Caslon Analytics elephant logo title for Intellectual Property guide
home | about | site use | resources | publications | timeline   spacer graphic   Ketupa



IP history


global law







links & tags


fair use





moral rights


email & news





the arts








related pages icon



section heading icon     patents

This page looks at patents, a category of industrial property.

It covers -

It is supplemented by a more detailed note on patents, including comments on searching of the major patents databases and controversy about eBusiness Patents.

section heading icon     introduction

As noted earlier in this guide, patent and design protection (along with protection of trademarks and geographical indications) comprises the category of intellectual property known as 'industrial property'.

Most nations have enacted legislation regarding patents (for the protection of 'inventions', ie innovations in products or processes) and designs (the appearance of manufactured items).

Broad consistency across the national regimes is provided by the 1883 Paris Convention for the Protection of Industrial Property and the Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

section heading icon     patents

A patent is intellectual property protection granted for any "device, substance, method or process" that is "new, inventive and useful".

The patent gives the owner the exclusive (and legally enforceable) right to commercially exploit that 'invention' for the life of the patent, which in Australia is typically 20 years

In contrast to copyright, patent protection is not automatic. It is necessary to apply for a patent, with applications being examined by personnel at an official patent registry.

Patenting does not encompass literary or other artistic works, mathematical models, plans, "schemes or other purely mental processes". It may, however, provide protection for business methods.

Grant of a patent for an invention provides the owner with a right to exclude others from making, using or selling the patented invention during the term of the patent. In return for that grant the owner must make public a complete description of the invention.

Patent protection for 'inventions' dates from at least the English Statute of Monopolies of 1624, which provided a 14 year statutory protection for new devices and methods of manufacture. (The 14 years reflected contemporary apprenticeship arrangements: the inventor/manufacturer training successive apprentices, each indentured for a seven year terms).

Until the closing years of last century protection was given to original inventions and manufacturing processes. Given a traditional emphasis on originality, technical progress, practicality of identification and enforcement of rights, and a wariness among courts and patent offices (the government agencies that issue patents and maintain registration databases, highlighted below) about the "general inconvenience" of overly broad patents there was a strong reluctance to provide protection for methods of doing business, eg the idea of the reverse auction.

The term 'business method' - embracing activities such as buying/selling items, marketing techniques, financial schemes and gaming strategies - was a shorthand for all non-technical and thus unpatentable inventions.

That changed with the 1998 State Street and Priceline patents in the US, with US courts deciding that internet-related methods such as the online reverse auction and one-click shopping cart should be protected.

Abraham Lincoln, initially better known as a very successful corporate lawyer than a politician, praised the US patent system as "adding the fuel of interest to the fire of genius." In recent years it seems to have been adding petrol to the fiery debate about the basis and extent of intellectual property.

The US courts did not define 'business method' and, say some observers, the US Patent & Trademarks Office (USPTO) has accordingly been trying to fill a conceptual void with a body of comments, hints and guidelines.

Reception ouside the US has been mixed. The European Patent Convention - the collective of EU patent offices - has moved to recognise business method patents but, so far, has disdained to closely identify what they comprise and rejected the Priceline reverse auction and Amazon 'one-click' applications. A perspective is provided by Hartmut Pich's 2003 paper Why Amazon One Click Shopping is patentable under the proposed EU Directive.

A 2000 study by Oxford University and Olswang (PDF) found that although only 28% of all EPO applications were filed by US businesses, 52% of business method applications came from the US. Risto Saevas' masters thesis (PDF) considers software patent decisions by the EPO.

In Australia the landmark ruling was that in the 2001 Welcome Real-Time v Catuity case, with the Federal Court finding that a method of using information technology within a business system could comprise patentable subject matter under the Patents Act 1990. The implications of that decision are being digested by legal theorists, courts and the Australian Industrial Property Office (AIPO), the counterpart of the USPTO and EPO. The Advisory Council on Intellectual Property (ACIP) formed a working group on business method patents in 2002.

section heading icon     Australian and overseas legislation

Australian patent legislation includes -

1990 Patents Act (here), giving the patent owner the exclusive right to commercially exploit the invention (any device, substance, method or process which is "new, inventive and useful") for the life of the patent

1987 Plant Variety Rights Act and 1994 Plant Breeder's Rights Act (here), two PBR enactments that provides exclusive commercial rights to market a new variety of plant or its reproductive material

In New Zealand the salient legislation is the

Patents Act 1953
Plant Variety Rights Act 1987

In the UK the Patents Act 2004 came into effect on 1 January 2005.

The Paris Convention for the Protection of Industrial Property, concluded in 1883, is one of the bases of the international intellectual property system and is a counterpart to the Berne Convention. It applies to industrial property in the broadest sense: inventions, trademarks, industrial designs, utility models (a form of patent under the laws of some countries), trade names and geographical indications (indications of source and appellations of origin). As of December 2002 some 164 states were part of the Convention.

The Patent Cooperation Treaty (PCT), concluded in 1970, makes it possible to simultaneously seek patent protection for an invention in each of a large number of countries by filing an 'international' patent application. Such an application may be filed by anyone who is a citizen or resident of a contracting state. The Treaty regulates formal requirements with which any international application must comply.

section heading icon     studies

The history of the UK and US patent systems is explored in Neil Davenport's The United Kingdom Patent System (London: Kenneth Mason 1979), Henry Dutton's The Patent System & Inventive Activity During the Industrial Revolution (Manchester: Manchester Uni Press 1984), Josh Lerner's 2000 NBER paper 150 Years of Patent Protection, Stacy Jones' The Patent Office (New York: Praeger 1971), Bruce Bugbee's The Genesis of American Patent & Copyright Law (Washington: Public Affairs 1967) and The Growing Complexity of the United States Patent System (PDF) by John Allison & Mark Lemley. Precursors are explored in Openness, Secrecy, Authorship: Technical Arts and the Culture of Knowledge from Antiquity to the Renaissance (Baltimore: Johns Hopkins Uni Press 2004) by Patricia Long.

An introduction to the international regime is provided by Stephen Ladas' Patents, Trademarks & Related Rights: National & International Protection (Cambridge: Harvard Uni Press 1975) and Sources of Industrial Leadership: Studies of Seven Industries (Cambridge: Cambridge Uni Press 1999) edited by David Mowery & Richard Nelson. For Australia see in particular Intellectual Property Law and Innovation (Cambridge: Cambridge Uni Press 2007) by William van Caenegem and Patent Law in Australia (Pyrmont: Lawbook Co 2008) by Colin Bodkin.

Aubrey Silberston's The Economic Impact of the Patent System (Cambridge: Cambridge Uni Press 1973), Brigitte Andersen's Technological Change & the Evolution of Corporate Innovation: The Structure of Patenting 1890-1990 (Cheltenham: Elgar 2001), Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk (Princeton: Princeton Uni Press 2008) by James Bessen & Michael Meurer andKnowledge & Competitive Advantage: The Coevolution of Firms, Technology and National Institutions (Cambridge: Cambridge Uni Press 2003) by Johann Murmann explore patent protection as an incentive/disincentive for innovation.

They are complemented by Doron Ben-Atar's Trade Secrets: Intellectual Piracy and the Origins of American Industrial Power (New Haven: Yale Uni Press 2004), Patents, R&D & Productivity (Chicago: Uni of Chicago Press 1984) edited by Zvi Griliches, the 2006 World Health Organization Intellectual Property Rights, Innovation and Public Health report and Knowledge & Innovation in the New Service Economy (Cheltenham: Edward Elgar 2000) edited by Birgitte Andersen, Jeremy Howells, Richard Miles & Joanne Roberts. Kees Gispen's Poems in Steel: National Socialism & the Politics of Inventing from Weimar to Bonn (New York: Berghahn 2002) is rich in insights. We have explored broader questions of innovation and competition in our Economy guide and in the 'fair use' page later in this guide.

For an empirical study questioning the value of patents per se see Sequential Innovation, Patents & Imitation (PDF) by James Bessen & Eric Maskin of MIT and The Patent Paradox Revisited, a 1999 paper by Bronwyn Hall & Rose Ham. There is a defence in Thomas Mandeville's Understanding Novelty: Information, Technological Change & The Patent System (Norwood: Ablex 1996), Wesley Cohen's 2000 NBER paper Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not) and Stephen Ladas' Patents, Trademarks & Related Rights. An overview is provided in the US National Academies study Patents in the Knowledge-Based Economy, Zvi Griliches' R&D and Productivity: The Econometric Evidence (Chicago: Uni of Chicago Press 1998) and work by Robert Gordon cited elsewhere on this site.

Questions about patenting sports moves and training are highlighted in 'Legal Responses To The Challenges Of Sports Patents' by Derek Bambauer in 18(2) Harvard Journal of Law & Technology (2005) (PDF), 'It's Your Move - No its Not! The Application of Patent Law to Sports Moves' by J. A. Smith in 70(3) University Of Colorado Law Review (1999) 1051-1087 and Christoph Kolonko's 2006 dissertation Restraints of Trade in Sport: An International and South African Perspective (PDF).

Most e-business patent disputes end in partnerships or licensing agreements: a company can generate enormous revenue by licensing its patents and several companies such as (which has sued Microsoft for alleged infringements) are now valued primarily for their IP. For a view of litigation see Mark Lemley's 2000 paper Who's Patenting What? An Empirical Exploration of Patent Prosecution, Kimberly Moore's 2001 Judges, Juries and Patent Cases - An Empirical Peek Inside the Black Box and the 2001 paper Characteristics of Patent Litigation: A Window on Competition by Jean Lanjouw & Mark Schankerman. Some idea of the money involved in such litigation is provided in a table of US court awards and sales data compiled by Greg Aharonian and in the articles by Chris Holt.  

The Australian Industrial Property Office (AIPO), the local version of the US Patent Office, has recently published an online version of its detailed Manual of Practice & Procedure. Australian law is discussed in Patent Law in Australia (Pyrmont: Lawbook Co 2008) by Colin Bodkin and in Australian Patent Law (Chatswood: Butterworths 2005) by D Bucknell, K Beattie, A Goatcher & H Rofe.

The National Academies study noted above maps business method patents in relation to internet/e-commerce patents and software patents.

The Maastricht University Portal on Information Economy & Intellectual Property (here) points to some EU studies. There is more detail at Bernard Lang's Software Patentability Debate site. Insights are also offered on the European Intellectual Property Association (EIPAWEB) site.

section heading icon     statistics

The number of patents issued by the US Patent & Trademark Office increased 36% between 1997 and 1999. In 2000 around 170,000 patents were issued. In Australia 69,000 patent applications were made (PDF).

In 2003-4 some 18,000 trademarks, 900 designs and 3,000 patents were registered in New Zealand. The same year saw renewal of 9,310 trademarks, 600 designs and 8,570 patents.

It took 210 years to issue the first six million patents in the US; many envisage that another six million will be issued in the next 10 years. 

More detailed figures are available in the July 2001 US National Academies study Statistical Mapping of Business Method Patents (PDF).

icon for link to next page     next page  (designs)

this site
the web





version of July 2008
© Bruce Arnold | caslon analytics