corp.,416 US 470 (1974) In return for the right of exclusion

this "reward for inventions,"Universal Oil Co. v. Globe Co., 322 U. S. 471, 484 (1944)

the patent laws impose upon the inventor a requirement of disclosure. To insure

adequate and full disclosure so that upon the expiration of the 17-year period "the

knowledge of the invention enures to the people, who are thus enabled without

restriction to practice it and profit by its use,"United States v. Dubilier Condenser Corp.,

289 U. S. 178, 187 (1933),the patent laws require that the patent application shall

include a full and clear description of the invention and "of the manner and process of
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making and using it" so that any person skilled in the art may make and use the

invention. 35 U. S. C. 112.

Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 Soon after the adoption of the

Constitution, the First Congress enacted the Patent Act of 1790, which allowed the grantof a limited monopoly of 14 years to any applicant that "hath . . . invented or discovered

147*147 any useful art, manufacture, . . . or device, or any improvement therein not

before known or used." 1 Stat. 109, 110. In addition to novelty, the 1790 Act required that

the invention be "sufficiently useful and important" to merit the 14-year right of

exclusion. Ibid. Section 2 of the Act required that the patentee deposit with the Secretary

of State, a specification and if possible a model of the new invention, "which specification

shall be so particular, and said models so exact, as not only to distinguish the invention

or discovery from other things before known and used, but also to enable a workman orother person skilled in the art or manufacture. . . to make, construct, or use the same, to

the end that the public may have the full benefit thereof, after the expiration of the

patent term."

Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,489 US 141 Moreover, the ultimate goal

of the patent system is to bring new designs and technologies into the public domain

through disclosure.

Scott Paper Co. v. Marcalus Co., 326 US 249 (1945) The aim of the patent laws is not only

that members of the public shall be free to manufacture the product or employ the

process disclosed by the expired patent, but also that the consuming public at large shall

receive the benefits of the unrestricted exploitation, by others, of its disclosures.

By the force of the patent laws not only is the invention of a patent dedicated to the

public upon its expiration, but the public thereby becomes entitled to share in the good

will which the patentee has built up in the patented article or product through the

enjoyment of his patent monopoly. Hence we have held that the patentee may not

exclude the public from participating in that good will or secure, to any extent, a

continuation of his monopoly by resorting to the trademark law and registering as a

trademark any particular descriptive matter appearing in the specifications, drawings or
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claims of the expired patent, whether or not such matter describes essential elements of

the invention or claims.

The public disclosure through patent applications is immediately available for others to build

upon. It speeds the progress of scientific endeavor and facilitates experimentation.

Momenta Pharmaceuticals v. Amphastar Pharma., 686 F. 3d 1348 Fed.Cir.2012) Per

Rader CJ (in dissent) Thus, patents properly remain a tool for research and

experimentation because the system encourages publication and sharing of research

results. Disclosure of how to make and use the invention is the "quid pro quo" of the

patent grant. SeeJEM Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142,

122 S.Ct. 593, 151 L.Ed.2d 508 (2001).In exchange for disclosure, the inventor receives a

limited term of exclusivity to benefit from commercialization of his invention. Without

this promise of exclusivity, researchers at corporations would be forced to turn to secrecy

as the best protection for their inventions. Even academic researchers may delay

publication of results in order to maintain an edge over the competition, Cohen & Walsh,

supra at 14, and the race to the patent office helps counteract this tendency toward

secrecy by rewarding earlier disclosure. "The information in patents is added to the store

of knowledge with the publication/issuance of the patent.... [It] is not insulated from

analysis, study, and experimentation for the twenty years until patent expiration."

Classen, 659 F.3d at 1072.Rather, information shared through patent applications is

immediately available for others to build upon. It speeds the progress of scientific

endeavor. In other words, the patent system's modern benefits facilitate experimentation

far more than any hypothetical inhibition.

The public disclosure requirements to obtain a patent will stimulate further innovations.

Kewanee Oil Co. v. Bicron Corp.,416 US 470 (1974) When a patent is granted and the

information contained in it is circulated to the general public and those especially skilled

in the trade, such additions to the general store of knowledge are of such importance to

the public weal that the Federal Government is willing to pay the high price of 17 years of

exclusive use for its disclosure, which disclosure, it is assumed, will stimulate ideas and

the eventual development of further significant advances in the art.
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The patent system seeks not only superior inventions but also but also a multiplicity of

inventions.

Vornado Air Systems v. Duracraft Corp.,58 F. 3d 1498 (10th.Cir.1995) In this respect, it is

significant that the framers of the patent system did not require an inventor todemonstrate an invention's superiority to existing products in order to qualify for a

patent. That they did not do so tells us that the patent system seeks not only superior

inventions but also a multiplicity of inventions. A variety of choices is more likely to

satisfy the desires of a greater number of consumers than is a single set of products

deemed "optimal" in some average sense by patent examiners and/or judges. And the

ability to intermingle and extrapolate from many inventors' solutions to the same

problem is more likely to lead to further technological advances than is a single, linear

approach seeking to advance one "superior" line of research and development.

The incentives provided by patents leads to inventions being discovered earlier than they

otherwise would have been.

Kewanee Oil Co. v. Bicron Corp.416 US 470 (1974) The ripeness-of-time concept of

invention, developed from the study of the many independent multiple discoveries in

history, predicts that if a particular individual had not made a particular discovery others

would have, and in probably a relatively short period of time. If something is to be

discovered at all very likely it will be discovered by more than one person. Singletons andMultiples in Science (1961), in R. Merton, The Sociology of Science 343 (1973); J. Cole &

S. Cole, Social Stratification in Science 12-13, 229-230 (1973); Ogburn & Thomas, Are

Inventions Inevitable?, 37 Pol. Sci. Q. 83 (1922). Even were an inventor to keep his

discovery completely to himself, something that neither the patent nor trade secret laws

forbid, there is a high probability that it will be soon independently developed. If the

invention, though still a trade secret, is put into public use, the competition is alerted to

the existence of the inventor's solution to the problem and may be encouraged to make

an extra effort to independently find the solution thus known to be possible. Theinventor faces pressures not only from private industry, but from the skilled scientists

who work in our universities and our other great publicly supported centers of learning

and research.

Perspectives on patent eligibility
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Patent eligibility is interpreted as being intentionally broad to promote innovation.

Bilski v. Kappos,130 S. Ct. 3218 Congress plainly contemplated that the patent laws

would be given wide scope."Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S.Ct. 2204,

65 L.Ed.2d 144 (1980).Congress took this permissive approach to patent eligibility toensure that "`ingenuity should receive a liberal encouragement.'" Id., at 308-309,100

S.Ct. 2204(quoting 5 Writings of Thomas Jefferson 75-76 (H. Washington ed. 1871)).

Diamond v. Chakrabarty,447 US 303 The relevant legislative history also supports a

broad construction. The Patent Act of 1793, authored by Thomas Jefferson, defined

statutory subject matter as "any new and useful art, machine, manufacture, or

composition of matter, or any new or useful improvement [thereof]." Act of Feb. 21,

1793, 1, 1 Stat. 319. The Act embodied Jefferson's philosophy that "ingenuity should

receive a liberal encouragement." 309*309 5 Writings of Thomas Jefferson 75-76

(Washington ed. 1871). SeeGraham v. John Deere Co., 383 U. S. 1, 7-10 (1966).

Subsequent patent statutes in 1836, 1870 and 1874 employed this same broad language.

In 1952, when the patent laws were recodified, Congress replaced the word "art" with

"process," but otherwise left Jefferson's language intact.

CLS Bank Intern. v. Alice Corp. Pty. Ltd.,717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS

granted. Congress plainly contemplated that the patent laws would be given wide

scope.");Bilski, 130 S.Ct. at 3225("Congress took this permissive approach to patent

eligibility to ensure that `ingenuity should receive a liberal encouragement.'" (quoting

Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204)).

Harvard College v. Canada (Commissioner of Patents),[2002] 4 S.C.R. 45 I agree that

the definition of invention in thePatent Actis broad. Because the Act was designed in

part to promote innovation, it is only reasonable to expect the definition of invention to

be broad enough to encompass unforeseen and unanticipated technology. I cannot

however agree with the suggestion that the definition is unlimited in the sense that it

includes anything under the sun that is made by man

Parliament did not leave the definition of invention open, but rather chose to define it

exhaustively. Regardless of the desirability of a certain activity, or the necessity of
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creating incentives to engage in that activity, a product of human ingenuity must fall

within the terms of the Act in order for it to be patentable.

Patent eligibility principles limit what can be patented to ensure that what can be patented is

broad but not unlimited. In the U.S., the courts' precedents provide three judicially createdexceptions to 101's broad patent-eligibility principles.Association for Molecular Pathology v

USPTO,689 F.3d 1303 (Fed.Cir.2012). The Court concepts covered by these exceptions are

`part of the storehouse of knowledge of all men . . . free to all men and reserved exclusively to

none.'"Bilski, 130 S. Ct. at 3225

Laws of nature, natural phenomena, and abstract ideas are not patentable.

Diamond v. Chakrabarty,447 US 303 (1980) This is not to suggest that 101 has no

limits or that it embraces every discovery. The laws of nature, physical phenomena, andabstract ideas have been held not patentableThus, a new mineral discovered in the

earth or a new plant found in the wild is not patentable subject matter. Likewise,

Einstein could not patent his celebrated law that E=mc[2]; nor could Newton have

patented the law of gravity. Such discoveries are "manifestations of . . . nature, free to all

men and reserved exclusively to none.

Diamond v. Diehr, 450 U.S. 175 (1981).This Court has undoubtedly recognized limits to

101 and every discovery is not embraced within the statutory terms. Excluded fromsuch patent protection are laws of nature, natural phenomena, and abstract ideas "A

principle, in the abstract, is a fundamental truth; an original cause; a motive; these

cannot be patented, as no one can claim in either of them an exclusive right."

Mayo Collaborative v. Prometheus Labs.,132 S. Ct. 1289 (2012) We find that the

process claims at issue here do not satisfy these conditions. In particular, the steps in the

claimed processes (apart from the natural laws themselves) involve well-understood,

routine, conventional activity previously engaged in by researchers in the field. At thesame time, upholding the patents would risk disproportionately tying up the use of the

underlying natural laws, inhibiting their use in the making of further discoveries

The Court has repeatedly emphasized this last mentioned concern, a concern that patent

law not inhibit further discovery by improperly tying up the future use of laws of nature
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These statements reflect the fact that, even though rewarding with patents those who

discover new laws of nature and the like might well encourage their discovery, those laws

and principles, considered generally, are "the basic tools of scientific and technological

work."Benson, supra, at 67, 93 S.Ct. 253.And so there is a danger that the grant ofpatents that tie up their use will inhibit future innovation premised upon them, a danger

that becomes acute when a patented process amounts to no more than an instruction to

"apply the natural law," or otherwise forecloses more future invention than