Do Patents Incentivise Innovation?

The patent system can serve as an incentive for innovation, but it doesn’t exist simply to reward innovators.  Indeed, it explicitly does not reward all types of innovation.

The central purpose of the patent system is to encourage public disclosure of new inventions, in a way that enables them to be used.  It should provide a monopoly, therefore, only on inventions which would not otherwise have been disclosed or obvious.  There are many discoveries or bits of knowledge that cost money and create value but are not patentable, such as the discovery of a natural correlation, data on where to place a new shop and where in the shop to place purchasable items for most effective marketing, cosmetic changes to the way something is presented, non-original but critically important replicated steps for clinical testing and scale-up etc.

In affirming a judgment of patent invalidity Lord Justice Jacob made the following observation:

“There are old or obvious ideas which take a lot of work, expense and time to develop and turn into something practical and successful.   Without the incentive of a [patent] monopoly, people may not do that work or spend the time and money.  The Fosamax case, Teva v Gentili [2003] EWHC 5 (Patent), [2003] EWCA Civ 1545, is an example of an obvious invention which cost lots to bring to market.   But patent law provided no protection for all that investment because the basic invention was obvious.   The courts’ job is not, however, to uphold any claim to a monopoly for an idea which requires investment and risk to bring to market, only those for ideas which are new, non-obvious and enabled. “

Angiotech Pharm., Inc. v. Conor MedSystems Inc., [2007] EWCA Civ 5, ¶ 50(Court of Appeal 2007)(Jacob, L.J.) , aff’g, [2006] EWHC 260 (Pat)(Pumfrey, J.)(High Court 2006)

Thus, there is no sense in which a large company “deserves” a patent because it has made a large investment, unless it has provided enabling public disclosure of a new invention.  Unfortunately  many patent applications in biological sciences do not describe inventions, but discoveries, and many barely meet the standard of “enabling public disclosure”, for example those providing sequence listings or structural descriptions in a form that is not accessible to the public to search readily.

Furthermore, patents sometimes serve as barriers to investment, both intellectual and financial.  Countless small and medium enterprises have discovered that venture capitalists are reluctant to invest in their technologies because of uncertainty as to whether there is freedom to operate in view of pending patent claims by other entities.  “Patent pending” is sometimes a powerful way to impose a particular partnership arrangement, even though another pathway might have been more innovative.