Defining the Public Interest in the US and European Patent Systems

Patents appear to be governed through a homogeneous international system. While the system is organized by national and regional jurisdiction, the governing institutions, organized interests, and technical and legal experts involved in each look virtually the same. So too do the laws that reward inventors of new technologies with exclusive rights, which operate according to seemingly straightforward criteria: novelty, inventiveness, utility, and sufficient description in the application. These similarities are the result of more than a century of negotiation, from the 1883 Paris Convention to the World Trade Organization's 1994 Trade-Related Intellectual Property Rights (TRIPS) Agreement, which harmonizes rules for patentability, for copyrights that are awarded for authored work, and for trademarks that protect brand names and symbols. In recent years many countries have also signed bilateral and multilateral trade agreements to strengthen these similarities. Governments and inventors argue that together, these treaties form a global regime that makes it easier for inventions to travel, for inventors to reap rewards across borders, and for markets to become transnational.

But this apparent uniformity masks key differences in the legacies, makeup, and dynamics of the world's patent systems. Throughout this chapter I demonstrate that for centuries even the United States and Europe, who have led most of these harmonization efforts, have understood patents and their appropriate governance quite differently. And they have embodied different definitions of the public interest in their patent systems. These approaches are the result of deep but often overlooked differences in political culture and ideology. These differences matter because they help to explain how and why the United States and Europe would respond so differently to life-form patents, and why their political environments began to look so different as the two jurisdictions navigated these controversies. They also call into question the depth of international patent harmonization.

From almost their earliest days, European governments treated patents as moral and socioeconomic objects that could produce monopolies with both positive and negative effects. They were guided by political ideologies that envisioned the marketplace as a part of a larger and preexisting moral order that they had a duty to shape and maintain. Thus, patent-system institutions had a responsibility to protect the public from harms, which included affronts to public morality, inequitable distribution of goods, risks to national security, and eventually infringements of human rights. The United States eschewed this definition of patents in moral terms and emphasized their status as legal and technical objects. The US government's role was simply to set the conditions for the market to flourish, with the assumption that market activity would ultimately produce the public interest. The inventor's interest, in other words, was the public interest. With this came somewhat different stakeholders, rules, and practices, as well as institutional roles and responsibilities. Over the course of the twentieth century, with the rise of economic harmonization efforts across the world and the development of a pan-European patent system, patent systems in the United States and Europe looked increasingly similar. But, the two places still thought about patents, their governance, and the public interest quite differently. As we will see, these differences would eventually reassert themselves and take on new meaning in the life-form patent debates.

Patents as Moral and Socioeconomic Objects

Patent systems emerged first in fifteenth-century Venice and England, as tools to enable the royal courts to create and expand markets. These courts bestowed patents upon entrepreneurs as privileges, allowing them to commercialize a technology exclusively in a particular jurisdiction. In return, the royal courts received revenues from the often-substantial fees they charged the entrepreneurs, while also benefiting economically from additional market activity, technological development, and technology transfer in the jurisdiction.

But by the sixteenth century, these patents had begun to provoke occasional public anger and frustration in England, because some patent holders used their privileges to set extremely high prices for their goods. This caused particular resentment in the case of patents on daily necessities, including salt and oil. Worried that this could lead to a revolt, the English Parliament issued the 1623 Statute of Monopolies to limit the power of patent holders in a variety of ways. It restricted patent length to fourteen years, calculating that this would give inventors the exclusive advantage of training two generations of apprentices to learn to make and use a new technology (previously, the patent term was set by the royal court, and could be essentially infinite). It required patent holders to make the invention in the country within a limited period of time or risk revocation. The statute also prohibited patents that were contrary to law or caused harm to the state by raising commodity prices, hurting trade, or being generally "inconvenient." Interpreted later as a public-interest clause that prohibited certain categories of inventions based on public policy or morality concerns, at the time the statute referred to inventions that might cause riots or other kinds of public disorder.

With this law, the English government envisioned circumstances in which patents could contravene the public interest. They could, for example, restrict access to some goods and provoke political dissent. And rather than placing the responsibility for such effects on patent holders, it understood patents themselves as having the potential to produce harms. It also understood that it was responsible for stepping in to reduce these harms and to ensure the benefits of patents. To put it bluntly, the government considered itself responsible for shaping the impacts of patents and the market.

More than a century later, the French began to develop what is now known as the "modern" patent system. They reconceptualized patents as bundles of natural legal rights, rather than simply as exclusive privileges, that gave their owners greater power and focused on rewarding innovation rather than just entrepreneurship. France's 1791 patent law also included a "failure to work" provision and an ordre public clause that echoed the public-interest language in the Statute of Monopolies. The French understood the ordre public clause to prohibit patents on any technology deemed contrary to public policy or morality. Again, the state defined patents as potentially having both beneficial and problematic effects, and it assumed the responsibility of determining when an invention was morally or social problematic and then intervening to ameliorate these problems. But this clause, which would eventually play an important role in the twentieth-century life-form patent debates, was not unique to patent law. An ordre public clause would appear in many French administrative laws in the wake of the revolution as a means of demonstrating the "sovereignty of the people." While the meaning of this clause has evolved over the centuries, it has always retained the idea that politicians and administrators should be working on behalf of the public.

This understanding of patents as having multiple — but primarily socioeconomic — impacts on the public interest, potentially hurting citizens, distorting markets, and stifling technological and industrial growth, continued into the nineteenth century. In 1844, the French banned patents on foods and pharmaceuticals, continuing to link patents to the reduced access that might result from patent-based monopolies. It was immoral, they decided, to allow patents that might restrict access to such essential items. This law also strengthened the idea that certain kinds of innovation should be kept separate from market forces. By this time, other European countries had begun to establish patent systems, and many included public-interest clauses, categorical exceptions to patents on daily necessities, and "failure to work" provisions. There were, however, differing interpretations: Italy used the public-interest exception to disallow patents "detrimental to health," for example, while Ireland prohibited "inventions liable to cause an increase in the price of commodities, a hindrance to the freedom of commerce or any other public inconvenience." The British banned patents on "improper sexual appliances" during the Victorian era. And some countries simply banned patents on food and pharmaceuticals, while others prohibited patents on pharmaceutical products but allowed patents on the processes of producing them, hoping that competition and lower prices would result if multiple inventors could market the same product with exclusive rights of commercialization only on the process. While all of these countries saw patents as having moral meaning, they differed in how they interpreted this meaning and in the technologies and patents that they saw as most problematic.

These laws suggest that many European governments were ambivalent about patents in the nineteenth century, and they took on the responsibility of intervening to minimize negative impacts. But things changed in the twentieth century. Many governments became convinced that patents were key to economic growth, particularly because the US and German systems, as I discuss in the next sections, seemed so successful. In addition to participating in the 1883 Paris Convention, some countries began to roll back their patent prohibitions. But there was still concern about the monopolies patents produced. In addition, the two world wars had generated worries that patents could essentially become weapons if foreign inventors used them to restrict the availability of important technologies — including pharmaceuticals — that might be needed on the battlefield.

So European countries developed softer provisions. These included compulsory licensing, which gave governments the power, under specified circumstances, to step in and force patent holders to allow others to make and sell an invention if the patent holder either refused to do so or set the prices of its invention too high. The first such language appeared in Germany's 1911 Patent Law, which allowed compulsory licensing if it was "called for in the public interest." But the language spread quickly after 1925, when the Paris Convention was revised to recognize governments' rights to pass compulsory licensing laws. (The United States did not incorporate such a law, as I discuss later in this chapter.) Over the next few years, most European countries incorporated some version of compulsory licensing in their patent laws. As they did so, many removed blanket prohibitions on food and pharmaceutical patents. They calculated that compulsory licensing laws would give their governments the power and flexibility to step in if these products were not made available at the lowest possible prices, while still empowering patent holders.

In sum, European countries have a long history of conceptualizing patents as innovation and market drivers as well as moral and socioeconomic objects. Although patents could provide necessary incentives for innovation, they could also influence public morality, social and economic welfare, and national security directly. Governments took an active role in trying to minimize these negative effects, while encouraging the patent system's benefits for economic growth. The public's interest, in other words, was in balancing these benefits and harms. Governments also consistently retained the power to shape the marketplace, even by intervening after a patent was issued and used. While many European countries began to think about patents more positively by the early twentieth century, they still had laws on the books that reflected this wariness and their understanding that government had an active role in shaping social life, which included the marketplace.

Patents as Techno-Legal Objects

At first glance, the patent system envisioned by the founders of the United States looked quite similar to the one that the French built. Like the French, early Americans saw patents as legal rights granted to inventors of new technologies. They articulated these rights in the US Constitution, giving Congress the power "To 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." The founders also seemed to agree that promising patent exclusivity to inventors would stimulate innovation, which would in turn produce and expand markets. But these exclusive rights only lasted for a limited period of time, to ensure that others could build upon the invention and develop new, potentially patentable, technologies themselves.

But as the system developed, it became clear that the United States understood patents somewhat differently than its European counterparts. The patent laws that gave the system its shape in the late eighteenth and early nineteenth centuries did not articulate any explicit considerations or exceptions on the basis of the public interest; rather, they envisioned patents as technical objects that drove innovation and markets but had minimal — if any — impacts on public morality or access to technology. They emphasized objectivity and transparency in patent-system procedures and the importance of technical expertise in reviewing applications. As policy controversies emerged and were resolved through the nineteenth century and into the twentieth, the US patent system seemed to settle on the idea that the public interest would be best served if the patent system and the market were left alone to work, with government playing a minimal, certifying role.

A Scientific Approach to Patent Decision Making

Passed by the US Congress in 1790, the first patent law provides early clues about this orientation. Creating rules for how the system should function, it articulated for the first time an examination system. Most contemporary European systems required only that inventors register their patents with the government, but the 1790 law required the US secretaries of state and war, and the attorney general, to review the utility and importance of inventions. The new court system would adjudicate disputes over these decisions or over a patent's novelty.

The law required, also for the first time in any national law, that applicants submit a written "specification" and a "draft or model." These submissions were necessary "to enable a workman or other person skilled in the art of 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." Early administrators of the patent system then put some of these drafts and models of inventions on public display, to promote patents as points of civic pride. They were part of efforts to promote "industrial tourism" and to increase the production of "useful knowledge." Historian Mario Biagioli and others have argued that the public availability of the written specifications and models, coupled with low application fees, invited a much larger group of potential inventors than did the intellectual property systems that existed in Europe at the time. Indeed, the patent system, the inventions themselves, and the details regarding these inventions were more accessible than ever before. These scholars suggest that this made the innovation process more democratic. Viewed differently, however, these elements assumed that the public was composed of either inventors or potential inventors, ready for and interested in engaging in the innovation process. This approach also assumed that the interests of inventors and non-inventors were the same, and that they would all benefit from a strong patent regime that produced more technologies for the marketplace. This was, in essence, the moral basis of the US patent system.

The 1836 Patent Act, which established the basic institutions and rules for the system that the United States knows today, reinforced this early approach. Importantly, it defined patents as techno-legal objects to be governed with procedural objectivity. With this law, Congress created a central patent bureaucracy (then the Patents Office, now known as the Patent and Trademark Office, PTO) that would review applications and grant patents. The law authorized an examining clerk and two assistant clerks to review applications. One of these assistant clerks had to be a machinist and the other a "competent draughtsman" who possessed both technical knowledge and the skill to produce engineering drawings. Both had to have the expertise to ensure that all granted patents were "new and useful" inventions. Patent applicants could appeal these examiners' decisions to an internal appeals board, made up of experienced machinists and draftsmen (known today as the Patent Trial and Appeal Board) and ultimately to the courts. A commissioner of patents, appointed by the president of the United States, would oversee the bureaucracy's work. But the courts would play a central role in negotiating patent disputes, interpreting patent law, and developing case precedent.