Academic journal article Houston Journal of International Law

The European Patent System: An Overview and Critique

Academic journal article Houston Journal of International Law

The European Patent System: An Overview and Critique

Article excerpt

     A. French Patent Law of 1791
     B. The Paris Convention
     C. Patent Cooperation Treaty
     D. Strasbourg Convention
     E. The European Patent Convention
     F. The Community Patent Convention
     A. Extent of Protection and Rights Conferred
     B. EPO Procedures
     A. Substantive European Patentable Subject Matter.
     B. Biotechnology
     C. Software
     D. Business Methods
     E. Academic Patenting


A patent is a government-granted property right in an invention. (1) Typical rights conferred include the right to prevent use or sale of the patented invention. (2) A patent is a policy instrument designed as a trade-off to avoid secrecy in industry and promote knowledge and progress in society.

"The core of the utilitarian argument for patents is that free competition will generate an under-optimal rate of inventions, [because of] the 'public good' characteristic of knowledge." (3) Society is therefore concerned with complementing a free market with a patent system. A patent system is seen as a way to encourage additional innovation. The knowledge disclosed in a patent application ultimately becomes public knowledge, thereby benefiting society. (4)

Because knowledge does not take tangible form, knowledge is "even more public than other public goods such as roads." (5) To determine why a patent system is necessary to encourage disclosure of knowledge for the public good, we look to the economic aspects of invention. (6)

First, the cost of any inventive step is a sunk cost. (7) It is the cost that the inventor must incur through experimentation, supplies, and time before that cost can be recouped through marketing. (8) The inventor runs the risk of never being able to recoup this cost if the invention is not marketable.

Second, to reinvent "an existing piece of knowledge is a waste of social resources." (9) After invention, it is in the best interest of society that free and unlimited right to use is available to all possible users. (10)

Third, the invention may be of more benefit to other possible users than it is to the inventor. Indeed, the private inventor's benefit from an invention is often lower than the benefit to society. (11)

Fourth, "as the private return is lower than the social return, certain inventions whose social return would justify the expenditure needed to obtain them will not be made due to insufficient private return." (12) If the inventor's benefits from the invention are too small, then the investment is not justified. "Hence the competitive market mechanisms might not generate as many inventions as society would be willing to have." (13)

Fifth, "a competitive market could make things even worse, as an inventor must charge a price that will allow him to recoup his fixed cost while his competitors/imitators can charge just their marginal cost, hence driving the inventor out of business." (14) Companies who see this problem will not be willing to make an investment into the inventor's research. Without some type of legal protection, inventors and companies would have no economic incentive to disclose their inventions. These inventions would be kept secret, and others would have to reinvent--a process that would, by its nature, waste societal resources. "These various economic attributes of knowledge call for intervention by the government." (15)

The patent system solves this problem. It is a barrier that makes an invention the exclusive property of the patent owner for a limited time. (16) Under this system the patent owner can license the invention to others, or keep exclusivity, in order to obtain economic reward. (17) In fact, "this exclusive right can translate into an [extra reward] beyond the normal competitive profit, that could allow recouping the cost of research and compensating for the risk. …

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