History of Patent Law, Invention and Discovery, and the Justifications for Patents

1. The basic requirements in outline

A patent is granted for an invention: a new product or process involving an inventive step and capable of industrial application (s.2(1)(j)). The requirements are therefore:

1. Patentable subject matter: not excluded by sections 3 and 4.
2. Novelty: not anticipated by publication or use before the priority date (s.2(1)(l)).
3. Inventive step: a technical advance or economic significance, or both, not obvious to a person skilled in the art (s.2(1)(ja)).
4. Industrial application: capable of being made or used in an industry (s.2(1)(ac)).
5. Sufficient disclosure: a complete specification that describes the invention fully, discloses the best method, and ends with claims (s.10).

Each is treated in the Unit II notes. In Biswanath Prasad Radhey Shyam v. Hindustan Metal Industries, 1978 INSC 258, the Supreme Court said that the fundamental principle of patent law is that a patent is granted only for an invention which is new and useful, and that a mere workshop improvement or a new combination of known integers producing no new result is not an invention.

2. International history

• Privileges. Medieval sovereigns granted letters patent (open letters under the seal) conferring monopolies on traders and on importers of new crafts. They were favours, often for revenue.
• Venice, 1474. The Venetian Senate's statute gave any person who built a new and ingenious device in the city an exclusive right for ten years, provided it was reduced to working order. It contains the modern elements: novelty, utility, working, and a limited term.
• England, 1602 and 1624. In Darcy v. Allein (the Case of Monopolies, 1602) a royal monopoly over playing cards was held void at common law. The Statute of Monopolies (1624) declared monopolies void but saved, in section 6, grants for fourteen years or less to the true and first inventor of any manner of new manufacture, so long as they were not contrary to law or mischievous to the State. The phrase “manner of manufacture” remained the test of patentable subject matter in England until 1977 and in Australia today.
• United States and France. The US Constitution (1787) empowered Congress to secure to inventors for limited times the exclusive right to their discoveries; the Patent Act of 1790 followed, and the Act of 1836 created an examining Patent Office. France enacted a patent law in 1791 on a natural-rights basis.
• The nineteenth-century controversy. Free-trade economists attacked patents as monopolies. The Netherlands abolished patents in 1869 and restored them only in 1912; Switzerland had no patent law until 1888. The pro-patent side prevailed with the Paris Convention (1883).
• The twentieth century. The PCT (1970), the European Patent Convention (1973), the Budapest Treaty (1977), and finally TRIPS (1994), which made patents for twenty years in all fields of technology a condition of WTO membership.

3. Indian history

Act VI of 1856, modelled on the British Patent Law Amendment Act, 1852, gave exclusive privileges to inventors for fourteen years; it was repealed for want of royal sanction and re-enacted as Act XV of 1859. The Patents and Designs Protection Act, 1872, the Inventions and Designs Act, 1888 and the Indian Patents and Designs Act, 1911 followed; the last introduced administration by a Controller of Patents. The Bakshi Tek Chand Committee (1949–50) and the Ayyangar Report (1959) found the system served foreign patentees; the Patents Act, 1970 (in force 20 April 1972) narrowed protection to build domestic industry. TRIPS required the amendments of 1999, 2002 and 2005. The note on the 1970 Act sets these out in detail.

4. Invention, discovery and patent distinguished

The line is not always sharp. An invention often begins from a discovery; what matters is whether the claim is to the discovery itself or to a practical application of it. US law draws the same line: laws of nature, natural phenomena and abstract ideas are not patentable (Funk Brothers Seed Co. v. Kalo Inoculant Co., 1948; Mayo v. Prometheus, 2012), but a genetically engineered bacterium is “a product of human ingenuity” and patentable (Diamond v. Chakrabarty, 1980), while a naturally occurring DNA sequence, merely isolated, is not (Association for Molecular Pathology, US Supreme Court, 2013). In India the Calcutta High Court in Dimminaco AG v. Controller of Patents (2001) held that a process for preparing a vaccine was a manner of manufacture even though the end product contained living matter. A patent, finally, is not the invention but the right: a person may make an invention and never patent it, keeping it secret instead.

5. Theoretical justifications for patent protection

Fritz Machlup and Edith Penrose, in “The Patent Controversy in the Nineteenth Century” (Journal of Economic History, 1950), identified four arguments that had been used to defend patents. They remain the standard classification.

1. Natural law (property) thesis. A man has a natural property in his own ideas, and society must recognise it. Objection: if natural, why limited to twenty years, why lost to an independent inventor who files second, and why territorial?
2. Reward-by-monopoly thesis. Justice requires that the inventor be rewarded in proportion to the usefulness of the invention, and the monopoly lets the market measure it. Objection: the reward may far exceed the contribution, and much invention is simultaneous.
3. Monopoly-profit-incentive thesis. Without the prospect of exclusive profits, firms will under-invest in invention because rivals can copy. Objection: empirical studies (Mansfield, 1986; Levin and others, 1987) show patents matter greatly in pharmaceuticals and chemicals but little in most industries, where lead time and secrecy suffice.
4. Exchange-for-secrets (contract) thesis. The State grants a monopoly in return for disclosure, which enriches public knowledge. Indian law reflects it in the duty of full disclosure (s.10(4)) and revocation for insufficiency (s.64(1)(h)). Objection: inventions that could be kept secret are often kept secret anyway, and obvious inventions would be disclosed by the market.

Two later theories are added in modern answers. Edmund Kitch's prospect theory (1977) justifies early, broad patents as a means of coordinating development; Merges and Nelson (1990) reply that competition improves technology faster. Schumpeter's account of innovation as creative destruction treats temporary monopoly profit as the engine of growth. The Paper I note on theories of IPR develops these.

How this is examined

Expect a 16-mark essay on the history of patent law (international and Indian), a question on the theoretical justifications, or a short note on “invention and discovery”. For history, take section 2 in date order and close with the Indian sequence. For justifications, use the four Machlup and Penrose theses with one objection each, then section 83. For the short note, use the table and the Chakrabarty and Molecular Pathology contrast.