links & tags
page looks at patents, a category of industrial property.
It covers -
is supplemented by a more detailed note
on patents, including comments on searching of the major
patents databases and controversy about eBusiness Patents.
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
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
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
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
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.
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.
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
New Zealand the salient legislation is the
Plant Variety Rights Act 1987
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
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
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
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
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 &
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
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 Priceline.com (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)
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
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).