Fundamentals of Patent Law: Interpretation and Scope of Protection 9781472564061, 9781841136929

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To Kate, without whose support, none of this would have been possible.

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PREFACE Mark Twain once famously observed that a country without a good patent system ‘is like a crab that can’t travel any way but sideways or backways’. Yet detailed academic analysis of the patent system in the UK is a relatively rare occurrence. My objective in writing this book was therefore to provide academic comment on an area of the law that has great commercial significance and yet is severely underexplored in critical writing. The following text aims to provide the reader with an overview of the status and development of the process of claim interpretation in the UK, and also to explore significant practical, academic and theoretical aspects of this vital subject. Its novelty lies in bringing the theoretical elements of the discussion together with the view of the profession charged with creating the patent documentation in the first place, and then examining this in the light of comparative studies recounting the position adopted elsewhere. It is only by considering all of the elements that we have before us that we begin to see a pathway for the development of the law in this area. The story of the creation of this book begins with an application submitted in the spring of 1999 for entry onto the PhD programme at the University of Bristol. At this point in time, towards the end of my undergraduate degree, I thought it would be ‘quite nice’ to do a bit more studying (and to avoid paying council tax for another year or three). I therefore decided to apply for a PhD on purely mercenary grounds – added to the aforementioned council tax avoidance, you could get funding—and had settled upon IP as the topic of choice. I had narrowed my proposed field of investigation down to either an exploration of patent claim interpretation or an examination of plant variety rights. For better or worse I chose the former, and found that I actually quite liked what I was doing. Therefore, eight years, several scores of sleepless nights, much blood, sweat and tears later, that original application has metamorphosed, via a PhD thesis, into this book. It has been a long time in gestation, and is, needless to say, far changed from that original script, not least due to the House of Lords tinkering with claim interpretation in Kirin-Amgen. But it is here, and it is my hope that it makes a contribution to the literature that was worth the effort. I should add that versions of chapters three and eight have already appeared in Intellectual Property Quarterly, as [2005] IPQ 1, and [2004] IPQ 85 respectively. So now on to the thanks. Thanks must go first to my PhD supervisor, Helen Norman, for all the advice and support in the early days of my PhD – all those little things that supervisors do to put you on the straight and narrow. To the Faculty of Law, as it was, at the University of Bristol for the scholarship it gave me to pursue my PhD. To my examiners Margaret

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Llewellyn and Andrew Charlesworth for their helpful comments and, let’s face it, for not asking me to make any amendments. Thanks must also go to Richard Hart for caring less about the details than he might (length, deadlines, etc), and to all that worked with him, in the preparation of this book, especially my editor Mel Hamill, for making this author’s relations with his publisher so unproblematic. I would also like to thank the anonymous patent attorneys who, by recounting their tales of patent drafting procedure and problems, assisted a very green PhD student on the road to his doctorate. I learned a great deal from these informal discussions. Some of those who kindly gave up their time were very encouraging, and some were not quite so positive (one notably telling me that I should give up on this line of enquiry and do a PhD on selection patents instead – needless to say, I did not), but all were helpful in their own way and provided ample food for comment. There are many other people that, whilst not directly involved in the process of creation, have supported me throughout completion of this book. I thank them all; with special mention going to Kate, to whom this work is dedicated and who was turned into a library widow in the months leading up to submission of the manuscript, but who was still there when I came home. And to my parents for their eternal support. To my little-sister Lucy for not hating me forever for bundling her up in a duvet and locking her in the wardrobe when we were small (yes, I’m sorry) and her daughter Isabella (if you ever read this, your name is in full because at the time of writing you seemed to flit between ‘Izzy’ and ‘Bella’ more frequently than most people change socks – but I suppose that’s one of the perks of being eighteen months old) for lightening the tone on so many occasions. To Sarah for putting up with me for all those years we shared a flat together. To Mark for his companionship, dry sense of humour, fine taste in alcohol (although Pimms is not to be recommended neat) and of course for the interminable, indescribable, ‘Belsey stories’. And last, but not least, to Henri for years of friendship and for offering me a closing line for the book when I was close to the end of my tether. I didn’t use it there, but will use it here instead: And with that, Charles closed the book, returned it to the shelf, and left the library ... M Fisher June 2007

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Let’s not be tyrannized by words. Let’s try to hang on for dear life to the little advances in the art of thinking about patent law that we are able to make in our lifetimes Rich, ‘Escaping the Tyranny of Words— Is Evolution in Legal Thinking Impossible?’ Reprinted in (2004) 14 Federal Circuit Bar Journal 193, at 216.

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TABLE OF CASES AC Edwards v Acme Signs & Displays Ltd [1990] RPC 621 (Ch D), [1992] RPC 131 (CA) ............................................................................ 314, 316–7 Ace Denken KK v Yuai Shoji – p113 Hanrei Jihou (Law Report) No 1390 (19 Jul 1990) ...................................................................................................... 260 Al-Site Corp v VSI International Inc, 174 F.3d 1308 (1999, CAFC)....................... 188 American Hoist & Derrick Co v Sowa & Sons, Inc, 725 F.2d 1350 (1984, CAFC)................................................................................................................ 190 American Home Products Corporation v Novartis Pharmaceuticals UK Ltd [2001] RPC 159 ................................................................................................. 368 Anchor Building Products Ltd v Redland Roof Tiles Ltd [1990] RPC 283 .............. 309 Asahi Kasei Kogyo [1991] RPC 485...................................................................... 8, 74 Assidoman Multipack v The Mead Corporation [1995] RPC 321............................................................. 241, 323, 325–6, 328–31, 333, 337 Balfour v Welland (1809) 16 Ves 151...................................................................... 302 Bayer Aktiengesellschaft v Duphar International Research, 738 F.2d 1237 (1984, CAFC)..................................................................................................... 195 Bayer/Carbonless Copying T1/80 [1979-85] B EPOR 250. ................................... 286 Beecham Group v Bristol Laboratories [1978] RPC 153................................. 297, 304 Beloit Technologies Inc v Valmet Paper Machinery Inc [1995] RPC 705 ................ 328 Biogen v Medeva [1997] RPC 1......................................................... 58, 260, 346, 369 Birmingham Sound Reproducers Ltd v Collaro [1956] RPC 232 ....................... 13–14 Boulton v Bull, 2 H BL 463, 126 ER 651 ............................................................. 45, 54 Brenner v United States 773 F.2d 306 (1985, CAFC) ............................................. 195 British Hartford-Fairmont Syndicate Ltd v Jackson Bros (Knottingley) Ltd (1932) 49 RPC 495................................................................................................. 9 Carman Industries Inc v Wahl, 724 F.2d 932 (1983, CAFC) .................................. 198 Cartwright v Eamer, unreported ............................................................................. 82 Case C-251/95 Sabel v Puma [1998] RPC 199....................................................... 132 Catnic Components v Hill & Smith [1982] RPC 183 ................. 2, 4, 249, 251–3, 255, 294, 296–8, 299–304, 305–09, 312–17, 319–30, 331, 333, 335, 337, 339, 341–2, 345, 349, 352, 357, 361, 363, 365, 379, 387 Chiron v Organon (No 12) [1996] FSR 153 ............................................................. 94 Clark v Adie (1876-7) 2 App Cas 315................................................................... 12–3 Clothworkers of Ipswich, Godbolt 252, 78 ER 147.................................. 37, 39–41, 51 Codex v Racal-Milgo [1983] RPC 369 ................................................................... 305 Connell v Sears Roebuck & Co, 722 F.2d 1542 (1983, CAFC) ................................ 190 Corning Glass Works v Sumitomo Electric, 868 F.2d 1251 (1989, CAFC).............. 199

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Custodiol I [2002] GRUR 523 ................................................................................ 250 Custodial II [2002] GRUR 527; (2003) 34 IIC 197................................................ 250 Cutting Knife I (Schneidmesser I) [2003] ENPR 309 ................................ 250, 252–4, 253, 254, 302, 313, 325, 356, 387 Cutting Knife II (Schneidmesser II) [2002] GRUR 519 .......................................... 250 Daily v Berchet [1991] RPC 587 (PCC), [1993] RPC 357 (CA)................ 314–6, 325 Darcy v Allin, 11 Co Rep 84b, 77 ER 1260................................... 37, 39–41, 51, 58, 62 Deere & Co v Harrison McGregor & Guest Ltd [1965] RPC 461............................ 324 Deyerle v Wright Manufacturing Co, 496 F.2d 45, (1974, United States Court of Appeals, Sixth Circuit) ...................................................................................... 189 DMI Inc v Deere & Co, 755 F.2d 1570 (1985, CAFC) ............................................ 188 Dranez Anstalt v Hayek, [2003] FSR 561 ......................................................... 369–70 Dudgeon v Thomson (1877) 3 App Cas 34............................................................... 10 Edison Bell Phonograph Corporation v Smith, (1894) 11 RPC 389 ........................... 9 EMI v Lissen (1939) 56 RPC 23 ............... 2, 8, 10, 19, 91, 109, 183, 316, 359, 382, 386 Ethyl Corporation’s Patent [1972] RPC 169............................................................. 88 Evans v Eaton, 16 US 454 (1818, Supreme Court); also 20 US 356 (1822, Supreme Court).............................................................................. 177, 179 Exhibit Supply Co v Ace Patents Corp, 315 US 126 (1942, Supreme Court).......... 192 Feed Service Corp v Kent Feeds Inc, 528 F.2d 756 (1976, United States Court of Appeals, Seventh Circuit).................................................................................. 189 Ferag AG v Muller Martini Ltd [2006] EWHC 225 ............................................... 378 Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 520 US 1111 (1997, Supreme Court), 234 F.3d 558 (2000, CAFC, en banc), 535 US 722 (2002, Supreme Court), 344 F.3d 1359 (2003, CAFC, en banc), 75 USPQ.2d 1830 (2005, District Ct: Massachusetts)........................................................ 74, 175, 193, 207–19, 227, 285 Formstein, (1987) 18 IIC 795 .............................................. 238, 241–2, 244, 251, 283 Genentech Inc v Sumitomo Pharmaceutical Co Ltd H-6 (ne) No 3292 (29 Mar, 1996) ................................................................................................... 279 General Dynamics Corp v Whitcomb, 443 F.2d 630, (1971, United States Court of Appeals, Fourth Circuit) .................................................................... 189 General Tire v Firestone [1972] RPC 457........................................................... 374–5 Gillette Safety Razor Co v Anglo American Trading Co Ltd (1913) 30 RPC 465................................................................................................. 237, 374 Goddin and Rennie’s Application [1996] RPC 141 .................................................. 74 Graver Tank v Linde Air Products, 339 US 605 (1949, Supreme Court)........................... 12, 175, 179, 183–90, 199–200, 203–4, 206, 209, 220, 235 Gray v James, 10 F.Cas. 1015 (1817, Circuit Court for Pennsylvania) .................. 178 Great Atlantic & Pac Tea Co v Supermarket Equipment Corp, 340 US 147 (1950, Supreme Court) ................................................................................. 132–3 Halliburton Energy Services v Smith International [2006] RPC 25.... 252, 366, 377–8 Handle Cord for Battery (Batteriekastenschnur) (1991) 22 IIC 104........................................................................ 245–6, 253, 319, 321, 390

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Harding’s Patent [1988] RPC 515...................................................................... 305–6 Harmer v Plane, (1807) 14 Ves (Jun) 131 ................................................................ 82 Harrison v Anderston Foundry Co (1875-6) 1 App Cas 574 ...................................... 9 Heavy-Metal Oxidation Catalysts (Schwermetalloxidationskatalysator) [1989] GRUR 205 ...................................................................................... 245, 319 Henricksen v Tallon [1965] RPC 434 ................................................ 11, 279, 298, 341 Hobbs v Beach, 180 US 383 (1901, Supreme Court) ............................................. 182 Hughes Aircraft Co v United States, 717 F.2d 1351 (1983, CAFC), 215 USP.Q. 787 (1982, US Court of Claims) ........... 191–2, 193–8, 201–2, 210–11 Improver v Remington [1989] RPC 69 (CA, Interim); [1990] FSR 181 (Ch D)............................................................ 223, 241, 248, 251, 255, 305–16, 317–22, 324–30, 331–39, 342, 347, 352, 358, 364, 386–7 Improver v Remington (German Proceedings) (1993) 24 IIC 838 .... 223, 241, 246–7 Innova/Pure Water, Inc v Safari Water Filtration Systems Inc 381 F.3d 1111 (2004, CAFC) .................................................................................... 174 Intergraph Corp v Intel Corp, 195 F.3d 1346 (1999, CAFC) .................................... 74 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896.............................................................................................. 300 Ion Analysis (Ionenanalyse) (1991) 22 ILC 249...................................... 245, 249, 319 Johnson & Johnston Associates Inc v RE Service Co, 285 F.3d 1046 (2002, CAFC)............................................................................................. 205, 229 Kastner v Rizla [1995] RPC 585 ................................ 319, 328–31, 333, 337, 353, 386 Keystone Bridge Co v Phoenix Iron Co, 95 US 274 (1877, Supreme Court) .......... 181 Kinzenbaw v Deere & Co, 741 F.2d 383 (1984, CAFC) .................................. 150, 195 Kirin-Amgen v Transkaryotic Therapies Inc [2002] RPC 1 (Ch D), [2003] RPC 31 (CA), [2005] 1 All ER 667 (HL) .............. 2, 89, 114, 116, 151, 174, 251, 255, 287, 301, 305, 342, 346–8, 349–80, 385–7, 389 KK Kouken v KK Tatsumi Ryouki. Hanrei Jiho No 1657, 122 (7 October, 1998)............................................................................................... 284 Liardet v Johnson (1780) 1 Y & CC 527 ............................................................... 52–4 Loctite Corp v Ultraseal Ltd, 781 F.2d 861 (1985, CAFC)..................... 74, 195–7, 202 Lord Hastings v North Eastern Railway Co [1899] 1 Ch 656 ................................. 302 Lubrizol Corp v Esso Petroleum [1998] RPC 727 ........................................... 252, 366 Ludlum Steel Co v Terry, 37 F.2d 153 (1928, Distict Court of New York) ............. 150 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749................................................................................................................ 300 Marconi v British Radio Telegraph and Telephone Company Ltd (1911) 28 RPC 181 .......................................................................................................... 13 Martin v Barber, 755 F.2d 1564 (1985, CAFC)...................................................... 198 Maxwell v Baker, 86 F.3d. 1098 (1996, CAFC)............................................... 205, 229 Mayne Pharma v Pharmacia Italia [2004] EWHC 2458 (Ch D), [2005] EWCA Civ 137 (CA). ..................................................................... 376, 378 Medical Instrumentation and Diagnostics Corp v Elekta AB, 344 F.3d 1205 (2003, CAFC) .................................................................................... 188

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Merrill v Yeomans, 94 US 568 (1876, Supreme Court).......................................... 180 Merz Pharma GmbH v Allergan Inc [2006] EWHC 2686...................................... 378 Mishawaka Rubber & Woolen Mfg Co v SS Kresge Co, 316 US 203 (1942, Supreme Court) ..................................................................................... 155 Molliped [1974] GRUR 460 ................................................................................... 235 Nobel’s Explosives Co v Anderson (1894) 11 RPC 519 ........................................... 301 Nokia Corp v Interdigital Technology Corp [2005] EWCA Civ 614 ....................... 106 Non-Drip Measure Co v Strangers Ltd (1943) RPC 135 ........................................ 389 Odiorne v Winkley, 18 F.Cas. 581 at 582 (1814, Circuit Court for Massachusetts) .................................................................................................. 178 OI Corp v Tekmar Co, 115 F.3d 1576 (1997, CAFC).............................................. 188 Optical Coating Laboratory Inc v Pilkington Ltd [1995] RPC 145 ................. 314, 324 O’Reiley v Morse, 56 US 62 (1853, Circuit Court for Kentucky) .......................... 180 Pennwalt Corp v Durand-Wayland Inc, 833 F.2d 931 (1987, CAFC) ................ 196–9 Perkin-Elmer Corp v Westinghouse Elec Corp, 822 F.2d 1528 (1987, CAFC) ........ 197 Pharmacia v Merck [2002] RPC 775.......................................................... 340–1, 353 Phillips v AWH Corp 415 F.3d 1303 (2005, CAFC)................................................ 174 Plastic Pipes (Kunststoffrohrteil), [2003] ENPR 163, (2003) 34 IIC 302............................................................................................ 250–1, 253, 311 PLG Research v Ardon International, [1993] FSR 197 (Ch D), [1995] RPC 287 (CA) ............................................. 241, 245, 305, 317–23, 326–8, 329–30, 333, 339, 344, 347, 349 Pope v Spanish River (1928) 46 RPC 23 ................................................................... 13 Prodyne Enterprises Inc v Julie Pomerantz Inc 743 F.2d 1581 (1984, CAFC)......... 195 R (ex parte Quintavalle) v Secretary of State for Health [2003] 2 AC 687.............. 368 R v Arkwright (1785) 1 Web. P. C. 29 (Common Pleas 1785) ................................. 54 Ranbaxy UK Ltd v Warner-Lambert Co [2006] FSR 209 (Ch D), [2007] RPC 65 (CA) .......................................................................................... 378 Research Corp’s Supplementary Protection Certificate [1994] RPC 387 .................. 74 Rodi & Wienenberger v Showell [1966] FSR 160 (CA), [1969] RPC 367 (HL)..................................................................... 18–20, 247, 280, 296–7, 304, 324 Rosedale Associated Manufacturers v Carlton Tyre Saving Company [1960] RPC 59 ..................................................................................................... 11 Rotocrop International Ltd v Genbourne Ltd [1982] FSR 241........................ 293, 317 Royal Typewriter Co v Remington Rand, 168 F.2d 691 (1948, Circuit Court of Appeals, Second Circuit) ....................................................................... 185, 363 Safe Flight Instrument Corp v Sunstrand Data Control Inc, 706 F.Supp. 1146 (1989, United States District Court, Delaware) ....................................... 199 Sanitary Refrigerator Co v Winters, 280 US 30 (1929, Supreme Court)........ 185, 189 Schenck v Nortron Corp, 713 F.2d 782 (1983, CAFC)............................................ 190 Schienenschalter II [1972] GRUR 597 ................................................................... 233 Seattle Box Co v Industrial Crating and Packaging Inc 731 F.2d 818 (1984, CAFC)..................................................................................................... 195 Shell Petroleum Co Ltd v Gibbs [1982] QB 946...................................................... 302

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Shinwa Seisakusho v Furuta Denki KK Tokyo court 23 March 2000 ................ 285–6 Shore v Wilson (1842) 9 Cl. & Fin. 355................................................................... 302 Skistiefelverschluss [1969] GRUR 534........................................................................ 8 Smith International Inc v Specialised Petroleum Services Group Ltd [2005] EWHX 686............................................................................................. 376 Southco Inc v Dzus Fastener Europe Ltd, [1990] RPC 587 (Ch D), [1992] RPC 299 (CA) ........................................................................ 314, 317, 333 Société Nouvelle des Bennes Saphem v Edbro Ltd [1983] RPC 345 ........................ 305 Spannschraube [1999] GRUR 909 ......................................................................... 249 SS Seiyaku v Zensei Yakuhin KK, Heisei 8 (wa) 8927 (17 Sep, 1998) ................ 283–5 Stapeltrockner [2006] GRUR 313 .......................................................................... 255 Stewart-Warner Corp v City of Pontiac, Michigan 767 F.2d 1563 (1985, CAFC)................................................................................................................ 195 Sundstrand Corporation v Safe Flight Instrument Corporation [1994] FSR 599 .............................................................................................................. 314 Synthon v SmithKline [2006] 1 All ER 685................................................. 374–5, 390 Technip France SA’s Patent [2004] RPC 919 ........................... 350–1, 354, 361, 376–9 Technograph Printed Circuits Ltd v Mills & Rockley (Electronics) Ltd [1972] RPC 346 ................................................................................................. 299 Teva Pharmaceutical Industries Ltd v Instituto Gentili SpA, [2003] FSR 498.......... 74 Texaco Antilles Ltd v Kenochan [1973] AC 609...................................................... 302 Texas Instruments Inc v United States International Trade Commission, 805 F.2d 1558 (1986, CAFC) ............................................................................. 206 THK Co v Tsubakimoto Seiko Co – Infringement Case for Ball Spline Bearing, 1630 Hanrei Jiho 32 (Supreme Ct, 1998). Ball Spline....... 278–85, 287–8 Tickner v Honda Motor Co Ltd [2002] EWHC 8 ................................................... 351 Turner v Winter, 1 TR 601, 99 ER 1274.................................................................... 54 Van der Lely v Bamfords [1960] RPC 169 (Ch D), [1961] RPC 296 (CA), [1963] RPC 61 (HL) ................... 2, 14–15, 17–19, 99, 112, 247, 254, 284, 295, 324 Vitronics Corp v Conceptronic Inc 90 F.3d 1576 (1996, CAFC) ..................... 174, 225 Warheit v Olympia Tools Ltd [2002] EWCA Civ 1161 ........................... 182, 341, 347 Warner-Jenkinson Co Inc v Hilton Davis Chemical Co, 520 US 17 (1997, Supreme Court), 62 F.3d 1512 (1995, CAFC) .......................... 199, 200–7, 208–9, 211–12, 214, 216–18 Westinghouse v Boyden Power Brake Co, 170 US 537 (1898, Supreme Court) .......................................................... 150, 182–3, 206, 362 Wheatley (Davina) v Drillsafe Ltd, [2001] RPC 133 ..................... 160, 251, 255, 305, 310, 325, 331–3, 336–41, 345, 348, 350 White v Dunbar, 119 US 47 (1886, Supreme Court)............................................. 181 Winans v Denmead, 56 US 330 (1853, Supreme Court).............. 178–80, 185–6, 362 Zino Davidoff v A&G Imports Limited & Tesco Stores, [2000] Ch 127 ................... 92

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Introduction The protection of inventive endeavours by letters patent forms the keystone upon which multi-billion pound industries are built across the world. Every patent application filed in the United Kingdom must contain a specification, which comprises ‘a description of the invention, a claim or claims and any drawings referred to in the description or any claim’.1 Claims define the invention for which protection is sought, and after grant their interpretation determines the scope of the monopoly that the patent confers.2 Patents operate as a breakwater from competition, enabling control of the supply and use of a certain type of information; information that would otherwise be freely appropriable by all. Patents, therefore, create scarcity. They mark out a novel zone of virgin territory that may only be cultivated by the patentee, or with their permission. Due to this effect, their scope is of critical importance to the patentee, their competitors, and indeed society at large. In the United Kingdom, the element at the core of the determination of patent scope is the claim. Claims define the outer boundary of protection. They are utilised by the Patent Office when considering issues of patentability and by the courts in matters of validity and infringement. Their breadth is important to the patentee as they dictate the extent of their proprietary interest, and to their competitors for the very same reason. Their interpretation, specifically the tests used for such a task, must therefore strike a delicate balance between the interests of the right holder and those of third parties. In an ideal world the claims would be so clear and unambiguous that no dispute over their meaning would ever arise. But the world is not ideal; language is, by its very definition, multifaceted, layered with meaning and capable of simile or substitution. Words are, to put it succinctly, equivocal. Human beings, themselves far from perfect, draft claims whilst attempting to navigate through the treacherous waters bordered by the prior art. The words that they use to define the invention must be broad enough to prevent unscrupulous copying, yet narrow enough to avoid encroaching on the rocky shore. They must describe an invention that may not be challenged for up to twenty years after the application is filed,3 at which point the patent should, in the eyes of the law, be as fresh as the day it was penned. Against these obstacles it seems unfair that the patentee should be bound by the literal meaning of the words used to describe their invention, especially where obvious variants exist. The words in the claims are, however, all that the public and the 1

s14(2) Patents Act 1977 (PA 1977). s125(1) PA 1977. 3 Possibly more for medicinal or plant protection products, if supplementary protection certificates have been issued. See Reg 1768/92 EEC concerning the creation of a supplementary protection certificate for medicinal products [1992] OJ L/182/1; and Reg 1610/96 EEC concerning the creation of a supplementary protection certificate for plant protection products [1996] OJ L/198/30. 2

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patentee’s competitors have to inform them of the scope of the monopoly grant; as such, the interpretation that they enjoy must provide a degree of predictability in deference to legal certainty. As we shall see, convincing arguments can be made for both broad and narrow interpretations of the claims when determining the scope of protection of the patent. In the UK, courts have traditionally accepted the idea that the protection conferred by a patent cannot be restricted to the literal wording of the claims. They employ a single stage test in infringement proceedings, using purposive construction4 to tread the fine line between fairness and certainty. However, despite a growing trend of harmonisation, different jurisdictions utilise different means and their patents enjoy different scopes, some broader and some narrower than that in the UK. This work therefore sets out to explore various aspects of the determination of patent scope and to critically evaluate the current British position. It essentially asks two questions: first, what is the purpose of the patent system—ie how can the award of temporary monopoly to the creator of a new manufacture be justified; and second, what scope of protection best serves this purpose? In seeking the answer to these questions, it also considers whether the objective of harmonisation called for by the Protocol on the Interpretation of Article 69 of the European Patent Convention, and by international agreements such as TRIPs, is in fact misplaced. It is submitted that attention should not necessarily be focussed on securing conformity, but should rather be directed towards ensuring predictability (as will become clear in the rest of the book, this is not necessarily synonymous with certainty). However, this fundamental distinction is often overshadowed by a pseudoimperialistic idea of what predictability actually means. In developing this line of argument, reference is made to historic, economic and comparative viewpoints, with the aim of providing the reader with a strong contextual platform from which to comment on the extant policy of claim interpretation in the UK and to provide a basis for recommending improvement. The discussion is essentially divided into two parts: part one (chapters 1–5), historical and economic factors; and part two (chapters 6–11), comparative factors. Part one therefore focusses on identification and analysis of some of the historical and economic factors that have shaped the British patent system and begins the search for justification of its existence and explanation of its shape. This search commences in chapter one with discussion of what could be considered to be the typical British approach to claim interpretation, evidenced by decisions such as EMI v Lissen,5 Van der Lely v Bamfords,6 and Rodi & Wienenberger v Showell, 7 in the period up to the genesis of purposive construction in Catnic Components v Hill & Smith.8 It establishes a base position from which the remaining argument advances 4 Championed by Lord Diplock in Catnic Components v Hill & Smith [1982] RPC 183 and restated by Lord Hoffmann Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667. 5 (1939) 56 RPC 23. 6 [1963] RPC 61. 7 [1969] RPC 367. 8 Above, n 4.

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and aims to provide the reader with relatively quick and easy access to the material developed in later chapters. As such, it requires a certain leap of faith, and the reader may only see the circle completed upon re-reading it at the end. As noted, the real challenge with this chapter was to set the scene as rapidly as possible and, considering the potential volume of material, it was reasoned that a more fact-based approach would be preferable to adopting true narrative style. Therefore, the chapter is arranged around a series of quotations from a number of key cases, and as a consequence may appear a little extract heavy. However, this approach was adopted in order to deliver the maximum information in the least possible space, and avoids inflating the chapter out of all proportion to its place within the overall argument. In addition to setting the scene, chapter one also poses what is often considered to be the essential question when examining the determination of patent scope—what is the purpose of the patent? Chapter two begins the search for the answer to this question and directs attention back to the foundation of a patent custom in Elizabethan England. In doing so it seeks to identify the basis upon which the modern system is built and explores the origins of monopoly phobia arising from abuses of early grants. The chapter therefore provides insight into the pedigree of the restrictive practices discussed in chapter one. In addition, consideration is directed toward the manner in which the patent system developed in the UK and, in doing so, this provides a base from which to argue that harmonised protection may not necessarily be in the best interests of all states at every point in their evolution. This point is picked up once more in part two of the book during discussion of the comparative studies. Chapter three begins the exploration of patents within the market economy, and, using the ‘anti-patent’ debate of the mid-nineteenth century as its backdrop, discuss the classical justifications for the grant. Investigation of this period in British history also enables further exploration of the drive against monopoly and the rise of the laissez faire attitude that can be seen to colour early twentieth century interpretation. This discussion also enables identification of certain key differences between the traditional British and German approaches to claim interpretation that are the subject of investigation in chapter seven. Chapter four continues the exploration of the economics of the patent system, incorporating the results of empirical research carried out into the realities of claim drafting, and asks the question ‘Does the philosophy fit the facts?’In conducting this investigation, some of the other determinants of patent scope, separate from the courts’ construction of the claims, are laid bare. This study enables evaluation of the potential effects of modifying the courts’approach, and is a topic to which we return in the context of the comparative studies in part two of the book. In chapter five the post-classical justifications that have been utilised in an attempt to explain the system and suggest a template for its optimum scope, are examined. This discussion includes assessment of the argument that all patents are monopolies and also studies some of the basic economics of supply and demand that lie at the core of the utility of the grant. In addition, a topology of invention is introduced that facilitates deconstruction of the argument that the patent system is

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good for all innovation, and enables us to discuss how variation in the interpreted scope of a patent may impact upon the type of invention that is encouraged. This, in turn, lays the foundation for a discussion of whether the essential questions posed in chapter one are, in fact, essential at all. These are topics to which we return in part two of the book. Part two, concentrates primarily upon other (ie non-UK) jurisdictions in order to reflect upon wildly differing traditions of interpretation within the classic trinity of developed patent systems (the US, Europe and Japan). Thus, chapter six examines the US approach to determining patent scope, paying particular attention to the doctrine of equivalents as broadening the effect of the patentee’s monopoly from the literal wording of the claims. The limits placed on the operation of the doctrine, particularly the application of file-wrapper estoppel, are also considered in order that a full picture may be gained. Chapter seven focuses on the German patent system. As the German approach to claim interpretation is traditionally perceived to be diametrically opposed to that in the UK it therefore provides an excellent opportunity to explore and illustrate some of the tensions within the European Patent system as a whole. It also enables us to question the impact of the Protocol on the Interpretation of Article 69, and asks whether the idea of harmonisation is, in fact, desirable as an end in itself. Finally, to complete the discussion of other systems, Japan is considered. Therefore, in chapter eight, the nation’s meteoric rise from technological obscurity in the mid-nineteenth century to the electronic whiz-kid of today, is explored, paying particular attention to the role that the patent system can be seen to have played in this process. Ultimately we return home and, in chapters nine and ten, examine the postCatnic 9 approach to claim interpretation in the UK, assessing this position in the light of the foregoing discussion, before finally concluding and suggesting that it may be time to correct some of the more obvious discrepancies of the test.

9

Above, n 4.

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1 The British Tradition Basic Claim Theory A state may essentially choose one, or other, of two disparate classificatory theories when deciding on the role that patent claims will play within a determination of the grant’s scope of protection. The names given to these binary positions are peripheral definition theory and central definition theory,1 and any subsequent interpretative stance that may be adopted is subordinate to this primary categorisation of approach. Under peripheral definition theory the claims define the outer boundary of protection. They form the linguistic equivalent of fence-posts (hence the alternate name of fence-post claiming) and pen-in the patent’s exclusive territory, marking its outer limits. The major advantage of this approach is that the scope of protection is relatively clear to any third party who may read the patent documentation,2 thereby providing certainty to the grant. Under central definition theory, on the other hand, the scope of protection is determined by finding the principle underlying the invention (the ‘inventive idea’) by looking at the teaching in the specification as a whole. The claims are treated merely as sign posts; for while they may be the starting point for the assessment, courts are not strictly bound by their wording. Under this theory, patent scope is decided based upon contribution to the art and therefore central definition has the advantage of providing a fair and flexible degree of protection for the patentee. However, it may also be seen to suffer in terms of certainty when compared to the alternate interpretative convention. Traditional examples of countries adopting these different forms of claim theory would, until relatively recently, have been Britain and Germany, respectively. For many years the latter treated the claims as guidelines only, basing the scope of protection primarily on what the disclosure in the description would have taught the notional person skilled in the art.3 The British approach, in contrast, typified 1 These theories are also discussed in ch 6 below, in the context of the evolution of the US patent system. See also, Takenaka, Interpreting Patent Claims: The United States, Germany and Japan (Munich, Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, 1995) at 3–12. 2 Subject to s22 Patents Act 1977 (PA 1977) (inventions the publication of which would prejudice national security or the safety of the public), and to s16 PA 1977 (‘any prescribed restrictions’), all patent applications are published, and therefore become open to public inspection, a maximum of 18 months after filing: see r27(1) Patent Rules 1995 (SI 1995/2093) (as amended by the Patents (Amendment) Rules 2005 (SI 2005/2496)). 3 See also, ch 7, below.

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peripheral definition, with claims staking the outer limits of protection—the maxim ‘what is not claimed is disclaimed’4 being an apt descriptor of the erstwhile application of the theory. The rationale for the adoption of different approaches in these states is largely historical. In Britain, it has been linked to the ‘niceties of the Chancery mind accustomed to the ex post facto analysis of conveyances, trusts and wills’5; legal positivism also shares the blame.6 The more ‘open’ traditional German approach to interpretation has been attributed to the influence of theorists advocating the Interessenjurisprudenz, whereby it was argued that the interpretation of documents should be carried out with the interests of the parties in mind, here primarily the patentee.7 In other words, the different approaches can be traced back to critical differences between British and German legal thought.As we shall see in later chapters, the choice of theory is also affected by philosophical and economic rationalisation of the justifications for the patent grant.8 Although such arguments initially operated to explain, rather than give basis for, the award of the patent monopoly, their impact on the minds of the judiciary is clear. German courts, for example, have often stated that the primary justification for the patent system is that it gives just reward to the inventor,9 whilst British courts are apt to proclaim that it may be rationalised on the basis of providing incentive to invent.10 The effect that this distinction has for the scope of the patent is covered in more detail in later chapters, however, for the present it is interesting to note that the focuses of the two explanatory theories lie on opposite parties in the grant. Therefore, whilst the reward theory concentrates on adequate remuneration for the patentee, the incentive theory pays more attention to the interests of society.

The Traditional British Approach The traditional British approach to claim interpretation takes as its starting point s5(5) of the Patents Act 1883. This required that ‘a specification, whether provi4

See the judgment of Lord Russell in EMI Ltd v Lissen Ltd (1939) 56 RPC 23 at 39. Norman, ‘Determining the Scope of the Patentee’s Monopoly: Purposive Construction Revisited’ [1998] Anglo-American Law Review 221 at 223. 6 Sherman, ‘Patent Claim Interpretation: The Impact of the Protocol on Interpretation’ (1991) 54 MLR 499 at 508. 7 See Sherman, ibid. See also, Bredimas, Methods of Interpretation and Community Law (New York, Elsevier North-Holland, 1978). 8 See also, chs 3, 5, and 7, below. 9 See, eg, Skistiefelverschluss [1969] GRUR 534. Also note Bruchhausen’s comments that ‘German case law on the scope of protection of patents has been invariably aimed at ensuring adequate protection for the inventor’. See Bruchhausen, ‘The Scope of Patent Protection in Different European Countries— An Outline of Recent Case Law’ (1973) 4 IIC 306, at 322. See also, text accompanying n 64 et seq in ch 7, below. 10 See, eg, the comments of Lord Oliver in Asahi Kasei Kogyo [1991] RPC 485 at 523 where he states that: ‘The underlying purpose of the patent system is the encouragement of improvements and innovation’. 5

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sional or complete, must commence with the title, and in the case of a complete specification must end with a distinct summary of the invention claimed’. The practice of inserting a specification detailing the invention to be protected had been common since the mid-eighteenth century,11 however the 1883 Act was the first to make the provision of claims a statutory requirement. It is apparent, though, that this formal inclusion of claims in fact prompted little, if any, change in the way in which specifications were drafted.12 Indeed, as Lord Chelmsford had stated some seven years previously, the ‘office of a claim is to define and limit with precision what it is which is claimed to have been invented and therefore patented’.13 Thus, even before the passage of the 1883 Act, the British approach to determining the scope of protection of a patent was based on peripheral definition theory, with the claims forming the outer boundary of protection. The rules that were used to interpret the claims, and to decide whether an alleged infringer operating on the periphery of the grant in fact fell within the scope of the monopoly, were ‘very straightforward and very simple’.14 The starting point was the principle of literal interpretation. The method to be undertaken was aptly summarised by Lord Esher in 1894: [W]hen objection is taken to the claim, or to any one of several claims, it is not using the true canons of construction to read that alone and to say that, without regard to what there is in the rest of the patent, that means so-and-so, or that means what is stated as the objection, and therefore, reading it in that way, you must hold the patent is bad. You must look at the whole of the Specification, and then, having looked at the whole, if it is an objection to the claim, see what the claim, on the true construction of it is, having regard to the whole of the instrument.15

However, Romer LJ, later cautioned against over-use of the specification to alter the clear and unambiguous meaning of a claim: One may, and one ought to, refer to the body of the Specification for the purpose of ascertaining the meaning of words and phrases used in the Claims or for the purpose of resolving difficulties of construction occasioned by the Claims when read by themselves. But where the construction of a Claim when read by itself is plain it is not in my opinion legitimate to diminish the ambit of the monopoly claimed merely because in the body of the Specification the Patentee has described his invention in more restricted terms than in the Claim itself.16

For such practice ‘would not be to construe but to amend’17. Therefore, given that claims formed the outer limits of protection, infringement could still depend on 11

See also, ch 2, below. See Kemp, ‘Claim Drafting: An Historical Survey’ in Kemp (ed), Patent Claim Drafting and Interpretation, (London, Oyez Longman, 1983) at 17. 13 Harrison v Anderston Foundry Co (1875–6) 1 App Cas 574 at 581. 14 Jacob, ‘Interpretation of Claims and Infringement’, in Vitoria (ed), The Patents Act 1977 (London, Sweet & Maxwell, 1978) at 65. 15 Edison Bell Phonograph Corporation v Smith (1894) 11 RPC 389 at 395. 16 British Hartford-Fairmont Syndicate Ltd v Jackson Bros (Knottingley) Ltd (1932) 49 RPC 495 at 556. 17 Thorley (ed), Terrell on the Law of Patents (15th edn) (London, Sweet & Maxwell, 2000) at 6.37. Whilst reference to the case is still made in the 16th edn of Terrell (London, Sweet & Maxwell, 2006), at 6.65, the specific quote referred to is no longer present. 12

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whether their wording was broad or narrow, technical or general.18 Particular problems were caused by competitors inventing around the patent by producing functional equivalents to claim integers. Under a literal interpretation, if one or more of the essential elements of the patentee’s claims was omitted or replaced by mechanical equivalents then infringement would not be forthcoming. The reason for limitations in the claim was unimportant, the principle of legal certainty dictated that protection should be restricted to their precise wording and no more. This approach to construction is epitomised by the judgment of Lord Russell of Killowen in Electrical and Musical Industries Ltd v Lissen Ltd.19 The following passage, although not endorsed by a majority of the House in the case itself, is often recited as an accurate statement of the law:20 The Court of Appeal have stated that in their opinion no special rules are applicable to the construction of a specification, that it must be read as a whole and in the light of surrounding circumstances, that it may be gathered from the specification that particular words bear an unusual meaning, and that, if possible, a specification should be construed so as not to lead to a foolish result, or one which the patentee could not have contemplated. They further have pointed out that the claims have a particular function to discharge.With every word of this I agree, but I desire to add something further in regard to the claims in a specification. The function of the claims is to define clearly and with precision the monopoly claimed, so that others may know the exact boundaries of the area within which they will be trespassers. Their primary object is to limit and not to extend the monopoly. What is not claimed is disclaimed. The claims must undoubtedly be read as part of the entire document and not as a separate document; but the forbidden field must be found in the language of the claims, and not elsewhere. It is not permissible, in my opinion, by reference to some language used in the earlier part of the specification to change a claim which by its own language is a claim for one subject-matter into a claim for another and a different subject-matter, which is what you do when you alter the boundaries of the forbidden territory. A patentee who describes an invention in the body of a specification obtains no monopoly unless it is claimed in the claims.As Lord Cairns said, [in Dudgeon v Thomson (1877) 3 App Cas 34] there is no such thing as infringement of the equity of a patent.21

Pressing the point, he continued: I know of no canon or principle which will justify one in departing from the unambiguous and grammatical meaning of a claim and narrowing or extending its scope by reading into it words which are not in it; or which will justify one in using stray phrases in the body of the specification for the purpose of narrowing or widening the boundaries of the monopoly fixed by the plain words of a claim.

18 The factors influencing the intrinsic scope of the patent (ie the scope with which it is drafted) are discussed more fully in ch 4, below. 19 EMI v Lissen (1939) 56 RPC 23. Lord Russell’s speech can be found at 39–46. 20 See similar assertions in Terrell (15th ed), n 17, above, at 6.38. Also Kemp, n 12, above, at 19. 21 Above, n 19, at 39.

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A claim is a portion of the specification which fulfils a separate and distinct function. It and it alone defines the monopoly; and the patentee is under a statutory obligation to state in the claims clearly and distinctly what is the invention which he desires to protect.22

This point is echoed by comments of Lord Porter in the same case when he states that: If the claims have a plain meaning in themselves, then advantage cannot be taken of the language used in the body of the Specification to make them mean something different.23

Exceptions to the General Rule Lords Russell and Porter’s formulations clearly do not, however, apply where the wording of a claim is not ‘unambiguous’, or where a literal interpretation would produce a manifestly foolish result. This is certainly the interpretation placed on the case by Lord Evershed MR in Rosedale Associated Manufacturers v Carlton Tyre Saving Company when he states: It is no doubt true and has been well established (see for example, the speech of Lord Russell of Killowen in the E.M.I. case [citation omitted]) that you must construe the claims according to their terms upon ordinary principles, and that it is not legitimate to confine the scope of the claims by reference to some limitation which may be found in the body of the specification but is not expressly or by proper inference reproduced in the claims themselves. On the other hand, it is clearly no less legitimate and appropriate in approaching the construction of the claims to read the specification as a whole. Thereby the necessary background is obtained and in some cases the meaning of the words used in the claims may be affected or defined by what is said in the body of the specification.24

In addition, as Kemp notes, Lord Russell’s speech must be seen in the context of the Patent Office’s requirements that ‘the body of the specification . . . be consistent with the claims thereby to render in general less chance for the specification . . . [to contain] “stray phrases . . . for the purpose of narrowing or widening the boundaries of the monopoly fixed by the plain words of the claim” ’25 The classic example utilised as an exception to the standard approach advocated by Lord Russell is the case of Henriksen v Tallon.26 The dispute concerned a patent for a ball point pen having a plug in contact with the ink at the open end of the tube. The claims specified: a fountain pen of the ball tip type, comprising a tubular ink reservoir provided at one end with a ball tip and at the opposite end with an air inlet, in which there is disposed between the column of ink in the reservoir and the air inlet a liquid or a viscous or paste-like mass which does not mix with the ink and forms a plug which moves with the surface of the ink column and prevents air from contacting the surface of the ink.27 (emphasis added) 22 23 24 25 26 27

Ibid, at 41. Ibid, at 57. [1960] RPC 59, at 69. Kemp, n 12, above, at 19. [1965] RPC 434. Claim 1 of the patent, reproduced in Lord Reid’s judgment, ibid, at 441.

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The alleged infringement contained a grease plug between the ink and air inlet that did not mix with the ink to any appreciable extent, and which moved with the surface of the ink column. However, expert evidence demonstrated that the defendant’s plug only prevented some 60 per cent of the air from contacting the surface of the ink. Therefore, the question of construction that lay before the court related to the interpretation of the word ‘prevents’ in the claims. The House of Lords unanimously considered that ‘prevents’ in the patent claims must be interpreted as meaning ‘prevents for all practical purposes’, although Lord Guest disagreed with the majority over whether the plaintiff had successfully proved that the defendant’s embodiment fulfilled this requirement.28 Lord Reid was the most forthright of their Lordships, stating that: It is a general principle of construction that, where there is a choice between two meanings, one should if possible, reject that meaning which leads to an absurd result . . . It would be a very artificial construction of the claim to hold that, because an infringer’s plug is not very efficient though sufficient for commercial purposes, therefore there is no infringement. That would simply be inviting infringers to take the invention but make it work inefficiently.29

The ‘Pith and Marrow’ In addition to these principles, it was clear that protection extended to so-called colourable, or immaterial, variations of the claimed invention. In deference perhaps to the fact that ‘Outright and forthright duplication is a dull and very rare type of infringement’,30 the doctrine of pith and marrow grew up alongside the patent grant to soften the effect of a purely textual interpretation. This mixed metaphor appears to have been coined by Lord Cairns, the Lord Chancellor, in Clark v Adie when he stated that: The infringer might not take the whole of the instrument here described, but he might take a certain number of parts of the instrument described; he might make an instrument which in many respects would resemble the patent instrument, but would not resemble it in all its parts. And there the question would be . . . whether that which was done by the alleged infringer amounted to a colourable departure from the instrument patented, and whether in what he had done he had not really taken and adopted the substance of the instrument patented. And it might well be that if the instrument patented consisted of twelve different steps, . . . an infringer who took eight or nine or ten of those steps might be held by the tribunal judging of the patent to have taken in substance the pith and marrow of the invention, although there were one, two, three, four or five steps which he might not actually have taken and represented upon his machine.31 (emphasis added) 28

See the final para of Lord Guest’s judgment, n 26, above, at 453. [1965] RPC 434 at 443, 445. 30 Per Justice Jackson, delivering the leading judgment in Graver Tank v Linde Air Products 339 US 605 (1949, Supreme Ct), at 607. 31 (1876–7) 2 App Cas 315 at 320. 29

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As Kemp notes: ‘While the metaphor has been criticised the principle enunciated in Clark v Adie . . . has been followed and applied in many cases’.32 Subsequent decisions, however, had refined this doctrine of pith and marrow, in particular making explicit Lord Cairns’ implicit reference to mechanical equivalency. Thus, in Marconi v British Radio Telegraph and Telephone Company Ltd, Parker J referred to the doctrine in the following terms: It is a well-known rule of Patent law that no one who borrows the substance of a patented invention can escape the consequences of infringement by making immaterial variations. From this point of view the question is whether infringing apparatus is substantially the same as the apparatus said to have been infringed . . . where the Patent is for a combination of parts or a process, and the combination or process, besides being itself new, produces new and useful results; everyone who produces the same results by using the essential parts of the combination or process is an infringer, even though he has, in fact, altered the combination or process by omitting some unessential part or step and substituting another part or step, which is, in fact, equivalent to the part or step he has omitted.33

Therefore, by the early twentieth century it had become established that the patent grant extended to protect against embodiments that, although they omitted certain features or substituted equivalent means for them, nonetheless took the essence of the invention. However, it was equally clear that this extension of protection was only available where the variations or omissions were in respect of inessential features of the claimed invention. Therefore, the key issue in infringement proceedings became whether particular limitations in the claims were of this nature, or not. The importance, and difficulty, of making the distinction (as well as affirmation of the existence of the doctrine, which Kemp notes had lain dormant since the decision of the Privy Council in Pope v Spanish River 34) finds illustration in comments of Lord Evershed MR, in Birmingham Sound Reproducers Ltd, v Collaro: In our judgment, it is not open to this court or the authorities to accept that Sir Lionel’s submission to the effect that the doctrine of ‘pith and marrow’ or ‘substance’ is dead. Nor do we propose to attempt any comprehensive definition of its scope. We think it can, generally speaking, be taken to be confined to unessential differences, though we appreciate that the distinction between that which is essential and that which is unessential may be difficult to draw . . . The invention with which we are now concerned is an invention consisting of the selection of particular known mechanical members and the arrangement of them in a particular way . . . The individual parts of this apparatus are not claimed as inventions and . . . could not be so claimed. The basic idea which it carries out . . . is not new. Thus the essence of the invention resides wholly in the selection and arrangement of the parts and the manner in which they interact when arranged in accordance with the inven32 Kemp, n 12, above, at 20. He continues, listing some of the cases in which favourable reference has been made to Clark v Adie. 33 (1911) 28 RPC 181 at 217. 34 (1928) 46 RPC 23. See Kemp, n 12, above, at 22.

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Therefore, under the renewed doctrine little had changed: the courts still had to analyse the patent in order to establish the essential elements, and then assess whether the defendant’s embodiment reproduced each of these. It was not enough to show equivalent functionality, the doctrine required identity in essence, only inessential elements could be substituted or omitted.36

Applying the Test The potential for this approach to provide a narrow, almost literal, interpretation of the claims, restricting the scope of protection to ‘dull and very rare’cases of ‘outright and forthright duplication’, is illustrated by two notorious House of Lords decisions of the 1960s. The first is Van der Lely v Bamfords,37 which concerned a patent for a mechanical ‘hay rake’ cum ‘swathe turner’. The transformation from one function to the other was facilitated by the ‘rake wheels situated hindmost in the direction of motion’ being ‘separately or jointly dismountable’ and mountable ‘adjacent the foremost rake wheels’.38 The crux of the infringement action related to whether, by specifying that the hindmost wheels be dismountable, the patentee had limited the scope of their patent to exclude situations in which the same advantage could be achieved by removing the foremost wheels and aligning them adjacent to the hindmost rake wheels. At first instance, Lloyd-Jacob J had remarked: In the present case, no passage in the specification can be found to support the suggestion that removal of any but the hindmost wheels was ever in the contemplation of the inventor. Save for the ingenuity of the defendants in producing their device, it is unlikely that any reader of the specification would have appreciated that the transposition in Claim 35 36

[1956] RPC 232 at 244 and 245. As will be seen, (in ch 6, below) this bears close resemblance to the ‘all element rule’under US patent

law. 37 38

[1963] RPC 61. See Claim 11 of the patent, reproduced in Lord Reid’s speech ibid at 74.

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11 of the words ‘hindmost’ and ‘foremost’ would be required to identify the useful conversion of a particular raking device, and still less that to suppose that the Patentee so intended.39

Therefore, when deciding the issue of infringement, he declined to depart from the clear and unambiguous wording of the claim. Stating that: If the Patentee had in fact appreciated that a vehicular frame could be devised which permitted conversion from side raking to swathe turning by retention in position of the hindmost rake wheels of the original row, it is inconceivable that he would have framed this claim in language which expressly calls for their removal.40 (emphasis added)

By parity of reasoning, the majority in the Court of Appeal also refused to find that the patent had been infringed, Upjohn LJ adding: Why they so confined the claim it is not for us to speculate. The claim could presumably have been safely drawn to cover dismountability of either group [of wheels] . . . but apparently the appellants did not appreciate this possibility . . . [T]here is no escape . . . we are bound to construe the words of the claim according to their clear and unambiguous meaning.41

The case was appealed to the House of Lords where the majority, once again, declined to find infringement on grounds that the patentee had deliberately limited their claim to dismountable hindmost wheels. We shall turn to examine the reasoning of the majority on the issue of claim interpretation in due course, however, for the moment it is interesting to examine the dissenting opinion of Lord Reid, standing alone in his finding of infringement. Lord Reid took a practical view of the invention. After stating that the defendant clearly avoided textual infringement of the claim by providing dismountable foremost wheels rather than hindmost wheels as required by the patent, his Lordship proceeded to assess the scope of the doctrine of pith and marrow: Copying an invention by taking its ‘pith and marrow’ without textual infringement of the patent is an old and familiar abuse which the law has never been powerless to prevent. It may be that in doing so there is some illogicality, but our law has always preferred good sense to strict logic.42

He continued, explaining that this illogicality arises due to the fact that the patentee is strictly tied to the invention as claimed. Whilst clearly content that if another party effected the same improvement as the patentee by different means this should not infringe, his Lordship noted that: [I]t has long been recognised that there ‘may be an essence or substance of the invention underlying the mere accident of form; and that invention, like every other invention, may be pirated by a theft in a disguised or mutilated form, and it will be in every case a question 39 40 41 42

[1960] RPC 169 at 197. Ibid. [1961] RPC 296 at 313. Above, n 37, at 75.

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of fact whether the alleged piracy is the same in substance and effect, or is a substantially new or different combination’.43

Therefore, the critical element in this case, according to Lord Reid, was the fact that the defendant was unable to point to any mechanical reason for, or advantage to, making the foremost wheels dismountable. In his opinion, it was ‘simply done to try to evade the claim’.44 The lower courts had therefore erred in their reasoning, for even though: It must be true . . . that in framing their specification the appellants did not appreciate that the same result could be achieved by moving the foremost wheels, for otherwise they would have made their claim wide enough to cover this. . . . [S]urely the same must be true of most if not all cases where there is an attempt to avoid infringement by the substitution of a mechanical equivalent: if the patentee had foreseen that possibility he would have made his claim cover it. If that were a good reason for refusing protection to the patentee against a person who later thinks of and adopts the mechanical equivalent, it seems to me that there would be very little left of this principle. Upjohn, L.J., said that the appellants ‘have deliberately chosen to make it an essential feature of the claim that the hindmost wheels should be detachable’. If by that he meant that there is something in the specification to show that they deliberately refrained from including the foremost wheels or went out of their way to make the hindmost wheels an essential feature I cannot find anything on which to base such a conclusion. But I do not think that he meant that, because he went on to agree with Lloyd-Jacob, J., that apparently the appellants did not appreciate the possibility that the foremost wheels might be moved. So I think that he must have meant that the mere fact that they only mentioned the hindmost wheels was sufficient to make the limitation to the hindmost wheels an essential feature of the claim. But if that were right, then I cannot see how there could ever be an unessential feature or how this principle could ever operate. And I think that the principle is very necessary to prevent sharp practice.45

It is therefore apparent that Lord Reid considered the fact that the patentee failed to mention any other embodiment as insufficient evidence that they intended to exclude other embodiments from the scope of protection. His construction is based on what the patentee could validly have claimed and appears to appreciate the impossibility of drafting a claim that encompasses all potential variants from the outset. This approach can be seen to match the scope of protection to the patentee’s contribution to the art. As such, it appears that Lord Reid adopts a reward-based justification for the interpretation that he places on the claims. However, the integrity of his approach is somewhat compromised by the fact that everything in his judgment reflects his Lordship’s opinion that the defendant had consciously sought to copy the patentee’s product whilst avoiding a textual infringement. This latter factor tends to suggest that whilst the intention of the patentee cannot be assumed from their choice of limiting words, the defendant’s may be from their reluctance, or inability, to explain their own choice of elements. It could be argued 43 Ibid. Quoting from James LJ in the Court of Appeal’s judgment in Clark v Adie (1873) LR 10 Ch 667. 44 Above, n 37, at 75. 45 Ibid, at 76–7.

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that the defendant in this case had more opportunity in the process of litigation to provide an explanation for their choices than the patentee’s purely documentary submission in the patent would have done. However, the lack of reasoning on this point, indeed lack of acknowledgement of any kind that such an issue could exist, is still unsettling. A plausible workaround could be found by explicitly adopting a position in which the patent is assumed to cover all embodiments made obvious to the skilled addressee in the light of the claims. However, this would come perilously close to adopting central definition theory and would serve to weaken Lord Reid’s position still further. As noted, Lord Reid was in the minority on the issue of claim interpretation. The majority held the view that the patentee had deliberately elected to limit the claim to ‘dismountable hindmost wheels’. Therefore, even under the doctrine of pith and marrow there could be no infringement. Viscount Radcliffe explained that the application of the principle: [I]s from first to last directed to the prevention of abuse of patent rights by colourable evasion: it is not a special or ‘benevolent’ method of construing an uncertain claim . . . [T]he basic duty of the patentee [is] to state clearly what is the invention for which he seeks protection . . . When, therefore, one speaks of theft or piracy of another’s invention or says that it has been ‘taken’ by an alleged infringer and this ‘pith and marrow’ principle is invoked to support the accusation. I think that one must be very careful to see that the inventor has not by the actual form of his claim left open to the world the appropriation of just that property that he says has been filched from him by piracy or theft. After all, it is he who has committed himself to the unequivocal description of what he claims to have invented, and he must submit in the first place to be judged by his own action and words. If he is so judged, I cannot for my part see what inventive idea is claimed by claim 11, regarded as a separate claim, except the idea of dismounting the hindmost wheels and bringing them forwards to a position adjacent to and parallel with the foremost wheels . . . I cannot, therefore, embark upon an enquiry whether the dismountability of the hindmost wheels is an essential or unessential element of the invention claimed, because it seems to me that the patentee himself has told us by the way that he has drawn up claim 11 that this dismountability of the hindmost wheels is the very element of his idea that makes it an invention. When one says, then, as has been said by the majority of the Court of Appeal, that the appellants have ‘deliberately chosen to make it an essential feature of the claim that the hindmost wheels should be detachable,’ what one means is not merely that the wording of this claim has been carefully selected, as has all the rest of the patent document, to put the appellants in as strong a position as their expert advisers thought attainable or desirable, but also that the appellants have stated clearly and without equivocation that the point of their invention lies in its application to the hindmost wheels.46 (emphasis added)

This reasoning is interesting as it exposes a mindset in which the patent grant is seen as an exception to be fought for. This is significant in that it predicates a narrow view of the deserved scope of protection. It is therefore the patentee’s duty to clearly 46

Above, n 37, at 78.

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define the scope that he desires from the outset, and, critically, only very limited latitude is to be given for defects in this drafting process.47 The effect is to reduce the scope of protection to mere textual infringement. By reading all claim integers as essential, as the patentee ‘must submit in the first place to be judged by his own action and words’, the House of Lords at once sidelines the application of a doctrine that it explicitly endorses. Thus, a paradox is created in that pith and marrow is ‘from first to last directed to the prevention of abuse of patent rights by colourable evasion’. Yet it cannot be invoked where the meaning of the claim is unambiguous, for in this instance the patentee has ‘committed himself to the unequivocal description of what he claims to have invented’. Furthermore, according to Viscount Radcliffe, it is not intended to provide ‘a special or “benevolent” method of construing an uncertain claim’48. Therefore, as Lord Reid states, it is difficult to ‘see how there could ever be an unessential feature or how this principle could ever operate’.49 Further illustration of the House of Lords’ restrictive attitude to claim interpretation in this period is found in Rodi & Wienenberger v Showell.50 The patent claimed an ‘extensible chain band, more particularly a wristwatch bracelet’ made of two layers of cylindrical sleeves connected by a pair of ‘U-shaped’ bows. The connecting bows were kept firmly in the sleeve by a spring plate in each sleeve. The defendant marketed two similar products; in both, the connecting bows in the upper sleeve were joined to form an integral ‘C-shaped’link, the ends of which functioned as the U-shaped bows in the patented article. In one embodiment (‘Excalibur 59’) leaf springs were included in each sleeve to prevent the bows from lying loosely, however, they did not function to hold the bows in place to prevent them falling out of the sleeve, as the shape of the bow itself did this. In the other, (‘Excalibur 60’) the springs were dispensed with entirely, the middle of the connecting bows being shaped so as to provide their own springs. Three questions came before the House for consideration. First, did the defendant’s use of ‘C-shaped’ bows infringe the patentee’s ‘U-shaped’ bows? Second, was it essential that the spring plate functioned to keep the bows firmly in the sleeve, so that where the bows were held in place by their shape alone (as in ‘Excalibur 59’) this was not an infringement? Finally, was it essential that a separate bow and leaf spring comprising a bent spring plate be provided in each sleeve, or could the spring plate and the connecting bow be combined? A majority of the House of Lords thought that the defendant’s products fell outside of the scope of protection afforded by the patent. Lord Upjohn, arguing that: [T]he question of whether the relevant claim has been infringed . . . is purely a question of construction of the claim read as a matter of ordinary language, in the light of the complete specification taken as a whole; but the claim must be construed as a document without having in mind the alleged infringement. What is not claimed is disclaimed. The claim 47

The implausibility of producing perfect claims is considered in ch 4, below. Above, n 37, at 78. 49 Ibid, at 77. Although, it should be noted that Viscount Radcliffe’s interpretation was influenced by the fact that the patent had been partially invalidated. 50 [1969] RPC 367. 48

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must be read through the eyes of the notional addressee, the man who is going to carry out the invention described.51

He continued, stating: [W]hen the patentee claimed U-shaped connecting bows and then described their insertion and mutual reaction he meant to refer to U-links or bows and not to elongated C-members . . . As a matter of ordinary construction I think there is only one answer . . . [the skilled addressee] would think the patentee was describing independent U bows at each end of a transverse sleeve and that was the extent of the claim. I reach that conclusion upon the wording of the claim and without reference to the drawings, though the latter do support that view. That was one of the essential integers claimed in the claim.52

Therefore, by echoing Lord Russell’s famous words in EMI v Lissen,53 and utilising very similar reasoning to his Lordship’s own decision in the Court of Appeal in Van der Lely, Lord Upjohn effectively limited the scope of protection to a literal interpretation of the claim. However, more significantly, he also made the following statement of principle to justify this narrow approach: [I]f the patentee has in his specification limited the essential features of his claim in a manner that may appear to be unnecessary, it may be that the copier can escape infringement by adopting some simple mechanical equivalent so that it cannot be said that every essential integer of the claim has been taken; the Van der Lely case (admittedly a border line case which led to a conflict of judicial opinion upon its facts) affords a very good example. But it must be remembered that unlike a conveyance or commercial document which is normally inter partes and must be interpreted, frequently very broadly, so far as possible to give effect to what appears to have been the intentions of the parties; a patent is a grant of a monopoly forbidding others to enter a part of the general commercial territory open to all of Her Majesty’s subjects and so in the interests of those subjects that territory must be marked out with reasonable clarity by the claim, construing it fairly in the light of the relevant art.54 (emphasis added)

Therefore, we are provided with an explicit statement of policy. The patent grant is a monopoly, and as such it interferes with the rights of men to operate freely within the general commercial territory. The subtext is therefore that it must be construed narrowly in order to protect society from its abuse. Once more, it is an exception to the sanctity of free trade. Lord Reid, again offering dissenting judgment, was of the opinion that the claims should be viewed with an eye to the intended recipient; the skilled addressee. Therefore: [The] claims are not addressed to conveyancers: they are addressed to practical men skilled in the prior art, and I do not think that they ought to be construed with that meticulousness which was once thought appropriate for conveyancing documents.’55 51 52 53 54 55

Ibid, at 391. Ibid, at 393–4. Above, n 19. Above, n 50, at 391–2. Ibid, at 378.

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Individual phrases should be read in the context of the claim as a whole, interpreted in the light of the specification. As such, the interpretation that is placed on them should take account of their function. Lord Pearce, also dissenting, added that: Had the claim been a direction to a printer or a type-setter, the alphabetical approach would seem to me correct, since the alphabet would clearly be relevant and the identity and formation of a particular letter would probably be the essential ingredient of the integer described. But the essence of the connector to anybody thinking on mechanical rather than literary lines would be a bridge connecting two parallel limbs which would lie in adjacent sleeves. That quality would be fulfilled whether one described it as U-shaped bows, or J-shaped links, or goal posts. If one discards alphabetical niceties, there remains the more solid argument that here, instead of the two U-shaped bows, one has running all through the sleeve one continuous integer albeit having at each end (at the relevant point of interconnection) a link which performs the same function as a U-shaped link in that it acts as a bridge to join the adjacent sleeves and in that its limbs perform the pivotal action against the leaf springs. It is important that in construing a patent one should seek to find what it means to the reasonable person who is reasonably versed in the matters of which it speaks—in this case mechanical. It is directed to the workshop and the market place rather than to the cloister. For that reason a plain straightforward construction is generally to be preferred to one that is strained or literary or tortuous. And meticulous niceties of construction which are wholly appropriate to a legal document may seem to the practical man to have a flavour of pedantry if they so whittle away a patent that they enable a copyist to avoid its ambit by means that seem to be concerned with words rather than essentials.56

Therefore, there is a clear difference of opinion concerning the canons of construction that are to be applied in any given case. The majority judgment suggests that the patentee’s choice of the phrase ‘U-shaped’ automatically limits the claim to this, and no other, shape of bow. This approach is significant, as it prompts the view that in order to provide an adequate scope of protection the patentee should refrain from adding restrictions to their claims. Their Lordships rationalise this narrow approach by stating that it is in the interests of society that the patent marks out its territory with reasonable clarity by the claim. Yet, the result of their narrow interpretation is the exact opposite, in that that the patentee is encouraged to introduce uncertainties in the hope of broadening their protection. Lord Upjohn’s statement that the ‘patent is a grant of a monopoly forbidding others to enter a part of the general commercial territory open to all of Her Majesty’s subjects’,57 is telling as it exposes a mindset (perhaps even prejudice) that has its origins in the abuses of Crown grants under Elizabeth I.58 In addition, by focussing on the rights of society, rather than the rights of the patentee, the House may be criticised as loosing sight of the real reason that we have patent protection at all. As Cole 56 57 58

Above, n 50, at 387-8. See text accompanying n 54, above. Discussed in ch 2, below.

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notes, there is a distinction that exists ‘between the primary purpose of the Patents Acts and their secondary purposes’. The primary purpose is the ‘encouragement of manufacturing industry within the UK by granting to inventors a limited monopoly in their inventions’. The fact that the patentee is asked to define the scope of their invention in claims is ‘a secondary object of the Act intended to allow the system to operate smoothly’. Where there is conflict between the two, the primary purpose should prevail.59 The purpose of this work is to examine the validity of these statements. In order to do this we first look to the history of the patent system, and consider the origins of the anti-patent attitude in which the grant is seen as an exception to the general prohibition of monopoly.

59 See Cole, ‘Patent Infringement—‘Pith and Marrow’—A Review of United Kingdom Practice’ [1980] EIPR 289 at 298.

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Introduction The exact origin of modern patent law is unknown. Legal academics and historians vie to produce the definitive point of conception of the system, citing in turn the Greeks1, Byzantines2, Italians3 and English4, amongst others, as having sown the first seeds. It is impossible to tell which, if any, of these assertions is correct. What is clear, however, is that the development of the patent model was by no means peculiar to England, despite the occasional assertion to the contrary.5 The notion that there may be some kind of property in the fruits of intellectual labour dates back to at least the time of Ancient Greece. However, it is apparent that any such concepts and attendant rights that may have been attached to them were usually perceived in terms of the physical object or teaching of the trade so protected.6 Indeed, it is not until the end of the eighteenth century that we begin to see widespread acceptance of the notion of property in the intangible per se.7 Indeed, the role played by the patent system within society, and therefore the justifications that can be used to rationalise its existence, have also changed dramatically over time. We turn to consider these issues more fully in chapter three, but for now it is sufficient to note that these early customs bear little resemblance to the system of grants with which we are faced in the modern commercial sphere. Nevertheless, the conception and growth of the idea of a patent system, not to mention the English 1 See, eg Merges, Intellectual Property in the New Technological Age (New York, Aspen Law & Business, 1997) at 121. 2 Frumkin,‘Early History of Patents for Invention’ (1947) 26 Trans Newcomen Soc. 47. 3 Prager,‘A History of Intellectual Property 1545 to 1787’ (1944) 26 JPOS 711 (Prager,‘History’). 4 Price, The English Patents of Monopoly (Cambridge (MA), Harvard University Press, 1913). 5 See, eg Fox, Monopolies and Patents: A Study of the History and Future of the Patent Monopoly (Toronto, University of Toronto Press, 1947), at 85; Price, ibid, at 7; and Hindmarch, A Treatise on the Law Relative to Patent Privileges for the Sole use of Inventions (London, Stevens, Norton & Benning, 1846) at 3. 6 Long, ‘Invention, Authorship, “Intellectual Property,” and the Origin of Patents: Notes toward a Conceptual History’ (1991) 32 Technology & Culture 846, at 858. 7 Walterscheid,‘The Early Evolution of the United States Patent Law: Antecedents (Part I)’ (1994) 76 JPTOS 697 (Walterscheid, ‘Antecedents I’) at 702–3. See also Bently & Sherman, The Making of Modern Intellectual Property Law (Cambridge, Cambridge University Press, 1999), passim.

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custom itself, can teach us much about the motivations and justifications for patent protection today.

The Guild System: Alternative Monopoly During the Middle-Ages, the guild system was the prevalent form of monopoly extant in Europe.8 A guild was a group of craftsmen or merchants, defined by their trade and skills, which exercised control over their respective mystery by the use of monopoly. They fixed the price and quality of goods and services and provided for the security of their members. These monopolies were essentially of municipal and local character. If a tradesman wished to practise his art then he would have to join the relevant guild or else face rampant opposition from its members. The guilds obtained, by Charter, the right of exclusive sale of the goods made by them within a defined geographical area, such as the town or municipality in which they were based.9 Moreover, they were also granted the sole right of supervising and regulating their trade within the area in which they operated. The right of market or faire granted by Royal charter, or acquired by custom, served in many cases to constitute the only exceptions to the guilds’ control.10 However, the privileges enjoyed by these bodies were not individual rights; they were group monopolies within which there was free competition. The privileges of the guild were confined to protection from the competition of strangers, the regulation of the trade and the maintenance of price. Their monopoly was not a restriction upon competition per se but merely upon the number of competitors.

Early Monopoly Grants Outside of the guilds there is little evidence to support any claim that there was a system of monopoly grants that can, in any way, be likened to the modern conception of patent protection until the Statute of Venice, promulgated in 1474. Such grants as can be found before this time are sporadic and disorganised, however a number of claims deserve mention. Kaufer suggests the genesis of the practice of protecting what we now call invention can be traced back to early mining laws extant in the region of the Alps in the fourteenth century. He notes that at this point ‘the term “invention” had a meaning 8 The importance of the merchants’ guild, to which, as a general rule, all of the town’s traders were obliged to belong, has been chronicled by many. In particular Stubbs, The Constitutional History of England in its Origin and Development (Oxford, Clarendon Press, 1880) (Library Ed) Vol I, states (at 453) that ‘in the reign of Henry II there can be little doubt that the . . . merchant guild . . . was in fact, if not in theory, the governing body of the town in which it was allowed to exist.’ Quoted from Fox, n 5, above, at 33. For an informative discussion of the Guild system in England see Fox, id at 30-41 and Price, n 4, above, at 6–7. 9 Brentano, On the History and Development of Gilds, and the Origin of Trade-Unions (London, Trübner, 1870) at xciii; See also Fox, n 5, above, at 32. 10 Maitland, Domesday Book and Beyond: Three Essays in the Early History of England (Cambridge, Cambridge University Press, 1897) at 193–4; See also Fox, n 5, above, at 32.

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much closer to what we would now call “discovery” ’, with property rights often being granted for the ‘invention’ of an ore site.11 However, as time went on, and mining was forced deeper underground by exhaustion of surface deposits, innovative methods and machinery for drainage were protected in the same manner, with the law on mineral claiming being directly applied.12 Pohlmann, along the same lines, states that there are examples of ‘proto-patents’, as he terms them, in the German principalities as early as 1378.13 Frumkin, meanwhile, utilises the writings of Benjamin of Tuleda, a traveller in the twelfth century, to support his (admittedly vague) assertion that an embryonic patent system was evident in the semiByzantine kingdom of Jerusalem at this time.14 The account on which he bases this claim describes an exclusive privilege for the dyeing of cloth.Whilst interesting as an historical aside, Frumkin’s conclusion that this therefore proves the existence of a patent system that predates the Statute of Venice by some three centuries is, unfortunately, unfounded. The unofficial nature and singularity of his source render the authority of the account dubious at best. Frumkin also mentions other early examples of grants including a 15 year monopoly for the manufacture of cloth in Bordeaux in 1236.15 However, none of these pre-1474 examples can really be said to show evidence of anything other than isolated instances in which privilege was conferred. None can lay claim to providing for the systematic protection of invention, however it is defined.

The Statute of Venice Historians generally accept that Italy provided the backdrop for the genesis of a modern policy of monopoly grants—although there is a small bone of contention as to whether it was the city-state of Venice or that of Florence that can lay claim to the title of creator.16 Whichever, if either, is responsible for the idea, it was Venice that first marshalled its custom into statutory form when, in 1474, it enacted what has come to be known as the Statute of Venice. It reads: We have among us men of great genius, apt to invent and discover ingenious devices; and in view of the grandeur and virtue of our city, more such men come to us every day from 11 Kaufer, ‘The Economics of the Patent System’ in Lesourne & Sonneschein (eds), Fundamentals of Pure and Applied Economics (series) (New York, Harwood, 1989) at 2. 12 Ibid, at 3. 13 Pohlmann, ‘The Inventor’s Right in Early German Law’(1961) 43 JPOS 121 at 122. Pohlmann does, however, concede that Germany’s first patent of monopoly privilege was granted in 1484, as part of a system that flourished until the thirty years war. See also Greenstreet, ‘History of Patents’ in Liebesny (ed), Mainly on patents: The Use of Industrial Property and its Literature (London, Butterworths, 1972) at 5. 14 Frumkin, n 2, above, at 47. He does, though, assert that ‘We are on safer ground’ with a number of other early privileges of the 13th century and later. 15 Frumkin, n 2, above, at 48. 16 Most academics conclude Venice, but Bugbee, The Genesis of American Patent and Copyright Law (Washington DC, Public Affairs Press, 1967) asserts Florence’s claim to the title, at 17.

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divers parts. Now, if provision were made for the works and devices discovered by such persons, so that others who may see them could not build them and take the inventor’s honour away, more men would then apply their genius, would discover, and would build devices of great utility and benefit to our commonwealth. Therefore: BE IT ENACTED that, by the authority of this Council, every person who shall build any new and ingenious device in this City, not previously made in our Commonwealth, shall give notice of it to the office of our General Welfare Board when it has been reduced to perfection so that it can be used and operated. It being forbidden to every other person in any of our territories and towns to make any further device conforming with and similar to said one, without the consent and licence of the author, for the term of ten years. And if anybody builds it in violation hereof, the aforesaid author and inventor shall be entitled to have him summoned before and magistrate the said infringer shall be constrained to pay him [one] hundred ducats; and the device shall be destroyed at once. It being, however, within the power and discretion of the Government, in its activities, to take and use any such device and instrument, with this condition however that no one but the author shall operate it.17

The Venetian Statute contained all of the essential features of a modern patent law. It provided that the devices must be novel (new and ingenious,18 not previously made in the Commonwealth) and reduced to perfection. It gave a term of protection (10 years), provided for the licensing of the invention, and set out a procedure for determining infringement, providing a remedy in damages and calling for destruction of the infringing article. Furthermore, it reserved the right of the State to take and use the invention for itself, a condition mirrored in the Crown use provisions of the current United Kingdom Patents Act.19 In all aspects it evidences a modern approach to patents. The success of this Statute in stimulating invention is difficult to gauge, however, it is evident that it was accompanied by a profound increase in terms of the number of State grants of protection. In the 75 years before the enactment of the statute, some 10 or 11 patent grants are evidenced in Venetian reports,20 compared to over 100 in the next 75.21

17

Quoted from a translation in Mandich,‘Venetian Patents’ (1948) 30 JPOS 166 at 176–7. Prager, ‘The Early Growth and Influence of Intellectual Property’ (1952) 34 JPOS 106 (Prager, ‘Early Growth’) at 139 and Mandich, ‘Venetian Patents’, ibid, suggest that the use of this term requires a level of inventive merit above an obvious application of known technology; Prager goes as far as to say that this phrase suggests a requirement of considerable inventive merit. Walterscheid,‘Antecedents I’, n 7 above, at 709, disagrees, saying that this seems to be an attempt to apply modern sensibilities concerning obviousness to a law that is now more than five centuries old. He states that it is questionable whether the concept of obviousness was understood in the Venice of the 15th century. 19 ss55–58 PA 1977. 20 Prager,‘Early Growth’, n 18, above. See also Mandich,‘Venetian Origins of Inventors’ Rights’ (1960) 42 JPOS 378 (Mandich,‘Inventors’ Rights’). 21 Mandich,‘Inventors’ Rights’, ibid. 18

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The Spread of a Statute With the discovery of sea routes around the Cape of Good Hope at the end of the fifteenth century, which relaxed the Venetian grasp upon the highly lucrative trade routes between Europe and the rest of the world, it was inevitable that the success and prosperity that the Republic had enjoyed for so long must soon come to an end. This it did, and with it came an exodus of craftsmen and artisans who took with them the knowledge of the Venetian patent custom.22 Knowledge from the Statute therefore spread across Europe and found fertile ground.23 France has been described as an ‘obvious recipient’ as the first French patent was granted in 1551 to an Italian from Bologna for ‘glassware according to the manufacture of Venice’.24 Price,25 often obtuse in his reasoning, agrees that by the end of the sixteenth century, a systematic use of patents had developed in France but argues, albeit unconvincingly, that this may well have been in imitation of the already well developed English custom.26 The Germanic States also apparently benefited from the teachings of the Venetian craftsmen and granted their first patents from approximately 1484,27 a practice that crystallised into a tradition that was to last until the Thirty Years War. It appears that the Netherlands was also influenced in this manner and established a patent custom in the middle of the sixteenth century. The Italian connection is, again, evident.28

22 Greenstreet, n 13, above, at 4 states that there is a strong suggestion inferred from records of early grants in other countries that the idea of patent systems spread throughout Europe from Italy with emigrating glass workers. MacLeod, ‘Accident or Design? George Ravenscroft’s Patent and the Invention of Lead Crystal Glass’ (1987) 28 Technology & Culture 776 at 780–1, states that the patent custom was ‘carried out’ of Venice by glassmakers seeking to obtain the same degree of protection from local competition that they had enjoyed in the Venetian Republic. 23 MacLeod, Inventing the Industrial Revolution: The English Patent System 1660—1800 (Cambridge, Cambridge University Press, 1988) (MacLeod, Industrial Revolution) at 11 comments that ‘[i]t is no coincidence that the first recorded patents in many countries at this time were for glass making, a skill in which the Venetians excelled’. See also Mandich,‘Inventors’ Rights’, n 20, above, passim. 24 Mandich,‘Venetian Patents’, n 17, above, at 206; and Prager,‘History’, n 3, above, at 723. 25 Price, n 4, above, at 5. 26 Price adduces no evidence to back this up, therefore it should be considered at least speculative. See also Walterscheid, ‘Antecedents I’, n 7, above, at 711–3 for a brief discussion of the early French patent custom. 27 See Walterscheid, ‘Antecedents I’, n 7, above, at 711 who makes this assertion. See also Greenstreet, n 13, above, at 5. Pohlmann, n 13, above, simply states, at 122, that numerous patents were granted between 1500 and 1600 and that it was ‘only the war of thirty years, 1618 to 1648, which doomed this promising growth’. 28 See Walterscheid, ‘Antecedents I’, n 7, above, at 714; see also Doorman, Patents for Inventions in the Netherlands During the 16th, 17th and 18th Centuries (The Hague, Nijhoff, 1942) at 14–15; and Greenstreet, n 13, above, at 4.

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Early English Grants In England, the earliest recorded example29 of a patent grant is that to John Kempe of Flanders, and his servants, apprentices, and other members of the Weavers’ Mystery, and the fullers and dyers who might wish to come to England; of ‘franchises as many and as much as may suffice them’.30 Frumkin31 describes this as provision by Edward III of a non-exclusive privilege for exporting woollen cloth. However, both Hulme 32 and Fox33 make it clear that, far from being an export privilege, this grant had as its object the instruction of the English in a new industry and further, according to Hulme,34 was in line with an ordinance of 1326 designed to promote the textile industry. The grant is therefore most significant; its importance not lying in the offer of protection per se, but rather in the fact that it contained a general promise to extend similar privilege to all foreign weavers. In short, therefore, it was an overt declaration of a policy for the encouragement of English industry through Crown protection; the first of such on record. The incentives offered by the English Crown in the fourteenth and fifteenth centuries were diverse and not necessarily restricted to sovereign protection.35 Indeed, they could be anything from financial benefits and favourable tax treatments, to the grant of franchises and exemption from the rigours of certain statutes.36 However, the common thread that flowed through all was the desire to promote native manufacture through the importation of foreign knowledge, regardless of how it was obtained. This patent custom, if it may be called such at this point, was evidently concerned with fostering English industry and self-sufficiency by offering incentive to immigrate, in the hope of rectifying the country’s technological lag compared to the rest of Continental Europe.37 29

That has been discovered and interpreted as such. Pat 5 Edw III 1 m 25; Cal Rot Edw III (1330-4). These grants are briefly mentioned by Vojácˇek, A Survey of the Principal National Patent Systems (New York, Prentice Hall, 1936), who describes them, at 95, as the ‘oldest privileges on record’. 31 Frumkin, n 2, above, at 48. 32 See Hulme, ‘The History of the Patent System under the Prerogative and at Common Law’ (1896) 12 LQR 141 (Hulme,‘Prerogative’). 33 Fox, n 5, above, at 43. 34 Hulme, ‘The Early History of the English Patent System’, in Association of American Law Schools (ed) Select Essays in Anglo-American Legal History (Volume III) (Boston, Little, Brown & Company, 1909) (Hulme, AALH), at 119. This work is a revised and condensed version of Hulme’s four articles published in the LQR between 1896 and 1902. 35 Although in England this was crucially important when dealing with the importation of an industry by foreign artisans, as they could not claim the protection and rights of the common law. Also foreigners tended to be quite unpopular with the indigenous population, Crown protection often being critical to protect them and their property from mob violence. See Holdsworth, A History of English Law (London, Methuen, 1932, 5th Ed) (Holdsworth, English Law), Vol IV, at 335. 36 For a discussion of such early incentives see, eg; Prager, ‘History’, n 3, above, at 714–5; and Prager, ‘Early Growth’, n 18, above, at 118–26; Mandich, ‘Venetian Patents’, n 17, above, at 171; Holdsworth, English Law, Vol IV, ibid, at 344–5. 37 Hulme,‘Prerogative’, above, n 32, eg at 142, states that ‘English society [at the time] was mainly that of a pastoral and mining community, exchanging undressed cloth, wool, hides, tin and lead for the 30

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Thus, we see a grant in 1336 to two Brabant weavers to settle in York in consideration of the value of their industry to the Realm;38 an invitation in 1368 to three clockmakers of Delft to come to England for a short period;39 letters patent dated 1440 to John of Schiedame for a process of making salt on a scale never before attempted in the Realm;40 and a grant in 1452 to the Bohemian miners, based upon their possession of scientific methods in mining.41 However, far from providing evidence of an emerging patent custom, whilst all of these grants were clearly designed to improve the knowledge of the Realm, they did so on an individual, ad hoc, and personal basis and did not purport to protect the manufactures as inventions in themselves. As the conditions for life became more stable and the populace more tolerant of the international character of these artisans, the need for protection gradually disappeared and the necessity for adequate reward took its place.42 Thus, slowly, these inducements evolved into limited exclusive rights in areas of industry controlled by the state; hence pointing the way to the birth of a true monopoly right.43 It is unclear when the first English monopoly patent of invention issued to individuals was in fact granted. The argument seems to lie between those backing 156144 and those who consider 1552 to be the year in which the first issuance occurred.45 A small number of academics claim the correct date to be 1449,46 but as one commentator states,‘John of Utynam’s patent of 1449 stands solitary, detached, and inscrutable’.47 Whatever the date of the first patent of invention, it is clear that the system took root and flourished during the reign of Elizabeth I, for in the years between 1561 and 1600 in excess of 50 patents were granted.48 manufactures of the continent and the produce of the East’.. See also Holdsworth, English Law, Vol IV, n 35, above, at 341, 344–6; MacLeod, Industrial Revolution, n 23, above, at 10; Fox, n 5, above, at 43–7. 38 10 Edw III, Dec 12. 39 42 Edw III, p I. 40 18 Hen VI, Franc 18 m 27. 41 See Hulme, ‘Prerogative’, n 32, above, at 143 who asserts that this is ‘[t]he first example of a grant made to the introducer of a newly-invented process’. See also Fox, n 5, above, at 44. 42 Fox, n 5, above, at 45. 43 Walterscheid,‘Antecedents I’, n 7, above, at 707. 44 Including Hulme,‘Prerogative’, n 32, above, at 145; Holdsworth, English Law, Vol IV, n 35, above, at 345; Hauhart, ‘The Origin and Development of the British and American Patent and Copyright Laws’ (1983) 8 Whittier Law Review 539 at 541; Bugbee, n 16, above, at 174. 45 See, eg, Davies, ‘Further Light on the Case of Monopolies’ (1932) 48 LQR 394 (Davies, ‘Further Light’) at 396, a point he reiterates in ‘The Early History of the Patent Specification’, (1934) 50 LQR 86 (Davies,‘Early History’) at 95; Klitzke,‘Historical Background of the English Patent Law’ (1959) 41 JPOS 615 at 629; Fox, n 5, above, at 60–1; MacLeod, Industrial Revolution, n 23, above, at 11. 46 See Greenstreet, n 13, above, at 1, 5–6; see also Gomme, Patents of Invention: Origin and Growth of the Patent System in Britain (London, Longmans, Green and Co, 1946) at 6–12. The UK Intellectual Property Office (the new name for the Patent Office) also backs this claim; see http://www.ipo.gov.uk/ about/about-ourorg/about-history/about-history-patent.htm. The patent is discussed at length in Thorne, ‘John Utynam’s Patent AD 1449 and Medieval Common Law and Other Considerations of Related Interest’ (1957) 27 Canadian Pat Rep 21. 47 Gomme, ibid, at 13. See also Klitzke, n 45, above, at 630. 48 Again there are disagreements between academics as to the correct number; Hulme, ‘The History of the Patent System under the Prerogative and at Common Law—A Sequel’ (1900) 16 LQR 44 (Hulme, ‘Sequel’) at 52, states the number to be 51; Klitzke, n 45, above, at 635 cites Hulme for the proposition that 55 grants were made in this period; Fox, n 5, above, at one point states that 55 grants were made (at 50),

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The shift from the sporadic and essentially ad hoc pre-Elizabethan grants is, once more, presaged by the Italian factor. Commentators note a letter sent in 1537 to the King’s Principal Secretary, Thomas Cromwell, by a Venetian, one Antonio Guidotti, proposing to bring Italian silk weavers to England in return for 15 to 20 years’ control of the production of silk in the Realm.49 Whilst there is no evidence that Guidotti actually received a grant, the letter provides proof that Venetian practice was at least known in the Kingdom and therefore helps to explain a number of subsequent developments.

A New Policy of Monopoly Grant The early years of the reign of Queen Elizabeth I are marked by conscious acceleration in the policy of stimulation of domestic industry in order that the ‘technologically backward’ State might become self-sufficient.50 Central to this was the acquisition of superior technology, particularly in those areas that had previously ‘figured most prominently on the list of imports—viz. alum, glass, soap, oils, salt, saltpetre, latten, etc’.51 It is to this end that we see patents issued by William Cecil (Lord Burghley), Elizabeth’s first minister.52 The policy cultivated by Burghley made the provision of monopoly a natural phenomenon. It broke away from the fetters of local custom and allowed for the diversification and expansion of industry.53 The system still aimed at the importation of knowledge and skill from abroad and still sought to encourage the institution of new manufacture. However, the grant of exclusive privilege was becoming accepted as a cheap and effective method of improving the technological climate of the Realm, a policy argument that is comfortably familiar to any student of the patent system today. The only difference between the concept of the custom then and now, procedure and subject matter aside, being that as yet it was a matter of unquestionable prerogative power. However, events of the next few years changed the way that society was to view these grants, and indeed the Crown, perhaps forever.

but later asserts that the number was 51 (at 61–2); whilst Federico, ‘Origin and Early History of Patents’ (1929) 11 JPOS 292 at 297, indicates that Elizabeth granted 20 patents in the first 10 years of her reign, and 40 thereafter. 49 See, eg, MacLeod, Industrial Revolution, n 23, above, at 11; Klitzke, n 45, above, at 629; Gomme, n 46, above, at 8–9; Greenstreet, n 13, above, at 5–6. 50 See Walterscheid, ‘The Early Evolution of the United States Patent Law: Antecedents (Part 2)’ (1994) 76 JPTOS 849 (Walterscheid, ‘Antecedents II’) at 855 and Getz, ‘History of the Patentee’s Obligations in Great Britain’,(1964) 46 JPOS 62 (cont at 214) at 69–71. 51 Hulme,‘Prerogative’, n 32, above, at 152; see also MacLeod, Industrial Revolution, n 23, above, at 12. 52 See Walterscheid,‘Antecedents II’, n 50, above, at 855; MacLeod, Industrial Revolution, n 23, above, at 11. 53 See Price, n 4, above, at 6.

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Novelty and Consideration Close interest was paid to ensuring novelty of the invention during the early years of Elizabeth’s reign, a fact that emphasises that technological improvement of the Realm was a driving force behind the creation of the policy. The Crown was therefore careful to consider the merits of petitions for new inventions and to avoid displacing established industries. Employment of a native workforce was considered sacrosanct, and efforts were made to avoid impinging upon their livelihoods. Thus the Chiddingford glassmakers were consulted to see if they could make Normandy window glass before a patent for its production was issued to a group of foreign artisans.54 Similarly, a grant for the production of salt was refused in 1589 due to the fact that many native workers were using similar techniques. The patenting of mere improvements to existing inventions was also prohibited for the same reasons.55 Care must however be taken not to extend the sixteenth century definition of novelty too far. As Hulme explains, the sole test of monopoly contrary to law at this time was ‘that the grant should not seek to restrain the public of any freedom or liberty that they had before, or hinder them in their lawful trade’.56 Therefore, in practical terms, it was sufficient that the patentee demonstrate that their ‘new’ manufacture had not been practiced within the Realm within ‘a reasonable limit of time’ to render their grant ‘unassailable on the score of novelty’.57 Clear and distinct expectations were also developed, which, although the specifics varied from grant to grant, were ‘nonetheless consonant with the basic premise of developing new trade and industry within the Realm’.58 In modern patent grants, this role—the consideration that the patentee must provide in return for the protection offered—is satisfied by the provision of the specification, filed for public reference at the granting Patent Office. However, it was not until the eighteenth century that such a requirement was made of the patentee.59 In Elizabethan times consideration was acquired by the provision of requirements intended to ensure not only the introduction and operation of the new art, trade or industry, but also, and more importantly, its establishment within the Realm.

The Working Clause Patentees would often voluntarily bind themselves to put the invention into practice by words used in the petition and in the recitals of the patent. It was a 54

See MacLeod, Industrial Revolution, n 23, above, at 12. See Walterscheid, ‘Antecedents II’ n 50, above, at 859, discussing Bircot’s Case of 1572, wherein it was decreed that a patent should not be granted for an improvement in an existing manufacture. Walterscheid notes that this ‘would remain a tenet of English patent law for the next two centuries’. 56 Hulme,‘Prerogative’, n 32, above, at 153. 57 Ibid. 58 Walterscheid,‘Antecedents II’, n 50, above, at 856–7. 59 See the text accompanying n 180, et seq below. 55

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well-known axiom of English law, relating to all forms of Royal grant, that the ‘King must not be deceived in his grant’, the penalty for the contravention of this rule being the annulment of the grant.60 Englishmen were considered to know and respect this imperative, but foreigners were ‘apt to plead ignorance of the English common law!’61 and could therefore not be trusted. Thus, clauses were often,62 but not always,63 worked into the grants themselves in furtherance of this aim. The most basic of the clauses inserted into grants of this period were those which required the patentee to ‘work’ the new art, trade or industry within the kingdom;64 time limits frequently being placed upon such ‘working’, with the grant being void for lack of consideration if they were not adhered to. Also prevalent at the time were clauses obligating the patentee to employ and train native artisans to practice the trade covered by the grant. Walterscheid explains that this type of requirement was usually only applied to foreign patentees in order to safeguard the continuance of the industry should they abscond before the term of their patent expired:65 therefore accomplishing the same result as the ‘working’ requirement.66 A variation on this theme included limitations on the number of aliens that the patentee might employ. In addition, clauses were sometimes introduced that required the subject of the grant to prove the novelty or efficacy of their invention within a specified period. Evidence has been adduced to suggest that it was customary to bind foreign artisans in this way,67 presumably in an attempt to encourage full implementation of the invention, to prevent fraud being practiced upon the Crown and to ensure that the new knowledge could, in fact, be passed on to others. Further, the Crown often imposed requirements of a minimum standard of quality, and an obligation that the price be less than if the goods were imported, in consideration of the grant.

The Revocation Clause As time went on, and the policy became more established, the ‘working’ clause was gradually phased out in favour of a general revocation clause. This allowed the Crown to revoke grants on grounds of their being ‘generally inconvenient’, a simple, but all encompassing, concept easily applicable to a failure to introduce the

60

For a number of authorities that state this rule see Davies,‘Early History’, n 45, above, at 100. Walterscheid,‘Antecedents II’, n 50, above, at 857. 62 See Hulme, ‘On the Consideration of the Patent Grant, Past and Present’ (1897) 13 LQR 313 (Hulme,‘Consideration’) at 314. 63 See Davies, ‘Early History’, n 45, above, at 101–2 for a discussion of several grants not containing such clauses but which were accompanied by complimentary indentures between the Crown and the patentee whereby such requirements were inserted. 64 As opposed to merely introducing it. 65 Walterscheid,‘Antecedents II’, n 50, above, at 857. 66 An example of the use of this type of covenant can be found in the patent of Burchart Cranyce who undertook to teach ‘the secrets of his arte’ to Englishmen. See Walterscheid, ibid. 67 Davies,‘Early History’, n 45, above, at 102. 61

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patented industry within the specified time period.68 Davies declares its first use as being in a grant of 1575 to Holmes and Frampton for African headwear.69 The revocation clause rose out of the fact that the grant of a patent was a matter of Royal grace, and thus the hand that gave could also take away. Despite the potential breadth of the clause, it was mostly exercised in cases of non-use, cases where the grant was made on a false suggestion of novelty, and where the true inventor was discovered to be other than the patentee.70 It can be found in patents granted for the next two hundred years. The main object of the patent custom at this time was clearly the institution of new manufacture. Its grand aim was the technological improvement of the Realm, and the most simple and effective method of doing this was via the importation of knowledge from abroad. In short, the patent system protected and stimulated innovation directly, and invention (in the modern sense of creation) only indirectly, if at all.

The Problem of Odious Monopolies In addition to the legitimate and unobjectionable grants discussed above, the Elizabethan policy of monopoly reward carried with it a more shady countenance, which arose out of subtle but significant departures from earlier practice. Elizabeth’s policy demonstrated a marked difference from earlier mediaeval patents in two important ways. First, as stated above, early grants usually took the form of offers of Crown protection and not of monopoly privilege; although as noted there were a small number of exceptions. Second, the new system of monopoly grant relied far more heavily on the representations of the patentee than did the old. This reliance caused a gradual, but inexorable, devolution of responsibility for the introduction of new industry from the Crown to the patentee.71 Under the old system, where the Crown had been the administrator of the privilege, the grantee was essentially directly under Crown control. With the new system, however, it no longer had this direct influence; the power to act under the grant was transferred to the patentee who wielded and abused it as they pleased. Yet the jurisdiction for the settlement of grievances remained with the Crown. Holdsworth accurately sums up the position when he states that; ‘those who suffered [at the hands of monopoly grants] naturally wished for a better remedy than an appeal to the authority from which they emanated’.72 68

Ibid. See also Walterscheid,‘Antecedents II’, n 50, above, at 857. Davies,‘Early History’, n 45, above, at 102. 70 Ibid, at 103–4. 71 See Inlow, The Patent Grant (Baltimore, Johns Hopkins University Press, 1950) at 20; Holdsworth, English Law, Vol IV, n 35, above, at 347; Hulme,‘Prerogative’, n 32, above, at 151. 72 Holdsworth, English Law, Vol IV, n 35, above, at 347. See also Hulme, ibid, who states that; ‘to dispute the Queen’s licences before the Privy Council or in the Court of Star Chamber or in the Exchequer constituted a risk which few individuals cared to run, as the Courts were apt to regard non-compliance with the requirements of the patentee as evincing a want of respect for the Queen’s authority’. 69

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It was inevitable that this transfer of power and responsibility would lead to abuse, and grievances crept into the system early in its life. The Queen was quick to realise that the granting of monopolies could be used to reward favourites without depleting the Royal coffers. Courtiers saw that the policy could be exploited for their own personal gain, the mere existence of a system of exclusive privileges being sufficient incentive to join in the race for favours.73 Drawn by licensing patents or lucrative new monopolies in old industries, they left the more uncertain reward of patents for new inventions to the ‘poor and often chimerical inventors’74. Thus we see patents for the production of salt,75 vinegar76 and starch77, all established industries, being granted to court favourites. At ‘the hands of the corrupt courtiers the system of monopolies, designed originally to foster new arts, became degraded into a system of plunder’.78

Monopoly Classified The contemporary definition of ‘inventor’ and ‘invention’, combined with a lack of specifications, makes it impossible to clearly divide the grants of this era into those that are novel and useful by modern standards, and those that would be considered abuses.79 However, Lipson, in his Economic History of England, suggested the sub-division of patents into four categories, which attracted varying degrees of objection at the time of Elizabeth.80 His approach provides an exhaustive method of classification,81 and can be summarised as follows: First, there are patents to which no exception could be taken. These are grants that provided protection for new industries, whether for inventions in the modern sense of the word or technological know-how imported from abroad. At the opposite end of the spectrum were those grants that gave control of an established trade to an individual or group. These constituted a major grievance as they took from the people the right to enjoy a liberty previously open to them. In addition they were often bad for want of consideration moving to the public, as the notional requirement that society should derive some net benefit in return for sacrificing an area of commerce to the patentee’s exclusivity went unrealised. However, it is clear that these first two categories are not necessarily mutually exclusive as the second may eventually result from the first. Thus, the soap monopoly of Groyett and Le Leuryer ‘to make white sope’ as good and as fine as any in the 73

See Price, n 4, above, at 16–17. Ibid. Pat 27 Eliz pt 6 of Sept 1, 1585 to Thomas Wilkes. 76 Pat 26 Eliz pt 11 of Mar 23, 1584 to Richard Drake. 77 Pat 30 Eliz pt 9 of Apr 15, 1588 to Young. 78 Price, n 4, above, at 16–17. 79 See Fox, n 5, above, at 62. For a list of Elizabethan grants see Hulme, AALH, n 34, above, at 121–38; Also Hulme,‘Prerogative’, n 32, above; Hulme,‘Sequel’, n 48, above. 80 (Vol III) (London, Messrs Black Ltd, 1929) at 352–6. See also Davies,‘Further Light’, n 45, above, at 397 and Fox, n 5, above, at 62–5 from which the basis of the summary has been drawn. 81 Davies,‘Further Light’, n 45, above, at 398. 74 75

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‘Sope house of Triana or Syvile’,82 which was unobjectionable when first granted in 1561, was relegated to the second category by a series of additional grants issued long after the trade had lost its novelty. So too with the monopoly for the production of starch, originally awarded to Young in 1588 and continued by grants to various others well into the mid 1660s.83 Lipson’s third category, also disagreeable in nature, concerned grants conveying powers of supervision over an established industry or trade. Finally, of intrinsically less objectionable character, but under which grave abuses nevertheless flourished, were those patents taking the form of licences relaxing the austerity of the law in areas of import, export and the transport of certain commodities. These grants arose because it was often more expedient to grant limited licences to evade an unworkable law than to repeal the statute as a whole. However, it was not simply the grant of patents in these objectionable areas that caused problems, for instrumental in the creation of these odious monopolies were the powers of policing that accompanied the grant. The patentee was often provided with full powers of supervision, search, seizure and arrest of infringers in addition to ability to recover fines or penalties for infringement.84 Needless to say, this was an open invitation to abuse.

Mounting Opposition That the matter of abuses escaped serious opposition for most of Elizabeth’s reign is partly due to the (overall) cautious manner in which policy was conducted, but also, in no small measure, it was attributable to the vast power and popularity of the Queen herself. The issue of odious monopolies was first raised in Parliament in the 1571 session but was the subject of stern rebuke by Elizabeth as an attack on the Royal prerogative. This sharp, and damning, attack on those who wished to trim her ‘chiefest Flower’ was effective in silencing her opponents for the next 25 years until, in 1597, the issue of odious monopolies once again reared its head, prompted by the pressures of industrial depression. Elizabeth was firm in her stance, and once more condemned those who attacked her. However, seemingly aware that the problem would not just fade away, she also promised to ‘examine all patents and to abide the touchstone of the law’.85 However, this time her delaying tactics were not so effective. On 20 November, 1601, a Bill was introduced to Parliament entitled ‘An Act for the Explanation of the Common Law in Certain Cases of Letters Patent’. It prompted four days of debate, to which the Queen herself put an end by the issuance of a statement through the Speaker. Thus, Elizabeth said, ‘she understood 82 Which Fox, n 5, above, at 61 states may be said ‘to have launched the policy of encouraging new manufactures so vigorously pursued by Elizabeth and Burghley’. 83 Fox, n 5, above, at 64. 84 Walterscheid,‘Antecedents II’, n 50, above, at 864. 85 1 Parl Hist 906; quoted from Fox, n 5, above, at 75.

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that divers patents, that she had granted, were grievous to her subjects’,86 but that she had never assented to grant anything malum in se.87 Furthermore, she doubted the wisdom of simply repealing undesirable grants, stating that if the Bill were withdrawn she would agree to submit her patents to trial according to the law. This concession was most significant as it shifted any blame for the abuses away from the prerogative and onto the patentee. Moreover, as the courts’ discussion of the monopolies in question would inevitably turn on the facts of the individual cases, an in-depth criticism of the policy of monopoly grant and the role and nature of the prerogative was deftly avoided.88 The picture to emerge from the continued abuse of monopoly grants is one of increasing hostility and distrust of monopoly as a barrier to free trade. The monopoly system, designed to foster technological improvement within the Realm, to make the Kingdom self-sufficient, was being defiled. The minds of the people, of Parliament, and of the courts of the common law were therefore turned against the system. The only thing that prevented an overt attack on the prerogative power was deft manipulation of the situation by a powerful and, most importantly, popular Queen. The problem of odious monopoly hangs like a fog shrouding the brilliance of the invention that such a policy of monopoly grants in fact represents. The main object of the policy, the technological improvement of the Realm, was, after all, a resounding success. There is no evidence that Elizabeth set out to grant monopolies harmful to the State; even where patents were issued in restraint of trade it is clear that the necessity for supply was considered greater than the inconvenience caused. Thus, maintenance of supplies of gunpowder and ordnance of sufficient quality and quantity for the needs of the Realm was considered to outweigh the social cost of imposing a monopoly in its production. Indeed, when Elizabeth came to the throne there was a frightening need for ordnance;89 by 1591 English cannon were considered to be the best in Europe, and even the Spanish attempted to buy them.90 In short, it was ‘not the monopolies which were bad, but only their abuse’.91

Judging Monopoly at Common Law The most important consequence of Elizabeth’s concessions in the 1601 Parliamentary session was that the common law was called upon to settle the delicate constitutional issue of how far the Crown could be allowed to go in the 86

See Fox, n 5, above, at 77. Wrong in itself. See Holdsworth, English Law, Vol IV, n 35, above, at 348–9; Fox, n 5, above, at 78–9 for further discussion. 89 State Papers, Domestic Eliz vii, 5. 90 State Papers, Domestic Eliz ccxliv, 116. 91 Fox, n 5, above, at 189. 87 88

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pursuance of a policy of monopolies. The answer came in the infamous case of Darcy v Allin—The Case of Monopolies 92 and represents a decisive strike by the common law courts against odious grants. The monopoly in question was an exclusive privilege for the manufacture, import and sale of playing cards within the Realm. The grant was first made in 1576,93 was reissued twice94 and finally came into Lord Darcy’s hands in 1598. By the beginning of the seventeenth century it was wholeheartedly infringed,95 and the Queen’s proclamation of 1601 only accelerated this practice. Indeed, Darcy complained in June 1602 that many people took it for granted that the patent had been revoked and not just opened up to judgment by the law. The Privy Council stepped to his aid and issued an order confirming that the patent was still valid and that it would be upheld until adjudged void at law. The case was tried in the Easter term of 1602, and judgment delivered shortly after Elizabeth’s death the following year. The court considered that the Queen had been deceived in her grant, and the patent was proclaimed a dangerous innovation, contrary to statute, common law and the Commonwealth. However, rather than condemning all monopolies, counsel for the defendant stated that: where a man by his own charge and industry, or by his own wit or invention doth bring any new trade into the Realm, or any engine tending to the furtherance of a trade that never was used before: and that for the good of the Realm: that in such cases the king may grant him a monopoly patent for some reasonable time, until such subjects may learn the same, in consideration of the good that he doth bring by his invention to the commonwealth: otherwise not.96

The courts of common law, somewhat curiously, explicitly confirmed this exception to the general illegality of monopoly grants in the 1615 case of the Clothworkers of Ipswich,97 despite the fact that it had nothing whatsoever to do with the facts being tried.

Battles of a King James I acceded to the throne shortly before the decision in Darcy v Allin was handed down. It may be for this reason that he began his reign on a note of caution concerning monopoly grants, issuing a proclamation suspending them all until they could be examined and assessed by the Privy Council.98 92

11 Co Rep 84b, 77 ER 1260. To Bowes and Bedingfield. Pat 18 Eliz pt 1 of Jul 28, 1576. 94 In 1578 to Bowes and Bedingfield, and in 1588 to Bowes alone. 95 Davies, ‘Further Light’, n 45, above, at 399–403 notes at least 8 actions taken by the previous owners against infringers. 96 11 Co Rep 84b, 77 ER 1260 at 1263. 97 Godbolt 252; 78 ER 147. 98 Soc Ant Proc Coll May 7, 1603, summarised in Price, n 4, above, at 163. 93

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Despite such timid beginnings, James’s reign is not notable for its stable and conservative attitude to monopoly; quite the reverse. The years of 1603 to 1625 mark a period of extreme vacillation between caution and excess.99 Thus, on 16 March, 1604, James issued an apology to Parliament over the surfeit of his grants, and promised to moderate his generosity; in addition, he instigated the Commissioners of Suits to examine the merits of all applications. However, by 1606 the situation concerning monopolies was so bad that the Committee on Grievances presented a petition to the King at the close of the Parliamentary Session.100 The King undertook to revoke those patents of most concern, but in fact did nothing. In 1610 the Committee once again petitioned James, pointing to his lack of action and stating that in addition he had ‘failed in his undertaking that the courts should consider and judge of the validity of certain of the grants’.101 Shortly after this petition, the King issued what has become known as his Book of Bounty. This was a proclamation that all monopolies were against the laws of the Kingdom, excepting those concerning ‘Projects of new invention, so they be not contrary to the Law, nor mischievous to the State, by raising prices of commodities at home, or hurt of trade, or otherwise inconvenient.’102

From Bounty to Statute The wording of the Book of Bounty makes it clear that James’s advisors were familiar with the opinions expressed in The Case of Monopolies. Indeed, Coke stated that the case was the principal motive behind the publication of the book.103 The actual motivation of the King is, however, unclear. Fox suggests that James wished to convince the public that he had no intention of transgressing the principles of the common law and the limits of the prerogative, but adds that ‘the suspicion is inescapable that James was doing so, to a certain extent, with tongue in cheek, in an effort to lull the minds of the people into a feeling of security and with no real intention of limiting his own use of this facile tool for regulating trade.’104 In the years immediately following publication of the Book, complaints against monopolies continued unabated. However, the situation noticeably worsened in 1617 when Bacon, subordinate to Buckingham, replaced Ellesmere as Lord Keeper.105 Whereas Ellesmere had been a staunch opponent of improper grants, Bacon, under Buckingham’s piratic gaze,106 was less particular. In the autumn pre99 Coke famously stated in a debate in the House of Commons in 1620 that, ‘Monopolies are now grown like Hydra-heads: they grow up as fast as they are cut off ’ 1 Parl Hist 1193—quoted from Fox, n 5, above, at 93. 100 State Papers, Domestic Jac I, xxiii, 66 and 67. The list is reprinted in Fox, n 5, above, at 329. 101 Fox, n 5, above, at 95; see also Price, n 4, above, at 27. 102 See Fox, n 5, above, at 330-5 for a complete reproduction of the proclamation. 103 Coke, Part III of the Institutes of the Laws of England (London, Clarke & Sons, 1817; reprint) at 182. 104 Fox, n 5, above, at 97. 105 See Price, n 4, above, at 30; Fox, n 5, above, at 100–1. 106 See Fox’s statement that ‘Buckingham regarded [grants of patents] . . . as a means of enriching his own family and providing for his dependents’. Fox, n 5, above, at 101.

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ceding the 1621 Parliament, perhaps prompted by the growing unease with which his grants were being viewed, James convened a Commission to investigate the question of monopolies. Fox suggests that it was this act that forced the issue to a head the opening of the 1621 Session.107 Parliament met on 30 January and extensive debate on public grievances occasioned by monopoly grants was undertaken. A Bill against monopolies was introduced to the House in March whereupon it was passed by the Commons, but failed to gain approval in the Lords.108 Prompted by the agitation, the King issued a proclamation akin to Elizabeth’s of 1601, stating that many privileges had been granted on false suggestions of benefit to the Realm, and that others had been the subjects of abuse. He referred to the Book of Bounty saying that he had previously written of his dislike of such grants and of those who seek to obtain them. He followed these comments by declaring 18 patents void, and opening up 17 others to trial by the common law, stating that: [I]f any subject should find himself grieved, injured, or wronged by reason of any of the said grants, or any clause, article, or thing therein contained, may take their remedy therefor by the common laws of the Realm, or other ordinary course of justice, any matter or thing in the said grants to the contrary not withstanding.109

However, James was not the monarch that Elizabeth was, and in 1623 Parliament renewed its onslaught. The Statute of Monopolies thus entered the statute books as Chapter 3 of 1623.110

The Statute of Monopolies On almost every level the Statute of Monopolies merely restates the law as declared in Darcy v Allin, the Book of Bounty, and the Clothworkers of Ipswich.111 In section 1 107

Fox, n 5, above, at 102. Fox, n 5, above, at 106–7. Price, n 4, above, at 33 states that their Lordships did not object to it in principle, but considered the drafting to be unflattering to the King. 109 Soc Ant Proc Coll Jul 10, 1621. Quoted from Price, n 4, above, at 168, the relevant portion of the proclamation being reproduced at 166–8; See also Fox, n 5, above, at 112; MacLeod, Industrial Revolution, n 23, above, at 15. 110 (1623) 21 Jac I cap 3. 111 As ever there is academic disagreement as to the extent to which the statute was merely declaratory of the common law. Inlow, n 71, above, concludes, at 31, that the Statute introduced nothing new into the law: MacLeod, Industrial Revolution, n 23, above, at 17–18, suggests that it was little more than declaratory of the common law but ‘it converted previous prudential restraints into statutorily binding codes of practice’: Hulme, ‘Sequel’, n 48, above, declared, at 55, that the Statute did little to alter the limitations already assigned by the common law except to provide a restriction of the term of the patent grant. See also Boehm, The British Patent System: I Administration (Cambridge, Cambridge University Press, 1967) at 17. Fox, n 5, above, appears confused, stating at 125 that ‘[t]he Statute of Monopolies was nothing more than a declaration of what the common law had always been’, but at 118 he states that the Statute marks a departure from the common law with respect to the limitation of the term of the grant and also concerning the forum in which the grant could be contested; Holdsworth, English Law, Vol IV, n 35, above, at 353–4, similarly states that, in addition to the restriction of patent term, the Statute gave new 108

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all monopolies are declared to be contrary to the law and utterly void. Section 2 states that all issues of validity are to be determined at common law. Whilst section 3 provides that no one may exercise any monopoly right previously granted. In section 4, remedies are detailed for any party judged by the courts of common law to be aggrieved by a monopoly. Sections 5 to 14 then contain exceptions to section 1; the most famous being section 6, which provided an interpretative basis for English patents granted during the next 450 years.112 The section states that: any declaration before mentioned shall not extend to any letters patents and graunts of privilege for the tearme of fowerteene yeares or under, hereafter to be made of the sole working or makinge of any manner of new manufactures within this realme, to the true and first inventor and inventors of such manufactures, which others at the tyme of makinge such letters patents and graunts shall not use, soe as alsoe they be not contrary to the lawe nor mischievous to the state, by raisinge prices of commodities at home, or hurt of trade, or generallie inconvenient; the said fourteene yeares to be accomplished from the date of the first letters patents or grant of such priviledge hereafter to be made, but that the same shall be of such force as they should be if this Act had never byn made, and of none other.

Section 5 similarly exempted grants previously made, providing they satisfied similar requirements and did not extend beyond 21 years.

Commentary Sir Edward Coke provides contemporary commentary on the Statute in his Institutes on the Laws of England.113 He lists seven properties that a privilege of new manufacture granted thereafter must possess to be valid under section 6. The first five—the grant must not exceed 14 years; it must be made to the first and true inventor; it must be for those manufactures ‘which any other at the making of such letters patents did not use’; it must not be contrary to law; and it must not raise prices of commodities and therefore be ‘mischievous to the State’—are taken from the Statute itself. The final pair—the patent must not hurt trade; and that it must not be generally inconvenient—although not mentioned in the Statute, are consonant with Elizabethan policy. He then states that where such criteria are fulfilled, the grant of a patent will be good in law as ‘the inventor bringeth to and for the common wealth a new manufacture by his invention, cost and charges, and therefore it is reason[able], that he should have a privilege for his reward (and the incouragement of jurisdiction to the ‘common law courts to deal with disputes connected with these grants’. However, as Walterscheid,‘Antecedents II’, n 50, above, points out, at 875, the previous decisions of the common law in Darcy v Allin, n 92, above, and the Clothworkers of Ipswich, n 97, above, provide evidence that the jurisdiction given to the common law courts was not new under the Act. 112 Invention was defined in s101 Patents Act 1949 as meaning ‘any manner of new manufacture the subject of letters patent and grant of privilege within section six of the Statute of Monopolies and any new method or process of testing applicable to the improvement or control of manufacture’. Interestingly, s6 has never been repealed. 113 Coke, n 103, above, at 181–5.

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others in the like) for a convenient time’.114 Thus, we see the first explicit policy justification for the patent grant. In addition, Coke asserted that: ‘It appeareth by the Preamble of this act (as a judgement in parliament) that all grants of monopolies are against the ancient and fundamentall laws of this kingdome’, and that all ‘monopolies are against the ancient and fundamentall laws of the realm’.115 The latter phrase has served to colour the patent grant ever since. However, it is clear from both Darcy v Allin and the Clothworkers of Ipswich, that the right of the Crown to grant monopolies of new trades or manufactures to those responsible for their introduction to the Realm (whether by importation of skill or ideas, or by ‘contrivance’) was always recognised at common law as part of the prerogative. Nonetheless, as monopoly is the antithesis of the common right of freedom of trade, which all men are to enjoy as their birthright, the prerogative right to grant monopolies was, at least in theory, limited at common law to grants where consideration moved to the public. Even where this transfer of consideration was not in evidence, as long as a grant could be shown to be in the best interests of the Realm its validity would be recognised.116 Therefore, even after the ruling in Darcy v Allin, it is apparent that to omit the caveat relating to new invention and to condemn all monopolies on the ground that they have ever been ‘against the ancient and fundamentall laws of the realm’117 was an unsustainable argument.

The True Significance of the Statute The Statute of Monopolies forms a handy legislative marker from which to hang a picture of the neat and orderly growth of the modern patent system. As such it has been embraced into the folklore of patents and hailed as marking the beginning of the modern patent grant, a position of prominence that it does not deserve.118 The picture of a patent system caused, or even accelerated, by the Statute of Monopolies is wrong for a number of reasons. First, it has been shown that not only was there a controlled policy of patent grants in England before the passage of the Act, but also that there is evidence of a statutory regime that predates it by approximately 114

Ibid, at 184; See also Walterscheid, Antecedents II, n 50, above, 876. Coke, n 103, above, at 181. See, eg patents for the sole production of saltpetre and ordnance granted by Elizabeth and continued under James which also gained exception to the general prohibition of monopolies in the Statute of 1623 by virtue of s10 of the same. See also Fox, n 5, above, at 60. 117 Coke, n 103, above, at 182. 118 It is evident that the folkloric transition occurred sometime during, or just after, the Patent Controversy of the 19th century (see ch 3, below) as in the Report of the Select Committee on the Law Relative to Patents for Inventions, Parliamentary Papers III, 1829 (Command Paper No 332) (Report of the 1829 Select Committee), the Statute is treated roughly equally with An Act Containing the Censure given in Parliament against Sir Francis Mitchell, Francis Viscount Saint Albane Lord Chancellor of England and Edward Flood (18 Jac I cap 1 (1621)) and An act to Confirm a Judgement given in Chancery for Annulling Certain Letters Patent Granted to Henry Heron, for the Sole Privilege of Salting, Drying and Packing of Fish within the Counties of Devon and Cornwall (21 Jac I cap 11 (1623)). See Bently & Sherman, n 7, above at 208. 115 116

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150 years.119 Second, the Statute was for the most part merely declaratory of the common law; indeed it receives derisory treatment on this very issue in the Report of the 1829 Select Committee.120 Third, the Statute of Monopolies enjoys the peculiar distinction of having had almost no impact on the development of English patent law for many years after its enactment.As Walterscheid states,‘for all intents and purposes there was no development in the common law relating to patents of invention during the next century’.121 Seen in this light, the true significance of the Statute of Monopolies lies solely in its prohibition of the unfair monopolisation of a known trade. The underlying policy of Elizabethan grants is still evident and the general concept of encouraging the implementation of new manufacture is never questioned. Indeed, the Statute can be seen to stand apart from the adoption of any such policy, instead functioning to keep guard for potentially unjustified and capricious barriers to free trade. Its primary objective was, after all, to restrain a King gone wild in his grants in order that odious monopoly be avoided or nullified. It is therefore little more than enduring testament to the sanctity of free-market dealing.

A Legislative Aftermath The Statute of Monopolies is a response to a little more than half a century of bad feeling towards abuses of monopoly privilege. Its chief contribution was to clarify the existing English law and to reinforce the position taken by the courts until this time. As Bugbee states, ‘[w]hile only incidentally concerned with . . . [patents of invention] . . . the Statute provided a firmer legal basis for clearing away the bad company with which [they] had been forced to travel’.122 It did not create a new law of patents of invention; it merely allowed them to continue to exist, saved from the stifling effect of the ‘weedlike growth of monopolies’.123 However, the story of odious monopoly does not end here. Such grants continued to aggravate English politics for some decades after the Statute’s enactment. The source of contamination is, with hindsight, immediately recognisable when the Statute is examined, for not only did it exempt patents of invention, but also significant other grants concerning industries considered essential to the Realm, including saltpetre, alum, ordnance, shot, and gunpowder.124 Furthermore, in section 9 it was provided that grants made to ‘any Corporations, Companies or Fellowships of any Art, Trade, Occupation, or Mystery, or to any Companies or 119

ie the Statute of Venice. See n 118, above. Walterscheid, ‘The Early Evolution of the United States Patent Law: Antecedents (Part 3)’ (1995) 77 JPTOS 771 (Walterscheid,‘Antecedents III’) at 771. 122 Bugbee, n 16, above, at 39–40. 123 Ibid, at 40. 124 ss10 and 11. 120 121

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Societies of Merchants within this Realm, erected for the maintenance, Enlargement or ordering of any Trade of Merchandize’, be similarly excused from the wholesale condemnation of monopoly. The effect of these provisions was to allow a financially insecure Crown to confer favour and sell additional monopolies of these types without infringing the Statute. Thus, monopoly abuse had been limited, but not extinguished by Parliament, and public condemnation of such activities naturally spilled over onto the legitimate operation of grants to inventors.

Issues of Jurisdiction Further problems arose concerning uncertainty over the exact jurisdiction of the courts of common law in matters concerning letters patent for invention.125 The problem arose because of the wording of section 6, which stated that ‘any declaration before mentioned shall not extend’to patents of invention meeting the requirements set out later in the section. The question that perplexed courts and scholars alike was whether this meant that such patents were also excused from the requirements of section 2, which provided that validity of any monopoly should be determined in accordance with the common law. If it was the object of the Statute to transfer jurisdiction for patents of invention to the courts of the common law, it failed in spectacular fashion. Fox asserts that only one patent case is reported at law during the rest of the seventeenth century, and only one more appears in the years stretching from 1700 until 1765.126 This period was not, however, devoid of litigation concerning letters patent for invention, such matters were simply tried in conciliar courts, as was common practice before the Statute. It was simply ‘not thought fitting or consonant with the royal dignity that questions concerning [the] propriety [of such grants] should be discussed and considered in ordinary courts of common law’.127 In addition, it appears, at least in part, that grants were not turned over to the common law at this time due to the interference of Parliament, which seems to have adopted the habit of periodically reviewing the validity of patent grants.128 This practice seems to stem from sustained concern over the issue of odious monopoly. However, rather than being seen as safeguarding the interests of society, the procedure served mainly to further undermine trust in the system. 125 This incertitude also goes some way to explain the hiatus in development of the law concerning patents for invention evident in the century after the enactment of the Statute. See further Walterscheid, ‘Antecedents III’, n 121, above, at 771. 126 Fox, n 5, above, at 119. MacLeod is more cautious, stating that the ‘compilations of judicial precedents are totally silent on patents for the period 1614–1766, except for a brief reference to [a 1691 case]’, however she continues to say that there is evidence to suggest that some cases may have gone unreported, Industrial Revolution, n 23, above, at 68–9. 127 Fox, n 5, above, at 120. 128 See Walterscheid,‘Antecedents III’, n 121, above, at 773; also Fox, n 5, above, at 123.

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Another factor keeping the common law away from patents for invention was the fierce territoriality of the Privy Council. Shortly after the passage of the Statute of Monopolies, the Council made its views on the supposed common law jurisdiction very clear when it intervened in a case concerning a challenge to Sir Robert Mansell’s glass patent. Not only did it state that there was to be no encroachment on Mansell’s rights until a suit at law had been decided, but more importantly, it later also removed the right of trial at law. The Council pronounced: ‘The Lords declare that the patent shall stand . . . They think it of Dangerous consequence and trenching upon the prerogative that patents granted on just grounds and of long continuance should be referred to the strict trial of common law, wherefore they order that all proceedings be stayed’.129 Given this clear message, it is hardly surprising that there was little resort made to the courts of common law in the following decades. The break in the Privy Council’s hold over matters patent came suddenly in 1756 when it made a determination to divest itself of authority in issues of validity.130 Finally the common law was able to begin to establish its grip on patents of invention. However, the going was far from smooth, common law judges being forced to ‘pick up the threads of the principles of [patent] law without the aid of recent and reliable precedents’.131 The result was uncertainty over the nature of patent law and distrust of a system that appeared to be capricious from without, as ‘few cases meant few precedents, and few precedents generally meant uncertainty’.132 Failures, patents deemed unworthy of protection when reviewed at law, were more famous and more frequent than successes, and confidence in the system fell to a new low.133

Pressure for Change Thus, a picture of the system of the early- to mid-eighteenth century emerges. Monopoly had maintained its seventeenth century ‘odious’ title. Patents of invention had failed to lose the tainted moniker of monopoly, and were viewed with distrust and hostility. Abuses continued, and for the first half of the new century, the Privy Council maintained its jurisdiction over issues of validity. When at last release came, rather than improving the situation, it made things worse as the change of 129

State Papers, Domestic Dec 6, 1626; quoted from Walterscheid, ‘Antecedents III’, n 120, above, at

774. 130 See Walterscheid, ibid. See also Hulme, ‘Privy Council Law and Practice of Letters Patent for Invention from the Restoration to 1794’ (1917) 33 LQR 63 (continued at 180) (Hulme,‘Privy Council’), at 194; Holdsworth, English Law, Vol XI, n 35, above, at 426. 131 Hulme, ‘Consideration’, n 62, above, at 318. It should be noted that the doctrine of precedent, sacrosanct within modern English law, was itself in its infancy. Case reports such as they were, were unofficial and could be discounted by judges. Conflicting decisions could and did exist side by side. For a more in-depth treatment of the doctrine of precedent see Kempin, ‘Precedent and Stare Decisis: The Critical Years, 1800 to 1850’ (1959) 3 American Journal of Legal History 28. 132 Dutton, The Patent System and Inventive Activity During the Industrial Revolution 1750–1852 (Manchester; Manchester University Press, 1984) at 70. 133 Dutton, ibid, at 79 states that during the period from 1750–1799 only 39% of common law cases were decided in favour of the patentee.

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jurisdiction created additional uncertainty and removed any predictability that there may have been. The common law was forced to operate without precedent and became viewed as hostile by the patentee. Confidence in the system, always a precious commodity, had ebbed slowly away. Furthermore, society was unsure of what the patent law actually was. Dissatisfaction was rife. Concerns over the security offered by patent protection had conspired to produce an essentially binary valuation of patent grants. Most patents were considered unsafe, expensive and unattractive to the inventor. However the lure of certain patents, specifically those regarded as being more secure—typically taking the form of a grant that had survived challenge at common law—gave hope, and became incredibly valuable.134 Prospective patentees were therefore given great incentive to invent methods of making their grants more resistant to challenge. One such idea, which had been used erratically, and generally unsuccessfully, in the 150 years following the formation of the Elizabethan policy, was to accompany the petition with the enrolment of a manuscript detailing the invention and the extent of protection desired. It was this concept of specifying the subject matter of the grant that was eventually to gain favour with both patentees and the courts, and to serve to accompany the patent grant through a transition from object of Royal patronage into a bona fide tool of commerce.

Consideration Revisited—The Birth and Growth of the Specification The requirement that patentee disclose their invention to the public in return for a grant is a concept deeply ingrained in modern patent law. However, as has been shown, this has not always been the case. Indeed, it took more than two centuries from the crystallisation of Elizabethan patent policy for the provision of a specification to be required by the common law. Under early English patent custom, the consideration required to validate a grant in opposition of free trade was usually the promise that the subject matter would be introduced into the Realm. The methods employed in furtherance of this aim included using clauses obliging the patentee to ‘work’ the invention, requiring the employment of a certain number of native apprentices, and the all-encompassing ‘revocation for inconvenience’clause.135 By the closing years of the eighteenth century, the price that the patentee had to pay for the monopoly was the provision of a specification.136 Gone was the requirement to institute their manufacture, and in its place stood a far broader obligation to disseminate new skills to the public in general.137 134 135 136 137

Some things, it would appear, never change. See text accompanying n 68 et seq above. See comments to this effect in Boulton & Watt v Bull, 2 H BL 463, 126 ER 651 at 656. Walterscheid,‘Antecedents III’, n 121, above, at 792.

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From Introduction to Explanation as the Price of Monopoly There is a general consensus amongst commentators that the first enrolment of a specification can be found in Nasmith’s patent of 1711.138 However, there are a number of earlier grants which, although they cannot be said to have gone as far as Nasmith, nonetheless show that such a development was not as startling, or original, as some may claim. The earliest is an agreement between the Crown and Gerard Honricke, a German sea captain, in which he promised that in return for £300 he would ‘teache perfectlie by demonstraˆcon and practice with the hand without all manner of decipte and falsehood the said arte of makinge salte peter in the moste perfecte sorte’.139 The pact between the Crown and the German required that he should submit, within a specified time, written directions for its production. This he did, and it is this document, reproduced in the State Papers for 1561 under the title of ‘The trew and perfecte arte of the making of Saltpeter to grow in Cellars, Barns, or in Lyme or Stone quarrees’140 that Hulme contends is the first example of a specification.141 However, as Davies notes, there are a number of reasons why this cannot be so, the most important of which being the fact that Honricke was never awarded a patent, indeed he never asked for one, he merely offered to sell his knowledge.142 Fifty years after Honricke’s recipe was published an even more important precursor of the modern specification can be found in the publication of Simon Sturtevant’s Treatise on Metallica. It appeared in 1612 in accordance with a covenant made between Sturtevant and the Crown in the application for a patent. Although more in the way of an advertising prospectus than a specification,143 it is of interest because of the reasons that Sturtevant gives for its provision. He explains that it was deemed necessary so that: (1) . . . it might appear his inventions were new, and of his own devising, and not stolen from any other; (2) that the endeavours and inventions of other men, being different from his own, might not be prevented by him; (3) that none other should hereafter presume to petition His Majesty for inventions identical with those described by him; (4) that he was bound by the proviso (which he had caused to be inserted) in his grant, whereas he was not tied to any time for the trial of his inventions.144

138 See MacLeod, Industrial Revolution, n 23, above, at 49; Dutton, n 132, above, at 75; Gomme, n 46, above, at 27; Davies,‘Early History’, n 45, above, at 87; Adams & Averley,‘The Patent Specification—The Role of Liardet v Johnson’ (1986) 7 Journal of Legal History 156 at 158; Walterscheid, ibid, at 782. 139 Quoted from Davies, ‘Early History’, n 45, above, at 263–4. See also Klitzke, n 45, above, at 640–1 and Hulme,‘Prerogative’, n 32, above, at 145. 140 State Papers, Domestic Eliz XVI, 29–31. 141 Hulme, AALH, n 34, above, at 142. 142 Rights under this bargain were later transferred to Cockeram and Barnes who were granted a 10year monopoly. They, however, did not have to provide a specification. 143 Davies,‘Early History’, n 45, above, at 266–7; also Price, n 4, above, at 108. 144 Davies, ibid.

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Thus it is clear that the ideas behind the provision of a specification were not new at the time of Nasmith’s patent, and had in fact been advanced some 100 years previously, albeit in a climate not yet ready to accept such a change.145 Davies contends that five grants of James I, which required the submission of models146 or descriptions, are more deserving than Sturtevant of the title of first specification; although he concedes probably still not enough for its award.147 It is not known whether these requirements were made for the benefit of the Crown, to enable the Law Officers to determine more exactly the nature of the grant made, or for the benefit of the patentee, for their own protection. Indeed, it is possible that it may have been both. However, it is significant that these grants all occurred in the period between the Book of Bounty and the Statute of Monopolies, a time marked by growing unease over the public perception of monopolies. Therefore, the provision of models may also have been an attempt to assure the validity of such grants in the eyes of the public by illustrating that they did not cross the line between permitted and odious monopoly. This view is reinforced by a resurgence in the practice under Charles I shortly before the civil war,148 a time of great opposition to monopoly policy.149 In addition to these early-seventeenth century examples, there are a number of references to the annexation of models, schemes, drafts and discourses to patents after 1670.150 However, it is apparent that ‘these few precursors of the patent specification were seeds that fell on rocky ground, for apart from them we have found no suggestion in the patents of the seventeenth century of the coming of the novel provisions in Nasmith’s patent of 1711 which really originate the history of the modern patent specification’.151

The Novelty of Nasmith It has been deduced from the wording of Nasmith’s patent that the most likely explanation for his provision of a specification is that it was for his own security and protection, to make the scope of his grant more certain.152 In support of this view is 145 Thus, notwithstanding Sturtevant’s admission that he was not tied to any time limit for the introduction of his inventions due to the publication of his treatise (point 4 of his reasons), Davies reports that his patent was revoked in following year due to his outlawry and failure to work it. Ibid. 146 Meaning designs or descriptions of structure. 147 Davies,‘Early History’, n 45, above, at 268–9. 148 Ibid, at 271. 149 Fox, n 5, above, at 128–9. 150 Of which, the most famous are those of Dud Dudley, who published Metallum Martis in 1665— reproduced in Price, n 4, above, at 108–111—and the Earl of Worcester who issued a prospectus of his ‘most stupendous Water-Commanding Engine’ in 1663, see Davies, ‘Early History’, n 45, above, at 272. 151 Davies, ibid. 152 See Hulme,‘Consideration’, n 62, above, at 317.

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an argument relating to concerns expressed over the common practice at this time of inventors entering caveats with the law officers to alert them of petitions in fields of their interest. Caveats were notices that could be entered onto a register at any time prior to the sealing of a patent. They had the effect of preventing grant until after the objector’s arguments had been heard. When a request for a patent was made the caveat book would be searched and a hearing would be held between the petitioner and the caveat holder. The opposition would state the current art and his understanding of the work in the field. The patentee would describe the exact nature of his invention. Based on the information provided, the law officer would decide whether to go ahead with the patent or not. It was, in effect, a preliminary trial.153 Caveats saw a lot of use, and it appears that there was widespread belief that the system could be used to obtain knowledge of pre-grant patents and therefore provide an opportunity to steal the inventions before the patent could be issued.154 This fear found footing from the Statute of Monopolies, which stated that a grant would only be good for manufactures ‘which others at the time of making such letters patent shall not use’.155 Therefore, if anyone obtained knowledge and practised a patent before its grant, it could be avoided through caveat opposition or through a writ of scire facias. It was of no consequence that the information was obtained by fair means or foul.156 Nasmith’s statement that he ‘thinks it not safe to mention in what the New Invention consists until we shall have obtained our Letters Patent’157 clearly demonstrates that this fear was at the fore of his mind when petitioning for protection. However, detracting from the argument that the patentee introduced the specification to make the grant more certain, is the fact that the majority enrolled at this time were hopelessly vague.158 Davies also cautions against conclusions drawn from heavy reliance on the exact language used in such patents as ‘examples could be given . . . of suggestions which emanated from the Crown being embodied in patents in language which suggests that they were originally made by the patentee— or vice versa’.159 Therefore, although compelling, it is impossible to state with certainty that the specification was enrolled at Nasmith’s request. Indeed, because its first mention appears in the report of the law officer dealing with the petition it may be deduced that the initiative came from the Crown; the officer requiring a better 153 See Walterscheid,‘Antecedents III’, n 121, above, at 790; Davies,‘Early History’, n 45, above, at 107 for a slightly fuller discussion of the caveat system. 154 Dutton, n 132, above, at 35, 183; Davies, ‘Early History’, n 45, above, at 92; Gomme, n 46, above, at 23; Walterscheid, ‘Antecedents III’, n 121, above, at 790; MacLeod, Industrial Revolution, n 23, above, at 43. 155 s6. Reproduced in text following n 112, above. 156 See Walterscheid,‘Antecedents III’, n 121, above, at 791. 157 Quoted from Walterscheid, ibid. 158 See Adams & Averley, n 138, above, at 161; see also MacLeod, Industrial Revolution, n 23, above, at 49, who states that the specification, at this time, could be as informative or evasive as the patentee saw fit. 159 Davies,‘Early History’, n 45, above, at 91.

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disclosure before he would issue a favourable report.160 MacLeod states that it is likely a request of a specification was made in many such cases to make discrimination between superficially similar inventions easier.161 However, it is eminently possible that both views have a claim to the truth. The fear of inventive theft was well grounded, and the path towards the specification had already been explored in disputes akin to Garill’s case in the Privy Council in 1664162 and by publications such as Sturtevant’s Treatise on Metallica. In the former, the injustice and inconvenience caused by the lack of a description of the nature of the patentee’s invention was highlighted, and the enrolment of a specification after grant suggested. As Davies states, although not taken up in the case, it forestalls Nasmith by 50 years.163 It is therefore not unreasonable to conclude that Garril’s case paved the way and formed a link in the chain of developments leading to present law. Furthermore, Sturtevant’s Treatise is clear evidence that the Crown would already have been aware of the argument in favour of the enrolment of a specification by the time Nasmith approached them. A number of more practical reasons for the specification’s late development have also been advanced which may, in some manner, help to explain the gap between Nasmith and his precursors. Most commentators rely on the argument that it was not until the time of Nasmith’s patent that inventions were actually capable of being described in a specification. Hulme and Davies, for example, state that before this time in essence what were being introduced, were not simple mechanical inventions but rather whole new industries, the description of which ‘would have required a treatise rather than a specification’.164 Hulme goes further, stating that as long as the system was aimed at the introduction of new industries the requirement of a specification would have ‘materially detracted from the concession offered by the crown, besides constituting a precedent for which no sufficient reason or authority could be adduced’.165 Gomme166 and MacLeod167 state that technical literature was in its infancy in the eighteenth century, and therefore imply that requiring a specification before this time, even if considered a desirable option, may have been beyond the scope of the majority of patentees’ talents. 160 See Walterscheid,‘Antecedents III’, n 121, above, at 788; Gomme, n 46, above, at 33. The role played by the law officers in the grant at this time was significant. Hulme,‘Sequel’, n 48, above, states, at 53, that their influence in deciding patent grant policy began around the beginning of the 17th century. MacLeod, Industrial Revolution, n 23, above, at 48 suggests that in the century after 1660 all modifications in the patent system were made by them in the course of reporting on inventors’ petitions. Walterscheid, ‘Antecedents III’, n 121, above, at 779, states that by the 17th century the participation of the law officers in deciding patent policy was becoming standard practice. 161 MacLeod, Industrial Revolution, n 23, above, at 51. 162 This was a dispute heard in the Privy Council relating to a proposed patent to John Garill. For a fuller account of Garill’s dispute see Davies,‘Early History’, n 45, above, at 274. 163 Davies, ibid. 164 Hulme, ‘Consideration’, n 62, above, at 317; see also Davies, ‘Early History’, n 45, above, at 97 and 263; this is one of the few points on which the two appear to agree. 165 Hulme, ibid. 166 Gomme, n 46, above, at 26. 167 MacLeod, Industrial Revolution, n 23, above, at 49.

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Walterscheid, on the other hand, rebukes these arguments as too simplistic; stating ‘many of the Elizabethan grants cannot be said in any reasonable way to have encompassed the introduction of whole new industries’.168 He continues, asking why ‘the nature of inventions should have remained unchanged for more than 150 years and then suddenly change sufficiently to require a formal disclosure of the invention in the specification[?]’169 Taking these points in turn: whilst many Elizabethan grants were not for entire industries, it is clear that the majority were for more than simple mechanical inventions capable of straightforward description. In addition, it is submitted that Walterscheid’s second argument entirely misses the point, for it is not suggested that the kind of invention that was patented changed overnight. The sensible conclusion is that by this point in time conditions were such that it was far less likely that protection would be sought for the introduction of an entire industry. This argument is supported the fact that even after the provision of a specification was made a routine condition of grant, there is at least one case in which exemption was granted.170 Walterscheid further argues that for as long as ‘working’ of the invention was the main Crown priority, the idea of a specification was of little importance. Therefore, the rationale for not requiring one under early English patent custom came more out of a ‘concern by the Crown and the patentee to avoid legal arguments about the propriety of the grant than anything else’. Moreover, not making the requirement was, in the main, an attempt to protect the royal prerogative to its fullest extent.171 However, all of these arguments seemingly fail to appreciate that no ‘one’ reason can be given for why the specification was not introduced at an earlier point in history. Rather, a gradual change in the type of invention, the fact that ‘working’ clauses had been removed, the use of the caveat system, and patentee’s concerns to make their grants more certain, amongst other reasons, all conspired to form an environment conducive to the enrolment of a specification. It cannot be said that any one of these factors was responsible for Nasmith’s revolution. It was their combination in the social, political and economic context of the day that formed what might be termed the ‘inventive step’ of the specification.

A Mark of Evolution The uncertainties concerning the scope and substance of patent rights that had been evident since before the passage of the Statute of Monopolies, and that were to continue for decades after the advances marked by Nasmith’s patent, were the inevitable result of an evolution within both the patent sphere and society. When the system was conceived during Elizabeth’s reign, all grants were semi-contractual agreements between the patentee and the Monarch, whereby protection was offered 168 169 170 171

Walterscheid, Antecedents II, n 50, above, at 860. Ibid. See Davies,‘Early History’, n 45, above, at 90. Walterscheid,‘Antecedents II’, n 50, above, at 862.

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in return for the introduction of new manufacture. By the mid-eighteenth century, this practice had evolved into offers of exclusive privilege in which the Crown, consonant with a policy of improving the Realm, provided limited monopoly rights in exchange for the introduction of new industry. In essence,‘patents originally represented royal privileges issued under the royal prerogative to achieve royal policy goals’.172 However, first Darcy v Allin, then the Clothworkers of Ipswich, and most importantly, the Statute of Monopolies, had made tentative, but significant, steps towards containment of the Monarch’s power in this area. This necessitated a shift away from patents being seen as royal privileges and towards their being viewed in the context of the common law and legal rights. In short, patents at this time were slowly coming to be seen as tools of commerce within the market economy.

A Practice Accepted Nasmith’s application was made in a period of confusion within the English patent system. Time and civil war had muted the public furore over odious monopolies, but had not erased the feeling of general distrust that was left in their wake. By the end of the seventeenth century, the requirement that the invention be introduced to the Realm within a specified period had disappeared in practice.173 Moreover, the utilisation of non obstantibus (notwithstanding) clauses meant that it was not necessary to include a description of any kind with the patent, as the subject matter receiving protection was that actually used by the patentee.174 Furthermore, great uncertainty had been injected by the unsettled issue of jurisdiction concerning patent disputes, the courts of common law not yet having taken up position as sole arbiter of the system as promised by the Statute of Monopolies.175 With these issues in mind, it is unsurprising that Nasmith’s patent gave no actual guidance as to what a specification should contain. Therefore, at this point in time, and for many years after,‘it is doubtful whether patentees had any clear idea what the function of a specification was or how full and accurate it ought to be’.176 172 Mossoff,‘Rethinking the Development of Patents: An Intellectual History, 1550—1800’ (2001) 52 Hastings Law Journal 1255 at 1274. 173 See Hulme,‘On the History of the Patent Law in the Seventeenth and Eighteenth Centuries’(1902) 18 LQR 280 (Hulme, ‘Seventeenth and Eighteenth Centuries’) at 283, who states that by about 1673 the ‘obligation to institute the manufacture . . . had disappeared from the contract (unless voluntarily introduced by the applicant)’. MacLeod further states that in the context of post-1660 grants nonimplementation ‘did not normally give cause for voiding an English Patent’, Industrial Revolution, n 23, above, at 21. See also Walterscheid,‘Antecedents III’, n 121, above, at 786. 174 See the opinion of Sir William Jones, Attorney General, in 1676 that the description of the article within the patent was not necessary, it could be constructed as the patentee saw fit, but once set up and used, that was the sole model protected by the patent. Referred to in MacLeod, Industrial Revolution, n 23, above, at 62; Walterscheid,‘Antecedents III’, n 121, above, at 786. 175 It will be recalled that the Privy Council finally conceded authority in patent matters in 1756. See text accompanying n 130 above. 176 MacLeod, Industrial Revolution, n 23, above, at 50.

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However, despite this uncertainty, the concept of bargaining for protection with a written disclosure gained favour, both with patentees, possibly eager to make their grants more certain, and with the law officers of the Crown, without whose favourable report a patent would not be issued. The provision of a written specification detailing the invention therefore became accepted as the price that the patentee should pay for the privilege of protection from imitation.177 Thus, the practice of requiring a specification became customary in about 1734.178 However, it took the common law another four decades to establish its grip on the system, and to openly accept the death of the doctrine of introduction, instituting the requirement of a specification in its place. Therefore, in 1778 Nasmith’s small step was finally translated into a great leap for the common law in the landmark case of Liardet v Johnson.179

Liardet v Johnson Liardet v Johnson has been variously described as a ‘landmark in the history of English patent law’180 and dismissed as insignificant.181 However, its status as the first reported case in which the courts of the common law expressly required an enabling disclosure marks it out for attention. The patent in question concerned a new composition for stucco, a type of cement. It was granted in 1773 with the, by then, usual proviso that a specification would be enrolled, in this case within four months.182 The patent was later assigned to the Adams family who, in 1776, ‘reassigned it to Liardet so that he could seek an Act of Parliament extending its term’.183 The term was subsequently extended to 18 years, on the condition that Liardet enrol a further specification detailing improvements made to the cement since the original grant. This was done in September 1776, and Adams, although no reassignment of the patent had taken place, continued to use the protected stucco.184 177 Thus Hulme,‘Privy Council’, n 130, above, gives the example, at 188–9, of a patent set aside in 1732 for failure of specification to set forth nature of invention. 178 Hulme, ‘Seventeenth and Eighteenth Centuries’, n 173, above, at 283 states that the first requirement for a specification can be found in a patent of 1716, but that the practice was not uniform until about 1740; Davies,‘Early History’, n 45, above, at 89 states that the practice was made customary in 1734 but that there are examples of the requirement being made in 1712, three times in 1716, twice in 1717, twice in 1718, and that between 1720 and 1733, a further 15 specifications were required; Gomme, n 46, above, at 34 says that between 1711 and 1734 (when the practice became customary), 29 of 158 grants had a specification enrolled. 179 Reports of the first trial were published in the Morning Advertiser and the Daily Post on 23 Feb, 1778, and in the London Chronicle and the Daily Advertiser the following day. The second trial is reported in the Morning Post and Daily Advertiser, The Gazetteer and the New Daily Advertiser on 20 Jul, 1778. See Adams & Averley, n 138, above, at 174. The case is reported at (1780) 1 Y & CC 527. 180 Hulme,‘Consideration’, n 62, above, at 317. 181 Adams & Averley, n 138, above. 182 It was enrolled on 3 Aug 1773. Adams & Averley, n 137, above, at 162. 183 Walterscheid,‘Antecedents III’, n 121, above, at 795. 184 Both Adams & Averley, n 138, above, at 162, and Walterscheid, ibid, state that Liardet acquiesced in this use.

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In May 1777, Liardet and four Adams Brothers filed a suit in equity against Johnson, Downes and Bellman, seeking an account and injunction. Johnson replied by producing an affidavit implying, without expressly stating so, that Liardet’s preparation was not novel, and in addition that Johnson’s composition was materially different from that protected by the patent. In July 1777, an injunction was granted restraining Johnson from making, using, or vending the composition, on the proviso that an action was brought promptly at law. Johnson replied to the injunction at the beginning of September 1777, stating that Liardet was not the inventor of the composition, or any ‘imaginary improvements’ over earlier stucco.185 He further denied that his invention infringed the Liardet patent, but rather improved upon a known manner of manufacture by the addition of specific ingredients,186 and stated that he had inspected the second specification to make sure. Liardet and the four Adams brothers then instigated action at common law. The case was first tried before Lord Mansfield on Saturday, 21 February, 1778. It lasted merely six hours, the jury returning verdict for the plaintiff. Unfavourable public comment, that Adams & Averley suggest may have been caused by the fact that the plaintiffs had stuccoed his Lordship’s house with the composition some years earlier, may have prompted Mansfield to grant a new trial, despite the fact that little, or no, new evidence was adduced.187 The case was therefore resubmitted and heard before Mansfield once more on 18 July, 1778. It is Mansfield’s charge to the jury in this, the second of the Liardet v Johnson cases, that is of primary interest to our discussion of the evolution of patent law at this time.188 Three questions were asked. First, had the defendant used the composition? Second, if he did use it, was the invention new or old within the definition given in the Statute of Monopolies? Finally, was the specification such as to instruct others how to make the composition? He continued: For the condition of giving encouragement is this: that you must specify upon record your invention in such a way as shall teach an artist, when your term is out, to make it—and to make it as well by your directions: for then at the end of the term, the public shall have benefit of it. The inventor has the benefit during the term, and the public have the benefit after . . . [Where the invention is a composition] the specification must state . . . the proportions; so that any other artist may be able to make it, and it must be a lesson and direction to him by which to make it. If the invention be of any other sort, to be done by mechanism, they must describe it in a way that an artist must be able to do it.189 (emphasis added)

185 He cited entries in A New and Universal Dictionary of Arts and Sciences published by John Hinton in 1751, and to the 2nd ed of this work published by a Mr Owen in 1764, as well as Charles Rawlinson’s patent for a composition for slate on roofs, published in his own Directory for Patent Slating in 1772 in order to substantiate such a claim. 186 Namely serum of ox blood. 187 Adams & Averley, n 138, above, at 164. 188 Although see Adams & Averley, n 138, above, at 171 who suggest that the novelty of the case lies in its reliance on the testimony of expert witnesses. 189 Quoted from Hulme,‘Seventeenth and Eighteenth Centuries’, n 173, above, at 285.

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As Walterscheid astutely states, this was ‘one of the earliest statements by an English judge of the modern requirement that a specification must be enabling’ (emphasis added).190 However, he is quick to note at least one earlier case in which Mansfield discussed the adequacy of the specification191—suggesting that Liardet v Johnson may not be as novel as the folklore of patents would infer.

Conclusion Novel, or not, Liardet v Johnson is, at least, evidence of an important step having been taken in English patent law. It reminds the patentee of the importance of an enabling disclosure (albeit in rudimentary form) and paints the patent grant as a contract with the public in which temporary monopoly is exchanged for benefit accruing from the inventor’s knowledge entering the public domain. Further, the case was one of the first on such matters to receive widespread coverage in newspapers and pamphlets. Thus it distributed the message to the public at large, rather than simply to a small circle of interested parties.192 By the end of the eighteenth century, Liardet v Johnson was settled law, and the patent could finally be said to have started its separation from grants of Crown favour. It had entered the market economy as an item of commerce, and the price was disclosure.193 By this time it was apparent that the patent should teach the operation of the invention without further experimentation,194 such a defect being grounds for avoiding the grant.195 The working of the invention per se was no longer sufficient consideration for the award of a monopoly. The function of the patent grant was therefore changing. Whereas previously it was seen as an object of patronage, by the end of the 1700s we begin to see it being discussed in connection with the promotion of invention. So, finally, more than 200 years after the inception of a discrete policy of monopoly grant for new manufacture, description of the subject matter had come to be required at law. The hiatus that followed the enactment of the Statute of Monopolies had been broken and the courts of the common law had asserted their place as the sole arbiter of the system of monopoly grant. 190

Walterscheid,‘Antecedents III’, n 121, above, at 797. Ibid, citing Hulme, ‘Privy Council’, n 130, above, at 192 for the proposition that Mansfield had previously held Brand’s Patent invalid in 1771 owing to the fact that the patentee had omitted certain material information from his specification. 192 See Mossoff, n 172, above, at 1293; also Hulme, ‘Consideration’, n 62, above, at 284 where he lists some of the literature in which the case can be found. 193 Buller J was therefore able to definitively state in 1795 that the ‘specification is the price that the patentee is to pay for the monopoly’. Boulton & Watt v Bull, 2 H BL 463, 126 ER 651 at 654. 194 See, eg, Turner v Winter, 1 TR 601, 99 ER 1274 at 1276. 195 It should be noted that a specification could equally be defective if it included too much as if it disclosed too little. This was especially the case if the superfluous material was thought to be included for the purpose of misleading the public—see Walterscheid, ‘Antecedents III’, n 121, above, at 802 where he discusses R v Arkwright, 1 Web P C 29 (Common Pleas 1785). 191

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The foregoing discussion highlights some of the problems that the patent system has experienced during its long history. In addition, examination of the Elizabethan practice has enabled us to begin to form a picture of the rationale for the grant. The clear motivation behind the early system was the improvement of the Realm. Consideration of the ‘price’ that the patentee should pay for the grant only really became important when the object shifted from instituting new manufacture to protecting invention in a modern sense of the word. As technology progressed, the problems associated with the scope of the grant became more visible. This predicament was compounded by the simple fact that the number of grants also increased. When there were only 50 patents extant in the country it was relatively simple to decide issues of infringement, however, as the custom evolved the numbers grew by exponential degree. The problem of odious monopoly is also significant for, as we saw in chapter one, the traditional view of the courts of England & Wales is that the patent is an exception to the principle of free trade. This view shares its roots with the Statute of Monopolies itself, and it is interesting to note the same arguments being raised against wide protection today as were levelled at the abuses of Elizabethan policy. Seen within the historical context, the introduction to the economics of the patent system in chapter three, reveals more than a simple dry treatment of the subject would do. The move away from viewing the patent as an instrument of Crown policy to a legal right obtained by an inventor is consonant with the common law’s tightening hold over the system. This is reflected in the grant’s change of focus from the issuing body to the petitioner. Therefore we see patentees in the period post-Nasmith taking a more active role in the definition of their own scope of protection. The increasing distance that this shift in focus placed between the Crown and the grant is also significant as it enabled opponents of the system to begin to voice their complaints, and competitors to challenge the grants, without this being viewed as criticism of the Sovereign. However, this did little to address the general feeling of discontent surrounding the system. Patents were still distrusted and maintained their association with the odious practice of the past in the mind of the people. Indeed, Frost, writing in 1912, stated that the courts’ general distaste for patents of invention during the eighteenth and early-nineteenth centuries was ‘no doubt, actuated by the deep-seated prejudice which was extremely general in the public mind and was the direct outcome of the monstrous oppression practiced by means of patent grants before the statute of James I’196 This feeling of discontent was, in many ways, compounded by the relatively small number of grants that were actually in existence; the exclusive nature of the right undoubtedly giving rise to a feeling of elitism and privilege. However, the system was inexorably gaining in popularity. Thus, the 22 patents granted in the first decade of the eighteenth century had become 647 in the last.197 Moreover, the growing competitiveness of patenting and 196 Frost, Treatise on the Law and Practice Relating to Letters Patent for Inventions Vol 1 (London, Stevens & Haynes, 1912) at 332. 197 MacLeod, Industrial Revolution, n 23, above, at 150.

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the oft-hostile attitude of the courts ‘generated a new concern for reform among patentees themselves’.198 In addition, this period in history saw the birth and popularisation of the political economists such as Smith, Bentham and Mill. Their comments and theories allowed the patent grant to be considered in a new light in their revolutionary ‘Market Economy’.

198

MacLeod, Industrial Revolution, n 23, above, at 182.

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3 Patents within the Market Economy (Part I) Classical Economics and Philosophy Preface Acceptance of the patent as an item of property is not something to which most of those using the system will ever direct their thoughts. Statute dictates that patents are to be treated as personal property for the purposes of assignment, mortgage, transfer upon death, etc.1 Therefore patents are property. However, certain aspects of intellectual property in general, and patents in particular, render such a simple conclusion lacking in substance, especially when the boundaries of this ‘property’ come to be considered. The principal problem involved with viewing the patent as an item of property is also one of its defining features: intangibility. As with any other proprietary right the patent is capable of being trespassed upon; the rights of the owner can be infringed by the commercial operation of another in the state(s) in which protection has been obtained.2 However, the fundamental difference between trespass upon the rights of the owner of tangible property and the rights of the patentee is the direct product of this intangibility: before matters of infringement can be concluded, the property itself, the extent of the right and its boundaries of protection, must be decided upon. Herein lies our problem. The abstract nature of this monopoly makes the application of a traditional legal analysis of property rights difficult, if not impossible. In cases of theft or trespass concerning tangible property there is rarely, if ever, the need to enter into complex debate about the boundaries of the property concerned. It may be that the rights affected need some clarification, but in general if someone strays onto your land or appropriates an item of personal property you can see his or her presence. Boundaries are clear.

1

See s30 Patents Act 1977 (PA 1977). It is important to remember that the patent is essentially a creature of territory, its power curtailed by the territorial limits of sovereignty. Therefore a patent granted in the UK is only effective within the UK, however wider protection can be obtained by the acquisition of multiple patents in other states. 2

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This is not the case with patents. Therefore, it is pertinent to inquire how their existence as items of property can be justified, and indeed how the legal treatment of patents can be intellectually separated from the treatment of other forms of intellectual property such as copyright or designs. Such an examination is rendered more significant when determination of the scope of the patent right is taken into account. The problem with a patent arises because of the way in which the scope of protection is defined. A patent may be said to provide protection to the inventive idea or subject matter that lies behind an invention. This is quite often wider than the projection or expression of the idea in real space and, given its abstract nature, the only sensible way in which this matter can be contained is to pin it down in a net of words. The accepted, indeed required, method of doing this is to write a series of claims, backed up by drawings and a more verbose and descriptive specification detailing the background of the invention, the problems that the inventor faced and the steps they took to overcome them, and generally explaining their creation to one versed in the art.3 However, this is not the end of the matter; claims are used to define the invention but great care must be taken not to make the definition too wide so as to encompass something that is not new.4 To claim as subject matter that which is already practiced would be to remove from the public a freedom to operate within the public domain, a fundamental evil that had been the legitimate subject of criticism since before Darcy v Allin.5 Therefore it is the job of the claim drafter to effectively enclose the invention without straying into the prior art and without overly stretching the claim to encompass things that the inventor has not actually invented or described. Thus stated, it is clear that there are two main questions that need to be answered in respect of the philosophical and legal justifications of patents for invention. First, and most fundamentally, how is the grant of a bundle of property rights in the intangible justifiable, ie on what basis does society rationalise the award of a temporary monopoly to the inventor for their invention? Second and inextricably linked with the first question, how large a bundle of rights should the inventor receive, ie how broad should the monopoly granted actually be? In answering the latter of these questions, regard must be had to the extent to which the philosophical justifications of the patent system permit expansion from the literal scope of the claims. This, in turn, opens the debate to include a consideration of the factors that affect the intrinsic scope of the patent as drafted (ie the reasons why the patent is drafted with the breadth that it is), a point that relays us back to the justifications of the patent system. Armed with this information, it will then be possible to critically appraise the economics of the patent system and compare philosophical and economic conclusions on the desired breadth of patent protection. 3

See s14 PA 1977. On the issue of overly broad patent claims see, eg, Biogen v Medeva [1997] RPC 1, where the House of Lords held that the requirement that the claims be supported by the description means that overly broad claims can be objected to on the basis that the disclosure is not adequate—thereby importing s14(5) PA 1977 into s72(1)(c). 5 11 Co Rep 84b, 77 ER 1260. Discussed at text accompanying n 92 et seq in ch 2, above. 4

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Introduction At a time when there is increasing pressure to conform to an international standard, the lessons of the past are often overlooked. Despite new theories and justifications being advanced, the patent system is seemingly perpetuated on the basis that there has ever been and will ever be patents; like them or not, they are part of the scenery. However, when considering modern questions about the breadth of the system, or the scope of the grants themselves, it is informative to return to first principles and consider why it is that we provide protection in the first place. History plays an important part, as it highlights that patents should not be taken for granted. They have a hard-won place in the modern economy and, as we shall see, during the antipatent debate6 of the mid to late-nineteenth century Britain came as close as it ever has to abolishing the system completely. Utilising this patent controversy as its backdrop, this chapter explores what may be called the classical justifications for the patent system. The philosophical arguments, both for and against the grant, which appeared in the popular press and the infantile arena of the political economists at this time, illustrate an early rationalisation of the nature of the right and the exclusivity that a patent provides. This revelation of nascent policy not only provides a backdrop to the modern theories, discussed in chapter five below, but also allows us to see the manner in which economic theory began to be utilised in an attempt to clarify, support and modernise the system, with varying degrees of success. Integral to this investigation is an examination of the effect that the shadow of monopoly, which had dogged the grant since Elizabeth I’s reign and still habitually raises its head today, had on the public perception of the grant at this time. Focus on the nature of the grant (as an instrument of Crown policy) necessarily restricted realisation of the patent as a distinct entity, as it was seen as a de facto brother of monopoly if not monopoly itself. This, in turn, hindered its acceptance as an item of property and its realisation as a separate category in the embryonic sphere of what is now known as intellectual property law. Therefore, whilst arguments that a property right existed in the patent grant were being advanced as early as the beginning of the eighteenth century,7 it was not until the reforms of the mid-nineteenth century that the grant of a patent could finally be seen as such. The chapter therefore explores popular misgivings entertained over the patent system and assesses their impact. The fact that an anti-patent debate could rage so furiously, and publicly, in the late nineteenth century is testament, in itself, to the depth of bad feelings and importance of the issues at stake. This experience demonstrates, perhaps more clearly than any other, that the public’s perception matters. It 6

Also often called the ‘patent controversy’ or ‘patent crisis’. See MacLeod, Inventing the Industrial Revolution: The English Patent System 1660–1800 (Cambridge, Cambridge University Press, 1988) (MacLeod, Industrial Revolution) at 198 for a discussion of such early rationalisation of property. 7

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is not simply sufficient for a legal regime to be fair if it is not also seen to be fair; and the patent system evident in early-Victorian Britain was ostensibly neither. However, despite damning criticism, the core survived and important legislative and administrative changes were undertaken to assuage the popular discontent. The patenting process and the quality of the grant were greatly improved and, crucially, the claims and the specification assumed what is now considered to be their proper place at the centre of the patent. However, this is not all that the Victorian controversy did for the system, for, as we shall see, it also galvanised economic debate over the justifications of the patent grant. As a consequence, the philosophies of Bentham, Mill and Smith were revitalised and re-energised, in turn enabling an economic agenda to start to replace the ostensibly pragmatic justifications of the past. It is important to note that these early ‘classical’ theories not only form the basis of much modern economic thought on the patent system, but also are regularly advanced as justifications in their own right. However, before discussing the early economic theory in any depth, we begin with general comments on the economic appreciation of the patent grant. In addition, we consider the nature of the rights that the patent provides and explore some of the problems that are associated with the creation of property in the intangible.

Patents Within the Market Economy As we have seen, the pedigree of the British patent system can be traced, in terms of ideas and themes, if not defining historical lineage, through the influence of the Royal prerogative to the Statute of Monopolies8 and Elizabethan grants9 and as far as the City State of Venice10 and beyond. Patents are not a new invention, and yet considered economic appreciation and analysis of them is a relatively modern concept. To the new breed of political economists in pre-twentieth century Britain, typified by the likes of Mill, Bentham and Smith, they appear to be taken for granted; mere paragraphs dedicated to them in treatises many hundreds of pages long.11 8

(1623) 21 JacI cap 3. See text accompanying n 50, et seq in ch 2, above. 10 The Statute of Venice 1474. For a detailed discussion see Prager, ‘The Early Growth and Influence of Intellectual Property’ (1952) 34 JPOS 106; see also Mandich, ‘Venetian Patents’ (1948) 30 JPOS 166, and ‘Venetian Origins of Inventors’ Rights’ (1960) 42 JPOS 378. 11 Mill, Principles of Political Economy (London, Longmans, Green & Co, 1929, 2nd ed), mentions monopolies in connection with patents only once (at 932). Smith, The Wealth of Nations (New York, The Modern Library, 1937) similarly only extends discussion of the topic of monopoly to patents on one occasion (at 712). However, more explicit coverage is given in his Selected Essays on Jurisprudence, Meek, Raphael & Stein, (eds) (Oxford, Clarendon Press, 1978), at 83 and 472. Bentham, of all of the early political economists, devotes the most time to discussing the expediency of granting monopoly privilege for inventions, but even his treatment is limited to a mere handful of pages in an extensive text. See Bentham, ‘Manual of Political Economy, Part II—Proper Measures,’ ch 19 In Stark, ed, Jeremy Bentham’s Economic Writings (London, George Allen & Unwin, 1952), Vol I, at 260-5. 9

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Little thought was directed to their justification as tools of commerce. However, all of this was to change when the patent controversy that swept Europe during the latter half of the nineteenth century brought consideration of the patent system to the masses. Despite the fierce intensity of the criticism which was levelled at the system during the anti-patent debate, it clearly survived. Indeed, the grant recovered so well from its near-death experience that Fox, writing in 1947, stated when discussing patents for invention that:‘there has never been, until the present time, any criticism of this type of exclusive privilege. It was always recognised at common law as a proper subject for a prerogative grant, and the Statute of Monopolies made no change in this conception’.12 Whilst this may be true regarding the legal provision of patent protection, it completely ignores the wholesale condemnation that rained down on the system in the mid-nineteenth century: how easily such a public debate was forgotten! Fox’s comments, however misleading, are testament to the fact that the patent grant simply exists within the societal mind; like the notion of invention itself, society takes it for granted. Just as Mill, Bentham and Smith never once questioned the provision of temporary monopoly as a reward to the inventor and, in the same vein, patents for invention escaped the wrath of the Statute of Monopolies, so did they, until relatively recently, evade the rigors of economic analysis.

An Economic Analysis of the Patent System—Hiatus Despite the noisy attack launched by free-traders in the mid-nineteenth century, which prompted the subsequent reforms of the patent system, discussions of the grant largely avoided any in-depth economic analysis until the first half of the twentieth century. Even then, economists seemed to be content to leave discussion of the exact scope of the patent right to the courts while they analysed business practices.13 Indeed, as Posner notes, it is only relatively recently that economic analysis of law can be said to have moved away from being ‘almost synonymous with economic analysis of antitrust law’.14 In many respects, it is hardly surprising that economists first concentrated their attention on abuses of monopoly power rather than seeking, shaping or upholding justifications for the grant of temporary monopoly in the case of new manufactures. The consequences of monopolistic distortion of the market economy were well known, clearly illustrated by events of the late-Tudor/early-Stuart period that 12 Fox, Monopolies and Patents: A Study of the History and Future of the Patent Monopoly (Toronto, University of Toronto Press, 1947) at 178–9. 13 The foregoing is not to say that antitrust arguments have no relevance to the patent of invention, however, an in-depth analysis of the abuses of monopoly power that would fall within the sphere of antitrust is outside of the scope of this work. 14 Posner, Economic Analysis of Law (Boston, Little, Brown and Company, 1992, 4th Ed) at 21.Antitrust law is basically law forbidding all combinations in restraint of trade and primarily focuses on business practices and abuses of monopoly power rather than looking at justifications of the patent system.

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led to the Statute of Monopolies.15 Thus, Mill and Smith, despite long diatribes on the evils of monopoly, were content to state that such bad blood did not extend to the provision of exclusive privileges for a limited time to the originator of an improved process of manufacture.16 One plausible explanation for the early economists’ reticence to engage fully in any critique of the patent system per se lies in the close association that the grant maintained with the Crown at this point in time. This connection with the Royal prerogative was, in itself, a major stumbling block to reform, as Parliamentary modification of the system ‘would have exploded the ancient theory that a patent is a special direct grant from the Crown of certain valuable privileges, and that it is only by Her Majesty’s gracious favour that these privileges are granted at all’.17 It is therefore unsurprising that it took near-fatal bombardment of the system by abolitionists during the anti-patent debate to force administrative and legislative wheels into motion.18 Once the debate had been settled, and public argument had established that the patent custom was essentially valid, yet in dire need of reform, public faith in the idea of a patent system was able to grow. Such faith was vital to the patent’s transition from instrument of the Crown to self-contained entity, as it enabled such reform to become a serious possibility.

Pressure Leading Up To The Debate The patent system at the beginning of the nineteenth century was a cumbersome and expensive animal. In evidence before the 1829 Select Committee, John Farey stated that the total cost of applying for a patent that covered England & Wales, Scotland and Ireland was in the region of £350.19 The additional costs of enlisting the services of a patent agent could add an average of £20 to this tally, and as much as £200 in some cases.20 At the same time, bureaucratic failings of the Patent Registry provided additional cause for complaint and added pressure for administrative reform of the system. 15 Typified by the rise of odious monopolies, ie monopolies that are harmful to the state as they appropriate something that beforehand was free for all to use. The patent on the production of vinegar granted to Richard Drake (Pat 26 Eliz pt 11 of Mar 23, 1584), one of Elizabeth I’s court favourites, is a good example. As is the infamous ‘playing card’ patent, first granted in 1576 (Pat 18 Eliz pt 1 of Jul 28, 1576, to Bowes and Beddingfield) that was the subject of litigation in Darcy v Allin 11 Co Rep 84b. See Fox, n 12, above, at 57–126. See further, text accompanying n 71, et seq in ch 2, above. 16 See Mill, n 11, above at 932, and Smith, The Wealth of Nations, n 11, above, at 712. 17 Truman Wood,‘The Patents for Inventions Bill 1877’ (1877) 25 Journal of the Society of the Arts 342. Quoted from Bently & Sherman, The Making of Modern Intellectual Property Law (Cambridge, Cambridge University Press, 1999) at 131. 18 It should be noted that neither side in the debate was in favour of preserving the status quo, the argument was between those advocating reform and those in favour of abolition. 19 Farey, in evidence before the 1829 Select Committee, Report of the Select Committee on the Law Relative to Patents for Inventions, Parliamentary Papers III, 1829 (Command Paper No 332) (Report of the 1829 Select Committee) at 17. A breakdown of the typical costs of patenting is given by Moses Poole in his evidence before the same, idem at 87-8. 20 Farey, ibid at 17 states that ‘this was merely the professional charge for all the business relative to preparing the title of the patent, the draft of the specification and the drawings’.

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Uncertainty over the requirements for (and exact nature of) the specification, coupled with widespread ignorance of the state of the law, had led to a perception that patents granted at this time were practically worthless.21 An inefficient filing and granting system and petty disputes over who, patent attorneys or lawyers, had the standing to act as agents for inventors for the purpose of obtaining patents, had corrupted public perception of the system even further. Thus, a catalogue of reforms was introduced to pull the system back from the shifting sands of bureaucratic inefficiency onto firmer ground. These included the institution of indexes of granted patents arranged both chronologically and alphabetically;22 the various offices, once scattered around the city of London were moved into one building; and the post of examiner was placed onto sounder footings by the institution of job specifications and clarification of pension arrangements.23 However, the reform that had most impact on the promotion of the patent as property (as opposed to privilege) was the introduction of a system of registration by the 1851 Protection of Inventions Act.24 Originally introduced as a temporary measure in connection with the Great Exhibition (therefore consonant with a public event supported by the Queen and considered not threatening to the role of the Crown in matters patent), registration proved a sweeping success and paved the way for more concrete legislative reforms. Therefore, in the 1852 Patent Law Amendment Act,25 Parliament was able to introduce a more effective system of registration whereby property arose in the invention from the date of application rather than grant by the Crown. This change was of vital importance in the patent’s evolution as an item of property as it created bureaucratic property in the grant enabling its emergence from the shadow of the prerogative.26 However, this change in the administration of the patent system initially did little to quell the widespread distaste for patents.27 Indeed, problems with the registration system, combined with the continuing uncertainty of the nature of the patent specification, added fuel to the abolitionists’ fire.28 21 See Bently & Sherman, n 17, above, at 131, who draw this conclusion from the speech of Lord Wolverton, Hansard, HL Vol 114 cols 1099 et seq (Nov 17, 1902). 22 As opposed to the purely chronological indexes of the past. 23 All administrative rather than strictly legal reforms. See Bently & Sherman, n 17, above, at 132–3. 24 An Act to Extend the Provisions of the Designs Act 1850, and to give Protection from Piracy to Persons Exhibiting New Inventions in the Exhibition of the Works of Industry of all Nations in 1851, 14 & 15 Vict c8 (1851). 25 An Act for Amending the Law for Granting Patents for Inventions 15 & 16 Vict c83 (1852). 26 See Webster’s answer to Q544 in Report of the Select Committee on Letters Patent, House of Commons Papers, 1871 (Command Paper No 368) (Report of the 1871 Select Committee). Also Bently & Sherman, n 17, above, at 134. 27 The Economist reported on Jun 5, 1869 (some 18 years after the initial reform) that ‘it is probable that patent laws will be abolished ere long. There is universal agreement that no patent law should cover all the inventions which are now covered. It is for the general interest that patent laws should be abolished’. 28 See further Boehm, The British Patent System: I Administration (Cambridge, Cambridge University Press, 1967) who states, at 29, that ‘The 1860s and 1870s were also the period in which the patent system sustained its severest opposition’—a claim that, considering The Economist’s dire proclamation, ibid, cannot be disputed.

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The slow divorce of the patent from the Crown also created new problems as it drew focus from the method of creation onto the property created. Therefore conceptual issues arose in relation to the grant, specifically due to the nature of this property, that had serious repercussions for its justification.

Property and Patents As already noted, it is now universally accepted that the patent right, as other categories of intangible rights falling under the umbrella of intellectual property, creates a form of personal property. However, it will now be apparent that it is only relatively recently that the patent has come to be appreciated as an entity distinct from an instrument of Crown privilege. During the anti-patent debate, for example, many proponents of the system were apt to refer to property in inventions, as opposed to property conferred by the patent right. Whilst it is now accepted that the patent grant can create property rights, ‘the idea of property in an invention is not taken seriously by modern economists’29 Discussion in this format did, however, avoid any delicate constitutional questions about the nature of the grant during the patent crisis itself; for, as noted, the link between the Crown and the grant was still a major sticking point in the reform of the system at this time.

Free Goods and Public Goods The patent system creates property in an invention by facilitating and imposing control of the knowledge that defines the invention, thereby enabling limitations to be placed on its supply and use. Structurally speaking, therefore, the grant facilitates the formation of property in the subject matter that it protects. As such, it cannot be justified on the basis that invention is property, as without the patent system property in an invention does not exist. The invention is property because of the patent system, because this imposes a structure of scarcity, and not vice versa. Patents concern knowledge; they protect ideas that are practically realised. Knowledge is unlike physical property in that it cannot be exhausted by use. It is known as a ‘free good’. Thus an invention, once it has been made (the concept plucked from the ether and reduced to practice) ‘can be regarded as a non-wasting asset whose use involves no additional economic cost, beyond costs of communication and learning’.30 29 See Machlup, An Economic Review of the Patent System, Study No 15 of the Sub-Committee on Patents, Trademarks and Copyrights of the Committee on the Judiciary, US Senate 85th Congress, 2nd Session (Washington, 1958) at 26. 30 See Taylor & Silberston, The Economic Impact of the Patent System (Cambridge, Cambridge University Press, 1973) at 24; quoting from Arrow, ‘Welfare Economics and Inventive Activity’ in The Rate and Direction of Inventive Activity (Princeton, NBER, 1962).

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Thus, the social value of an invention is not lessened by its widespread use. Indeed, it can be convincingly argued that the attendant benefit of use increases its value, as society is able to enjoy the invention more fully. In short, it is wasteful to restrict its use. Considered in this light it is clear that where an invention results from a spontaneous flash of insight, and therefore has no attendant cost of creation, it should ideally command a zero price in order that its benefit be maximised. However, such a bold statement ignores the costly reality of invention and innovation. Whilst it may be true that the original inventive idea could be costless, it is seldom the case that it is so simple and brilliant that it can be perfected or brought to the market without financial burden. Moreover, in the research-intensive society in which we live, the costs associated with the creation of an invention may, without some form of compensation or incentive, be proscriptively high. However, as Taylor & Silberston state ‘[t]he real difficulty arises because many inventions, like other types of knowledge, are not simply “free” goods: they are to a large extent “public” goods as well’.31 That is to say, as well as their non-exhaustibility, many inventions also suffer from non-excludability, so that once implemented, or otherwise disclosed, they can (absent legal protection) be freely, and relatively costlessly, copied by others. Consequently, because of non-excludability and non-exhaustibility there can be no market for a public good. In the absence of some sort of protection, once an invention has been created it is freely appropriable and therefore of strictly limited worth to its creator. It is, of course, worth an amount commensurate with the market value of the invention. However, if costlessly copied, this value is simply equal to the production cost, as competition will push the price down.32 The invention itself cannot be sold, as it is freely appropriable by all. Therefore, in the absence of some sort of proprietary right there is likely to be a disincentive to invest in invention, as competition will make it impossible to recover sunken research and developmental costs. With these points in mind, we now turn to address the issue of justifying the creation of property in the intangible.

Classical Justifications Of Property In The Intangible— The Patent During the literary property and anti-patent debates that raged consecutively from the mid-eighteenth to the latter half of the nineteenth centuries, a great deal of thought was directed towards the justification and distinction, or isolation, of property rights in the intangible. It is therefore unsurprising that this period marks a 31 32

Ibid at 25. See further, text accompanying n 3 in ch 5, below.

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small, but bountiful, oasis for economic analysis of the patent system in a desert otherwise relatively featureless until the 1920s. Broadly four lines of reasoning in general circulation in the mid-nineteenth century can be identified. These arguments form the basis of modern criticism of the patent system and are still utilised by lawyers, economists and the courts today. Each category found its own supporters and opponents within the debate and each can be argued, to some extent, to form a basis for the patent grant. As ever, certain theories find more favour than others do with contemporary critical thinkers and, as we shall see, different justifications suggest different scope for the patent rights. It is obvious to say that no one theory can attempt to provide a complete explanation of the system, however, insight into these classical justifications allows comment on current policy decisions. Various academic writers including Dutton33, Walterscheid34, Coulter35 and Machlup & Penrose36, have covered these four heads of reasoning in some detail. The following discussion therefore draws on their work.37

The Natural Right Theory The natural right thesis is a moral justification based upon the assertion that the individual has a natural property right in their ideas. By extension, therefore, they also have a natural right to the sole exploitation of these machinations such that unauthorised use by others without compensation must be condemned as theft. This property is exclusive and personal, and therefore society (and thus the State) is under a moral obligation to recognise and protect these rights. What, asks McCulloch, is more apt to be ‘called a man’s exclusive property . . . [than] that which owes its birth entirely to combinations formed in his own mind, and which, but for his ingenuity, would not have existed?’38 The thesis found firm footing in the French patent law of 1791, the preamble to which states: 33 Dutton, The Patent System and Inventive Activity During the Industrial Revolution 1750–1852 (Manchester, Manchester University Press, 1984), at 17-29. 34 Walterscheid,‘The Early Evolution of the United States Patent Law: Antecedents (Part 4)’ (1996) 78 JPTOS 77 (Walterscheid,‘Antecedents IV’) at 104–106. 35 Coulter, Property in Ideas: The Patent Question in Mid-Victorian Britain (Kirksville, Thomas Jefferson University Press, 1991), particularly ch 3. 36 Machlup & Penrose, ‘The Patent Controversy in the Nineteenth Century’ (1950) 10 Journal of Economic History 1 at 10-26. See also Machlup, n 29, above, at 19–44. 37 Machlup, n 29, above, when discussing these points states, at 22: ‘These references serve only as samples, since in most instances many writers have made the same points. Indeed, if one always cites only the “first and true inventor” of an argument concerning the patent system, one will rarely be able to cite an author of the 20th century’. 38 The Scotsman, May 26, 1826; McCulloch, A Dictionary, Practical, Theoretical and Historical, of Commerce and Commercial Navigation (London, Longmans, Green & Co, 1832) at 817-8; Quoted from Dutton, n 33, above, at 18.

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[T]hat every novel idea whose realization or development can become useful to society belongs primarily to him who conceived it, and that it would be a violation of the rights of man in their very essence if an industrial invention were not regarded as the property of its creator.39

This approach accords to a Lockean labour theory analysis of property rights, whereby labour functions as a determinant of title.40 Locke’s core propositions have been summarised as follows: 1. 2. 3. 4.

God has given the world to people in common. Every person has a property right in his own person. A person’s labour belongs to him. Whenever a person mixes his labour with something in the commons he thereby makes it his own property. 5. The right of property is conditional upon a person leaving in the commons enough and as good for the other commoners. 6. A person cannot take more out of the commons than they can use to advantage.41 Therefore, when applied to the intellectual labours of invention, it is possible to argue that the inventor should have a natural right to their creation. At the time that Locke was writing it is improbable that he entertained the notion of property in the intangible, his philosophical musings being more likely directed to the explanation of corporeal ownership. However, this did not prevent some proponents of the patent system in the nineteenth century liberally applying his theories and concluding that ‘permanent and inalienable’ property rights existed in ideas.42 One such advocate was Turner, barrister and author of a number of treatises on patent law, who justified the system on the basis that it was ‘simply the application of the natural principle of property as the reward of labour’.43 It is, however, a theory largely shunned by British and American historians, lawyers and economists as having played no part in the evolution of a modern Anglo-American law of patents.44 This stance shares strong contemporary support, the Westminster Review, for example, lambasted the idea by stating ‘to talk of natural rights of an inventor is to talk nonsense’.45 Further, it was argued that to allege 39

Preamble to the French Patent Law of 1791 quoted from Machlup, n 29, above, at 22. See further, Locke, Two Treatises of Government (Goldie, ed, London, Everyman, 1993, originally published 1690) Ch V, Book II. For a modern exploration of the philosophy of intellectual property, which includes discussion of Locke’s theories, see Drahos, A Philosophy of Intellectual Property (Aldershot, Dartmouth, 1996). 41 Taken from Drahos, ibid. at 43. 42 Jobard, Nouvelle économie sociale ou monautopole industriel, artistique, commercial et littéraire (Paris, Bruxelles [printed], 1844) at 5, 130, 239 et seq. Quoted from Machlup, n 29, above, at 22. 43 Turner, Counsel to Inventors of Improvements in the Useful Arts (London, F Elsworth, 1850) at 50; Also Coulter, n 35, above, at 80. 44 See comments to this effect in Dutton, n 33, above, at 18; MacLeod, Industrial Revolution, n 7, above, at 197; Walterscheid, ‘The Early Evolution of the United States Patent Law: Antecedents (Part 1)’ (1994) 76 JPTOS 697 (Walterscheid,‘Antecedents I’) at 715. 45 ‘The Patent Laws’ (1829) XXVI Westminster Review 329. 40

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theft of an idea is for a man to complain ‘that something has been stolen which he still possesses, and he wants something back which, if given to him a thousand times, would add nothing to his possession’.46 Webster neatly summed up contemporary opinion when he stated that ‘[t]hose who believe the inventor to have a natural right . . . must have an entire misconception as to what it is the inventor really achieves’.47 The main criticisms of natural rights as justification for the patent system stem from an analysis of the substance of the property concerned and the reality of the system as it stood when the arguments were first advanced.48 Thus, if property in ideas is a natural right, there is little logical basis for that right to be limited to a term of years, rather it should be perpetual. In addition, it does not sit comfortably with either the concept of knowledge as a non-exhaustible commodity,49 nor with any criteria of patentability that the inventor must satisfy before this ‘property’ is acknowledged. Further, it suggests that the scope of the right awarded should be tied to the actual effort, or degree of labour, exercised in creating the invention, with more time equating to greater protection. This would not only relegate flashes of inventive genius to receive little (if any) protection, but would also tend to favour complicated, expensive and time-consuming invention over elegant solutions to problems. Moreover, the Lockean approach would not justify the provision of an exclusive monopoly where both copying and independent creation are similarly prohibited. It is therefore unsurprising that this theory finds little support in modern literature.50 Indeed, Machlup states that it is apparent that some French lawyers:51 ‘conceded that they preferred to speak of “natural property rights” chiefly for propaganda purposes, especially because alternative concepts, such as “monopoly right” or “privilege”, were so unpopular’.52

The Reward by Monopoly Theory By contrast to the natural right theory, the reward theory found strong support with British economists during the anti-patent debate. It calls for protection in the name 46 Rentzsch, ‘Geistiges Eigenthum’ in Handwörterbuch der Volkswirtschaft (Leipzig, 1866) at 334; quoted from Machlup, n 29, above at 22. 47 Webster, Law and Practice of Letters Patent for Invention (London, Crofts & Blenkarn, 1841) at 3; quoted from Dutton, n 33, above, at 18. 48 And still stands today. 49 One whose stock is not depleted by use. See text accompanying n 30, above. 50 The support that it does find is limited (as far as this author can discern) to one article (Mossoff, ‘Rethinking the Development of Patents: An Intellectual History 1550–1800’; (2001) 52 Hastings Law Journal 1255), which stresses the Lockean conception of social contract. An argument more in line with the ‘exchange for secrets’ theory than a strict interpretation of the natural rights thesis per se. 51 From whom we find most of the support for such a notion of natural rights in ideas. 52 Machlup, n 21, above at 23. Machlup names DeBouffler, reporting the Patent Bill to the French Constitutional Assembly in May 1791, quoted by Renouard, Traité des Brevets D’invention (Paris, 1865, 3rd Ed) at 103. Also, Vicomte Dubouchage in the debate on the new French Patent Law, Chambre des Pairs, séance du 24 Mars, 1842. Le Moniteur Universel, No 84, Mar 25, 1843, at 542.

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of fairness; to secure the inventor their just reward, proportional to the usefulness of the invention to society. As this reward cannot be guaranteed by reliance upon ordinary market forces, State intervention is justified in the provision of temporary monopoly. Smith, Mill and Bentham all find justification for the patent monopoly under this mantle. Smith noted that optimum economic conditions are often not those found under natural, unregulated trade. He saw law and the lawmaker as vitally important players in ensuring that competition was maintained and resources efficiently allocated. His support for the patent system therefore rests on two main points. First, that the provision of temporary monopoly was ‘the easiest and most natural way in which the state can [provide] recompense . . . for hazarding a dangerous and expensive experiment, of which the public is afterwards to reap the benefit’.53 Further, ‘if the legislature should appoint pecuniary rewards for the inventors of new machines, etc., they would hardly ever be so precisely proportiond to the merit of the invention as . . . [the patent monopoly] is’.54 Second, that the grant of such a monopoly was harmless to society as ‘if the invention be good and as such is profitable to mankind, [the inventor] . . . will probably make a fortune by it; but if it be of no value he also will reap no benefit’. He continues, extending his discussion to include copyright: ‘These two privileges therefore, as they can do no harm and may do some good, are not to be altogether condemned. But there are few so harmless’.55 Therefore, despite long diatribe on the evils of monopoly, Smith was prepared to accept that the patent grant was not only necessary but also an economically justifiable means to an end. Mill, equally forthright in his support for rewarding invention by grant of a temporary monopoly, states in his Principles of Political Economy: ‘That . . . [the inventor] ought to be both compensated and rewarded . . . will not be denied . . . it would be a gross immorality in the law to set everybody free to use a person’s work without his consent, and without giving him an equivalent’.56 He also notes that pecuniary grants have, in some cases, been made to the inventor, but considers that ‘in general an exclusive privilege, of temporary duration is preferable; because it leaves nothing to any one’s discretion; because the reward conferred by it depends on the invention’s being found useful, and the greater the usefulness, the greater the reward; and because it is paid by the very persons to whom the service is rendered, the consumers of the commodity’. Therefore, whilst recognising that ‘the present Patent Laws [ie those of the early-to-mid-nineteenth century] need much improvement’57, Mill was eminently satisfied of their conceptual legitimacy as just reward within the free market economy. 53 Smith, The Wealth of Nations, n 11, above, at 712—at this point Smith is actually talking about grants of temporary monopolies to joint stock companies, but continues ‘A temporary monopoly of this kind may be vindicated upon the same principles upon which a like monopoly of a new machine is granted to its inventor’. 54 Smith, Selected Essays on Jurisprudence, n 11, above, at 83. 55 Ibid. 56 Mill, n 11, above, at 932–3. 57 Ibid, at 933.

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Bentham adopts similar reasoning to justify patents on the basis of reward.58 He divides labour into two distinct subcategories: the first being the bodily energy employed in the production of an effect; and the second, the skill or mental power displayed in the exercise of the bodily act.‘Mere labour, exclusive of skill, cannot be copied without equal labour . . . skill, on the other hand, . . . is . . . capable of being indefinitely imbibed and diffused . . . without any exertion of mental labour comparable to that . . . [by] which it was acquired. . . . A man will not be at the expence and trouble of bringing to maturity an invention unless he has had a prospect of an adequate satisfaction’.59 He then considers the various guises that this satisfaction may take: viz; reputation, the possibility that the invention may be reliably kept secret, and the provision of some kind of pecuniary reward. However, he concludes that none of these are possible in all situations. Preferable, therefore, is the provision of temporary monopoly so that ‘all persons but the author of an invention [are] excluded for a certain time from the liberty of practising it’.60 As,‘[a] patent considered as a recompense for the encrease given to the general stock of wealth by an invention, as a recompense for industry and genius and ingenuity, is proportionate and essentially just. No other mode of recompense can merit either one or the other epithet’.61 Arguments based on the reward theory embodying these ideas became stock-intrade for virtually every writer on the subject by the late 1850s.62 However, as Dutton notes, for the ‘classical economists patents were not a burning issue’,63 therefore we see only modest treatment of the system in the contemporary texts. Indeed, the Political Economy Club, formed in 1821, which often discussed ‘major contemporary issues, did not debate patents until late 1854’.64 However, this settled view, that the inventor deserved reward and that the patent system was the most economical method of providing it, did not escape criticism: ‘Geniuses, just as stars, must shine without pay’, being a Swiss comment on this point.65 Further, the moral argument that inventors deserved to be rewarded for their contributions to the progression of human knowledge appeared equally contentious. One popular, and forceful, criticism of patent ‘rewards’ found its basis in the ‘social origin theory’ of invention. Thus, Machlup & Penrose quote Ricardo as insisting that ‘nearly all useful inventions depend less on any individual than on the progress of society’and that therefore there is no need to ‘reward him who might be lucky enough to be the first to hit on the thing required’.66 This criticism is also arguably in line with 58

See Bentham, Manual of Political Economy, n 11, above, at 260-65. Ibid, at 260–1. 60 Ibid, at 263. 61 Ibid. 62 See Dutton, n 33, above, at 20; Machlup, n 29, above, at 23; Machlup & Penrose, n 36, above, at 21. 63 Dutton, ibid, at 20. 64 Ibid, at 30–1. 65 Taken from Machlup & Penrose, n 36, above, at 17. They state that this quotation was ‘[c]ited disapprovingly by Wilhelm Roscher, System der Volkswirtschaft (1881; “Nationalökonomik des Handels und Gewerbefleisses”, Stuttgart), Vol III, at 758.’ 66 See Machlup & Penrose, ibid, at 18, see also Machlup, n 29, above, at 23, quoting Ricardo MP, in the hearings of the Select Committee of the House of Lords; reported by The Economist (London), Jul 26, 1851. 59

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Kitch’s prospect theory of protection,67 which draws analogy between the patent system and the US mineral claim system, suggesting that inventions are somehow waiting to be found. It must be noted, however, that Kitch utilises this argument to provide alternative justification for the control of downstream technology. Ricardo, on the other hand, was simply utilising the inevitability of invention, as he saw it, to argue that patent protection was an unjustified restraint on trade. Other critics did not deny that the inventor had a moral right to be rewarded for their efforts, but stated that this reward would flow naturally, without the need for legal intervention. Thus Schäffle, whilst supporting the provision of temporary monopoly for the protection of literary property, denied the need for the same in respect of inventions. He reasoned that the head start the first user of an invention gained within the market would, as a general rule, provide sufficient reward for the inventor. This was, however, not the case in the book publishing business, where the speed with which pirated editions could enter circulation rendered lead-time insufficient reward in itself.68 This theory gained widespread support within the abolitionists’ camp during the anti-patent debate.69 However, not all opponents of the system were willing to trust the head start gained by the inventor as guaranteeing sufficient remuneration to justify embarking on the inventive process. Indeed, Macfie, perhaps the most vocal of the critics of the patent system during the mid- to late-nineteenth century, was of the opinion that the open market could not be trusted to secure the inventor with sufficient reward to compensate him for his time and effort. He opposed patents on a number of grounds, insisting: that they hurt free trade; that too many obvious inventions are patented; that under the patent system rewards rarely go to those who deserve them, and are never in proportion to their contribution to the state of the art; and that a great number of patents are based on old ideas or are useless.70 However, Macfie was of the opinion that some kind of reward was needed to compensate for the speed with which competition would act to wipe out any profit that could be made from the innovation. He therefore proposed a system of monetary prizes or bonuses determined according to the social utility of the invention as the best method of providing for the inventor.71 Similarly, The Economist supported the abolition of the patent monopoly and suggested instigating a system of direct monetary grant in its place, stating: ‘what the community requires is, that inventors be rewarded; that 67 Kitch, ‘The Nature and Function of the Patent System’ (1977) 20 Journal of Law & Economics 265. Discussed fully in ch 5, below. 68 See Schäffle, Die Nationalökononomische Theorie der Ausschliessenden Absatzverhältnisse (Tübingen, 1867), at 141 and 150. Distilled from Machlup & Penrose, n 36, above, at 18; and Machlup, n 29, above, at 23. 69 See comments to this end in Machlup & Penrose, ibid. 70 See Macfie, The Patent Question under Free Trade: A Solution of the Difficulties by Abolishing or Shortening the Inventor’s Monopoly and Instituting National Recompenses (London, W Johnson, 1863, 2nd Ed); also Macfie, Recent Discussions on the Abolition of Patents for Inventions (London, Longmans, Green, Reader, & Dyer, 1869); see also Oppenheim,‘Robert Andrew Macfie, Patents, Copyright, Libraries and Legal Deposit’ [1998] IPQ 383; Machlup, n 29, above, at 23. 71 See especially Macfie, The Patent Question under Free Trade, ibid. Such a system is akin to that adopted under Communist rule in the Eastern Bloc whereby the ownership of inventions was swapped for inventor’s certificates and a monetary reward.

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skillful men who contribute to the progress of society shall be well paid for their exertions. The Patent Laws are supported because it is erroneously supposed that they are a means to this end’.72 Despite rational and cogent dissent, Mill, Smith and Bentham’s economic arguments eventually won the day,73 as it was considered that to reward the inventor with monetary bonuses would inject partiality or even corruption into the mix by giving, in essence, discretionary power to administrators. However, the simple fact that a proposal to hand out money did not win huge support, and thus close the debate, adds little to the argument that the provision of temporary monopoly can be justified on the basis that it rewards the inventor. At best all that can be said is that such means are not less favourable than a system of monetary grant. However, it should be clear from the foregoing discussion that the provision of monopoly power as reward to the inventor can be attacked on a number of fronts. Furthermore, the argument that a prize of any kind was required found criticism on grounds that it was often not the person most deserving of recompense that actually received it (whatever it may be) and that it was, in actual fact, impossible to apportion reward accurately with respect to the services rendered.74 The patent system, as it stood, attracted further complaint, as it was impossible to prevent injury being inflicted upon others by restriction of their right to pursue inventive endeavours in areas protected by patents.75 The reward theory, as a justification for the patent system, also raises a number of further questions that are difficult to answer and which potentially prejudice its validity. First, if the inventor is being rewarded, what are they actually being rewarded for? What is the rationale for being given monopoly privilege? If the patent is granted for their labour then this returns us to the Lockean construct of property based on the natural rights of the author, and, as has been noted, this is not a concept that many take seriously. If the patentee is rewarded for having a good idea then this moves us to ask why it is only the first who takes their invention to the Patent Office that receives the reward? What is there in the nature of invention that makes independent re-creation less worthy than the initial creation? As Sir Roundell Palmer stated before the 1871 Select Committee:‘The knowledge used by inventors is like air, or light, or whatever else is universal and simultaneously capable of enjoyment by all’.76 Therefore, if knowledge is such a resource, why should only the first person to come up with an idea be rewarded for it? This collision between theory and reality within the system simply did not make sense. Therefore, as Machlup & Penrose state:‘If the patent system could not be credited with meeting the demands of distributive justice, it was still possible to defend it, 72

The Economist (London), Jul 26, 1851. Quoted from Machlup & Penrose, n 36, above, at 19. Or at least did not lose. 74 See, eg, the speech of Lord Stanley (chairman of the Royal Commission that inquired into the patent system in 1863–5) in the House of Commons, May 28, 1868. Reproduced in Macfie, Recent Discussions on the Abolition of Patents for Inventions, n 70, above, at 111; Also Machlup & Penrose, n 36, above, at 20. 75 Macfie, ibid. 76 Report of the 1871 Select Committee, n 26, above, at 690. 73

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not on the ground of justice, but on the ground of its social usefulness’.77 Thus we are brought to our third possible justification for the patent system, the incentive to invent.

The Incentive to Invent Theory The incentive thesis is primarily economic in its nature, and therefore lies independent of the question of whether justice calls for inventors to be rewarded for their efforts. Whilst the hope for a just reward can, in itself, act as an incentive, it has been noted that it is often the case that a simple reward will not be sufficiently attractive to promote technological progress.78 The incentive theory therefore posits that in order for inventive activity to be maximised it is necessary to offer specific enticement as well. Its focus is therefore not on the inventor per se, but rather on a series of assumptions about the basic economics of the inventive process.79 The apparent nexus between the patent system and economic development, which paints patents as a ‘lever of industrial progress’,80 has enchanted proponents of the system since the theory was first advanced, and has undoubtedly been a factor in its becoming ‘probably the most quoted argument in favour of patents’.81 Indeed, Abraham Lincoln famously wrote that: ‘the patent system added the fuel of interest to the fire of genius’,82 and in the same vein, Chitty proclaimed that it was the most effective means of encouraging the ‘production of GENIUS’.83 The rapid industrialisation of Britain and the US were often utilised as cases-inpoint to attest to the success of the patent system in promoting technical progression.84 The argument was simple. It was a matter of historical fact that by the end of the Industrial Revolution, Britain had become the first global superpower with Empire covering close to a quarter of the planet. It had a patent system during this time and it was therefore but a short leap of faith to infer a causal relation between the two. Thus Price, writing at the beginning of the twentieth century, was able to conclude that the monopoly policy, which began under Elizabeth, had, despite its problems, produced a ‘system of patents for the effective encouragement of invention’ (emphasis added).85 However, as with any theoretical justification of the patent system, the incentive argument attracted its share of criticism, not least that based on an equally logical 77

Machlup & Penrose, n 36, above, at 20. See, eg, Machlup, n 29, above, at 23; Machlup & Penrose, ibid, at 21; Dutton, n 33, above, at 21. 79 We return to consider the economic arguments underpinning the creation and sustenance of a system of temporary monopoly in inventions in ch 5, below. 80 Machlup & Penrose, n 36, above, at 21. 81 Dutton, n 33, above, at 20. 82 Lincoln, ‘Discoveries, Inventions, and Improvements’ (1859) in The Complete Works of Abraham Lincoln (New York, Francis D Tandy Co, 1905, 3rd Ed) Vol 5, at 113. 83 Chitty, A Treatise on the Laws of Commerce and Manufactures, and the contracts relating thereto (London, Henry Butterworth, 1820) Vol I, at 6. Quoted from Dutton, n 33, above, at 21. 84 See Machlup & Penrose, n 36, above, at 21. 85 See Price, The English Patents of Monopoly (Cambridge (MA), Harvard University Press, 1913) at 131. 78

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inference between the technological progression of Germany and Switzerland and the fact that they respectively offered little or no patent protection at this time.86 Indeed, some commentators suggested that the development of English industry had occurred in spite of the patent system, but remarked that this development was less than it would have been in its absence.87 The accuracy of this, or indeed the contrary conclusion, is impossible to judge as both are based on a logical analysis of the facts as presented with gaps filled by reasoned conjecture. Whichever statement holds the greater grain of truth, the incentive theory has weathered the years well, often being uttered in the same breath as the reward theory as an accepted justification underpinning the patent system. Despite having been criticised as an overly simplistic analysis as far as the modern economics of the patent system is concerned,88 it is an argument that is still routinely utilised to justify the system today by Parliamentary Committees,89 academics,90 and the courts.91 Such is its success, that one commentator has noted that this ‘simple model’has ‘been the model for 200 years’.92 86 See, eg, Böhmert, ‘Die Erfindungspatente nach volkswirtschaftlichen Grundsätzen und Industriellen Erfahrungen: mit besonderer Rücksicht auf England und die Schweiz’, Viertelijahrschrift für Volkswirthschaft und Kulturgeschichte, Siebenter Jahrgang (1869) XXV, at 48. Taken from Machlup & Penrose, n 36, above, at 21. 87 See Böhmert, ibid, at 79. Taken from Machlup & Penrose, ibid. See also the remarks of the Times newspaper, Dec 19, 1850 ‘The more we investigate, the more certain will be our conclusion and belief that we are a great and prosperous people, not in consequence but in spite of the legal system under which we live’. Quoted from Coulter, n 35, above, at 41. 88 See, eg, Scotchmer, ‘Standing on the Shoulders of Giants: Cumulative Research and Patent Law’ (1991) 5 Journal of Economic Perspectives 29. 89 See The Banks Committee, The British Patent System: Report of the Committee to Examine the Patent System and Patent Law, Cmnd 4407 (Jul 1970), at 1, ‘The primary intention of the patent system is the encouragement of new industries in the country’. 90 See, eg Turner, ‘The Patent System and Competitive Policy’ (1969) 44 New York University Law Review 451; Kitch, n 67, above; Taylor & Silberston, n 30, above, ch 2 therein; this argument is implicit in the treatment of the system by Merges & Nelson,‘On the Complex Economics of Patent Scope’ (1990) 90 Colombia Law Review 839; Dam,‘The Economic Underpinnings of Patent Law’(1994) 23 Journal of Legal Studies 247; Maskus, ‘Intellectual Property Rights and Economic Development’ (2000) 32 Case Western Reserve Journal of International Law 471 at 473, to name but a few. 91 A brief search of recent cases provides ample support for this proposition. See, eg the comments of Lord Oliver in Asahi Kasei Kogyo [1991] RPC 485 at 523 where he states that:‘The underlying purpose of the patent system is the encouragement of improvements and innovation.’ Further the Court of Session (Outer House) has explained: ‘The primary purpose of the patent system is to encourage the development and exploitation of new ideas.’ Goddin & Rennie’s Application [1996] RPC 141 at 161. The view of the Patent Office is strikingly similar:‘The patent system has hitherto constituted the best tool to encourage research’ in Research Corp’s Supplementary Protection Certificate [1994] RPC 387 at 398. See also comments of Jacob J (as he was then) in Teva Pharmaceutical Industries Ltd v Instituto Gentili SpA [2003] FSR 498 that: ‘patents are provided to encourage research.’ American judicial opinion is apt to voice this justification slightly more vociferously: ‘Strong patent protection is key to encouraging innovation, economic growth, and American competitiveness’ per Circuit Judge Linn in the 2000 en banc decision of the Court of Appeals for the Federal Circuit (CAFC) in Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co, 234 F.3d 558 (2000, CAFC, en banc) at 621. Further, see Loctite Corp v Ultraseal Ltd, 781 F.2d 861 (1985, CAFC) at 876–7: ‘the purpose of the patent system is to encourage innovation and its fruits’. Quoted with approval in Intergraph Corp v Intel Corp, 195 F.3d 1346 (1999, CAFC) at 1362. 92 Lemley,‘Reconceiving Patents in the Age of Venture Capital’(2000) 4 Journal of Small and Emerging Business Law 137 at 139.

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When used as an explanation of the beneficial effects of patents, the theory balances upon a number of assumptions: First, that growth and industrial progress is socially desirable. Second, that invention is necessary for this progress. Third, that the level of invention will be sub-optimal without incentives, and finally that patents are the cheapest and most effective way in which these incentives can be provided.93 The first two of these assumptions are wholly uncontentious, being readily accepted by both sides in the anti-patent debate. In this context, it should be noted that the abolitionists never advocated a Luddite philosophy, but rather insisted that, far from encouraging invention and economic growth, the system acted only to stifle technological progress. Therefore, the opposition can be grouped into those who disagreed with one, or both, of the latter assumptions. The argument that there will be sub-optimal levels of invention in the absence of incentives can be traced to policy considerations that prompted establishment of the Elizabethan patent custom. The pro-activity of the Crown during Elizabeth I’s reign was a product of concern over securing improvement of the Realm, and early grants of patent privilege were aimed at those industries featuring most prominently on the list of imports.94 The majority of abolitionists did not seek to contest this pedigree, conceding that artificial incentives may well have been necessary in pre-industrial Britain. However, times had changed, and by the mid-nineteenth century not everyone saw invention as a creature in need of nurturing. As Coulter states: ‘Rather than deny the historical utility of the patent grant altogether, they [the abolitionists] argued that patents had served their purpose and now could safely be dispensed with’.95 Thus, Macfie stated that: ‘The wisdom of our ancestors is not discredited, when, now that circumstances have completely changed, we abandon a system of restraint that is no longer tenable’.96 Some abolitionists, and even some supporters of the system who felt that justification by incentive undermined their cause, attacked the idea that there was a need to stimulate invention. Sir William Armstrong, president of the British Association for the Advancement of Science in 1863, is reported as saying that ‘the seeds of invention exist, as it were, in the air, ready to germinate whenever suitable conditions arise, and no legislative interference is needed to ensure their growth in proper season’.97 A number of contemporary patent agents, it seems, also shared this view.98 One is quoted as saying that ‘A man of true genius can no more resist the 93 See Machlup & Penrose, n 36, above, at 21; Walterscheid,‘Antecedents (Part IV)’, n 34, above, at 105 omits the final point in his list; Dutton, n 33, above, at 20, simply states that the theory ‘assumes that the supply of invention (which was also assumed to be a major cause of growth) would be less than it would otherwise be if patents were not used to protect the inventor’. 94 See text accompanying n 51 in ch 2, above. See also, MacLeod, Industrial Revolution, n 7, above, at 12. 95 Coulter, n 35, above, at 89. 96 Macfie, The Patent Question under Free-Trade, n 70, above, at iv; see also Coulter, ibid. 97 The opening address of the president, Report of the 33rd Meeting of the British Association for the Advancement of Science (London, 1864) at lii. Quoted from Machlup & Penrose, n 36, above, at 22. 98 One can’t but help wonder if they had really thought the repercussions of this line of argument out fully before proclaiming their belief.

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exercise of his genius than he can resist the growth of his body . . . nearly all those [inventions] deserving the name of “great” . . . have been made without any regard to, or stimulus from the existence of Patent Law’.99 Macfie comments on this quote by asking: ‘If this is true of great inventions, how much more must it be of small ones?’ 100 Furthermore, Turner, whist justifying the patent system on natural rights grounds, felt unable to accept that any incentive was required to induce invention. The inventive process, he stated, was a product of ‘a taste for experiment, a love of trying’ that was characteristic of the English psyche, there was therefore no need for State intervention to promote such activity.101 This was a view shared by William Cubitt, President of the Institute of Civil Engineers, who said of invention: ‘I think people will always invent anything that is useful and good, if it will answer their purpose to do so, even without reference to a patent’.102 Such views did not, however, go unchallenged. ‘That some men could not help inventing might be true’, noted Aston, a patent agent, in his Paper on the Patent Laws, ‘but as a rule men invent as they do other work, they invent to live or help them live’.103 Further, in his testimony to the 1851 Select Committee on Patents, Carpmael argued that, all of the steps in the ‘history of the whole of manufactures of this country . . . have been founded upon patents from the earliest date up to the present time . . . the whole system is built upon patents’.104 The supporter’s arguments were also greatly bolstered by the fact that they could provide at least two concrete examples of foreign inventors bringing their inventions and expertise to Britain solely because of the patent system. In testimony before the 1871 Select Committee, for instance, Bessemer, the German-born inventor of a revolutionary steel-making process that bears his name, told those gathered that he brought his invention to Britain because he was able to patent it here.105 Furthermore, Holden, in evidence before the same Committee, somewhat melodramatically gave the example of Switzerland, ‘where there is no patent law whatever of any kind, [and there] industry makes no progress, and the people are unemployed’.106 A year later, before the 1872 Select Committee, the tide of opinion was even stronger, with Siemens, celebrated foreign inventor, Fellow of the Royal Society, and President of the Institute of Mechanical Engineers also testifying that the patent 99 Letter by the author of A Popular Treatise on the Patent Laws reprinted from the North British Daily Mail, Feb 2, 1875, and reproduced in Macfie, The Patent Question in 1875 (London, Longmans, Green & Co, 1875) at 46. 100 Macfie, The Patent Question in 1875, ibid, at ix. 101 Turner, Counsel to Inventors of Improvements in the Useful Arts, n 43, above, at 4; Quoted from Coulter, n 35, above, at 80 102 See Report and Minutes of Evidence taken before the Select Committee of the House of Lords Appointed to Consider of the Bill, intituled, ‘An Act to further amend the Law touching Letters Patent for Inventions’ and also of the Bill, intituled, ‘An Act for the further Amendment of the Law touching Letters Patent for Inventions’ and to report thereon to the House, House of Commons Sessional Papers, Vol XVIII, 1851 (Command Paper No 486) (Report of the 1851 Select Committee) at 456. 103 Aston, A Paper on the Patent Laws (Manchester, Manchester Institute of Engineers, 1870) at 12–13; Quoted from Coulter, n 35, above, at 92. 104 See Report of the 1851 Select Committee, n 102, above, at 281. See also Coulter, n 35, above, at 52. 105 See Report of the 1871 Select Committee, n 26, above, at 746–62. 106 Ibid, at 764.

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system was responsible for his presence in Britain. It was, he said, ‘the fact of there being no properly understood and regulated Patent Law in Germany [that] induced me to come over to this country and make this my real home’.107 Most critics of the system at this time did not, however, go as far as Armstrong et al108 and make forthright pronouncements on the nature of the inventive process. Even Macfie, by proposing a system of monetary awards in place of the patent system,‘demonstrated that he was as capable as his opponents of making exceptions to the general rule of laissez-faire: while they disallowed monopolies but allowed patents, he disallowed patents but allowed cash subsidies’.109 It will therefore come as no surprise to the reader that the argument that patents are the cheapest and most effective incentives to invent was attacked on identical grounds to the grant of temporary monopoly as a reward to the inventor; ie that there are better, less harmful methods available. Even if it is accepted that patents can provide effective incentives for inducing inventive activity, it requires a certain leap of faith to move between this assertion and a statement that they are necessary, across the board, to procure an adequate level of invention. As Walterscheid states: believing that the ‘supply of invention would be less than it would otherwise be if patents were not used to protect the inventor . . . was one thing and proving it was another, but few bothered with any attempted proof ’.110 Thus the literature is littered with bold assertions of principle on one side of the debate or the other. The vehemently pro-patent lobby based their arguments on the theoretical musings of Mill and Bentham, that patents produced ‘infinite effect and cost nothing’. Taking more of a middle ground were those who argued that whilst patents were not totally free of social cost, the benefit that they provided far outweighed any such considerations. At the other end of the spectrum, others, such as Macfie, argued that monetary awards were more efficacious and socially cheaper incentives than patents.111 Bentham’s bold assertion of the great social value of the patent system and the absence of any associated social costs is not, it is respectfully submitted, a view that finds much, if any, grounding in truth. At even the most elementary level it will be appreciated that the patent system is not devoid of such burdens. Indeed, the view that patents ‘cost nothing’ is not a view that was accepted by the various Royal Commissions and Select Committees appointed in the latter-half of the nineteenth century to examine the question in detail. Instead they concluded that the heavy social costs associated with the operation of the laws were an unavoidable by-product of their existence.112 This is not to say that they are therefore without justification, 107 Report of the 1872 Select Committee on Letters Patent, House of Commons Papers, 1872 (Command Paper No. 193) at 433. 108 See text accompanying n 97, et seq, above. 109 See Coulter, n 35, above, at 98. 110 Walterscheid,‘Antecedents IV’, n 34, above, at 105. 111 Macfie, The Patent Question under Free Trade, n 70, above, at 29; See also Machlup & Penrose, n 36, above, at 22. 112 See, eg, the closing comments of the Royal Commission of 1863 where it is stated that ‘the inconveniences now generally complained of as incident to the working of the Patent Laws . . . cannot be wholly removed. They are . . . inherent in the nature of a Patent Law, and must be considered as the price which

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quite the contrary, it simply serves to divert attention from bold policy considerations to more concrete comparison between the social costs and benefits of the system. Thus Grove, an ardent abolitionist, when called to give evidence to the 1871 Select Committee on Patents, stated that ‘the sole ground on which letters patent can be held to be justifiable or permissible, is that they are beneficial to the public. If they are, and, so far as they are, keep them; if they are not, abolish them’.113 He concluded that patents were not. According to the abolitionists the patent system failed to satisfy the public benefit criteria on a number of grounds. Macfie, as ever, was highly vocal in his condemnation, stating that the provision of royalties to an inventor effectively resulted in taxation of the public due to the associated increase in prices.114 Another commonly voiced concern was that the uncertainty of the patent grant, when combined with the prohibitive cost of securing protection, rendered the system at best a lottery and at worst an elaborate mechanism designed to swindle the unwary.115 It should be noted that this criticism was also used by those on the other side of the debate in order to justify amendment of the system, although the injustices were not painted quite so graphically. In addition to questions raised about the efficacy of the patent system in promoting invention per se, some contemporary commentators inquired further into the roots of its function, examining if it did actually promote such activity. In short they asked if there was an additional social cost associated with the fact that incentives were given to invent. Where, in reality, did the resources diverted to the inventive process by the bait of the patent system actually come from? And was this rediversion economically justifiable? This argument, that the inevitable effect of the patent system was to divert existing activities from areas where they might most benefit into areas in which they would be most profitable, became one of the mainstays of the abolitionists’ arsenal. It provided the campaign against patents a sound economic platform from which to launch their assault. As Prince-Smith said, patents ‘do not promote inventive activity . . . they merely steer it into uneconomic channels’.116 It is a simple argument with a great deal of emotive strength; moreover, it is an argument that is difficult to defend against. However, it is also one concerning damage impossible to quantify and therefore other, more tangible factors, came to be counted at the fore. Amongst the most touted of these was the bureaucratic cost of administering the system, ie ‘the court personnel, lawyers, agents, and others engaged in prosecuting

the public consent to pay for the existence of such a law’. Report of the Royal Commission to Inquire into the Working of the Law Relating to Letters Patent for Inventions 1864 (Command Paper No 3419). 113 Report of the 1871 Select Committee, n 26, above, at 7. 114 See, eg, Macfie, Cries in a Crisis for Statesmanship Popular and Patriotic to Test and Contest FreeTrade in our Manufactures (London, Edward Stanford, 1881) at 30. 115 This opinion is amply illustrated by reference to the evidence placed before the 1829 Select Committee, see n 19, above. 116 Prince-Smith, ‘Ueber Patente für Erfindungen’, Vierteljahrschrift für Volksswirthschichte, Vol III, at 161. Quoted from Machlup & Penrose, n 36, above, at 23.

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patent applications and litigations’117 However, far more pernicious was the suggestion that the mere existence of the patent system was enough to discourage improvement as the fear of being charged with infringement ‘haunt[ed] the potential user of new technology and discourage[d] him from attempting to improve his technique’.118 Indeed, even Brunel complained that he ‘could hardly introduce the slightest improvement in [his own] machinery without being stopped by a patent’.119 Therefore, one of the strongest arguments of the pro-patent lobby, that patents were acceptable, as they did not deprive the public of anything that they formerly had enjoyed, now attracted criticism. The patent system, the abolitionists cried, served to rob the inventor of the opportunity to evolve and improve upon their inventions. Furthermore, there was a distinct possibility that more than one inventor may have been working towards the same goal, only for the first to get to the patent office to be given a monopoly to the exclusion of the others. The fact that ‘[y]ou can never prove that some other persons have not already invented, or will not soon invent, anything that is the subject matter of a patent’120 meant that the monopoly served to exclude the public from using the same idea as the patentee had.121 The Economist led the charge by stating that ‘[o]n all inventors [a patent] . . . is especially a prohibition to exercise their faculties; and . . . it is an impediment to the general advancement [of society] with which it is the duty of the legislature not to interfere’.122 The actual economic costs of these public disincentives are difficult to gauge, and it adds little to our discussion to enter into detailed analysis of the pros and cons of the system extant in the late-nineteenth century. At the time these arguments were first voiced the institutional structure of the grant was very different to that of today. Further, the doctrine of precedent was still in its infancy, not yet fully augmented by the systematic reporting of cases. Litigating a patent was a highly dangerous and costly process, a voyage only embarked upon by the bold or the reckless. The judiciary was considered to be distinctly anti-patent and the specification, although over 100 years old by the mid-nineteenth century, was still underdeveloped. However, the commentators of the time raised many objections to the patent system that were not based on administrative inefficiency or judicial hostility, but which had their footing in a heartfelt distrust of the patent system per se. Many of these arguments are no less relevant now as criticisms pertaining to the philosophical justifications of the system than they were when Macfie was writing. Indeed, the modern economic literature has recently returned to the ‘old’ arguments and finally begun to acknowledge the true complexity of the problem; that the patent system not only acts as an incentive to invent, but also acts to block invention.123 117

Taken from Machlup & Penrose, n 36, above, at 23. Batzel, ‘Legal Monopoly in Liberal England: The Patent Controversy in the Mid-Nineteenth Century’ [1980] Business History 189 at 191, referencing Hawes,‘On the Manufacture of Soap’ (1856) IV Journal of the Society of Arts 320. 119 See Report of the 1851 Select Committee, n 102, above, at 248. 120 Macfie, The Patent Question in 1875, n 99, above, at 32. 121 See Machlup & Penrose, n 36, above, at 24. 122 The Economist, Feb 1, 1851. Quoted in Machlup & Penrose, n 36, above, at 24. 123 See, eg Scotchmer, n 88, above. 118

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Realisation that the system could act as both incentive and disincentive to invent added serious weight to the abolitionists’ argument that the social costs of the system outweighed its benefits. If it could not be said with any certainty that the ‘carrot on a stick’ approach was efficacious in procuring invention where there would otherwise be none then, it was argued, the system not only harmed progress, but also charged the public for the privilege! It should be noted, however, that at the time these arguments were first advanced there was still a strong attachment to the image of the inventor as a hero.124 The idea of an individual, working alone in his workshop, who could not help but invent and whose driving force was the desire to aid the progression of the Empire. Stories of achievement in the face of adversity were commonplace. Figures such as Watt and Brunel were prominent role models to be emulated. The country was still riding on the crest of the Industrial Revolution and had not yet reached the point where corporate research and development had seized the day. Therefore, it is hardly surprising, as Machlup & Penrose simply state,‘that the function of the patent as a stimulus to the inventor’s financier was not given . . . the full emphasis that it now has’.125 The significance of this point is enhanced by the realisation that the cost of obtaining and defending a patent was so prohibitive that ‘[t]o make the property worth anything, a capitalist must take it up; but the capitalist, in doing so, stipulates for the lion’s share of the profit. Probably in ninety-nine cases out of a hundred the reward was obtained by such speculators, and not by inventors’.126 Therefore, to quote Bentham slightly out of context: as ‘he who has no hope that he shall reap, will not take the trouble to sow’,127 the logical conclusion drawn from the practical cost of the patenting process was that it could not actually perform to induce invention at all. Furthermore, the incentive thesis in its raw, pre-modern, form can only act as justification for those inventions actually induced by the offer of a patent. A causal relationship is required: but for the patent system, the invention would not have been made. Strict interpretation of this requirement focuses attention on the motivation behind the invention and necessitates denial of protection to serendipitous or accidental creations. It should be noted that when these arguments were first advanced the process of invention itself was poorly understood. The inventor was, by-and-large, an individual and this is reflected in contemporary writing. References are found to invention only; innovation, investment in research and development, the process of inventing inventions, was an alien concept. Indeed, it is only at the beginning of the twentieth century, due to the work of some highly influential economists,128 that we begin to see understanding unfold. It is at this point 124 See MacLeod,‘Concepts of Invention and the Patent Controversy in Victorian Britain’ in Fox (ed), Technological Change: Methods and Themes in the History of Technology (Australia, Harwood Academic Press, 1996) (MacLeod,‘Concepts of Invention’), at 137. 125 Machlup & Penrose, n 36, above, at 25. 126 The Spectator, Jun 5, 1869; quoted from Machlup & Penrose, ibid. 127 Bentham, The Works of Jeremy Bentham (Edinburgh, William Tait, 1843) Vol III, at 71. 128 Such as Schumpeter, Theory of Economic Development (Cambridge (MA), Harvard University Press, 1936).

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that we can observe the promotion of innovation, giving it primacy over invention and placing it at the centre of a modern appreciation of the system. It is this distinction between the act of invention and the inventive process itself that distinguishes the classical from the modern incentive theory. However, for the present our discussion is limited to consideration of the classical incentive to invent. The combined weight of these arguments may well have been fatal to any attempt to preserve the patent system as it stood, however, as already noted no one who took part in the highly public debate actually advocated maintaining the status quo.129 Instead, the pro-reform lobby used the argument to strengthen their calls for improvement of the administration of the system and to reduce the attendant costs. Also instrumental was the increased appreciation of the social contract theory of patent protection—that the patent could be seen as a bargain struck between the inventor and the public whereby monopoly was traded for knowledge.

The Exchange for Secrets Theory The idea of the patent as a contract between the public (represented by the Crown) and the inventor is a theory that can be traced back to the ‘working’ clauses often inserted into Elizabethan patent grants.130 The notion of such a bargain gained strength from the emergence of the specification in the eighteenth century, and was a trump card played by proponents of the system during the anti-patent debate. Three of the main treatises extant at the beginning of the crisis, those of Carpmael,131 Hindmarch,132 and Spence,133 emphasised the contractual nature of the patent grant. Thus in Carpmael’s Law of Patents for Inventions, Familiarly Explained, he states that the possibility of gaining a patent was: a great incentive to the exertion of ingenuity; as the . . . [patentee] found themselves rewarded for their labour . . . and the public were ultimately benefited by being made 129 Not strictly true.William Carpmael, it appears, was (according to the evidence of Thomas Webster at the 1851 Select Committee) ‘almost singular’ in his defence of the system as it stood. He opposed change on a number of grounds, insisting that high fees kept down the number of frivolous patents. He was also ‘sceptical of the value of indexes and abstracts, dubious of the necessity for commissioners, and critical of the Designs Act Extension Bill, which, in his opinion, had only increased the amount of paperwork accompanying every application for protection’. Coulter, n 35, above, at 52; see also Carpmael’s testimony before the 1851 Select Committee, n 102, above, at 265–317; and his testimony before the Royal Commission of 1864, n 112, above, at 354–73. 130 These were requirements that the invention must be worked—ie practiced—in England in order for protection to be legitimised. Failure to work the invention would lead to revocation of the grant. See Hulme,‘On the Consideration of the Patent Grant, Past and Present’ (1897) 13 LQR 313. 131 Carpmael, The Law of Patents for Inventions, Familiarly Explained, for the use of Inventors and Patentees (London, G Wightman, 1832). 132 Hindmarch, Treatise on the Law Relating to Patent Privileges for the Sole Use of Inventions (London, Stevens, Norton, and Benning & Co, 1846). 133 Spence, A Treatise on the Principles Relating to the Specification of a Patent for Invention (London, V&R Stevens, and GS Norton, 1847).

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acquainted with the means of producing the invention, which became public property at the expiration of the term of the grant, or earlier.134

As Coulter explains, this view of the patent as a bargain accorded with both the common law and the exchange arguments of the classical economists. ‘Any restrictions that the patent placed upon use of the new manufacture . . . were temporary ones acceded to by the public in return for the public in return for the information contained in the written specification’.135 Hindmarch reiterated this point, rationalising that the only way in which the patentee could have exclusive property in his invention, once it was made public, was by the application of some positive law made with the actual or implied consent of the whole community.136 Such consent was deemed to exist because of the benefits accruing to society from the publication of the invention where it might once have remained secret.137 His authority for this conclusion came from the case of Cartwright v Eamer 138 in which Eldon LCJ (as he was then) opined that the patent grant should not be considered ‘in the light of a monopoly, as it had before been put by the judges, but as a bargain with the public’.139 Therefore the question that should be asked of a particular specification in order that the patent is good was whether it ‘is such that a mechanist can make the machine from the description there given’. Like Hindmarch, Spence cited Cartwright v Eamer in support of his proposition that the specification was the consideration that the patentee provided for his bargain with the State, and which must therefore be ‘judged on good faith’.140 Coulter notes that Spence took this requirement very seriously, not only on legal, but also moral grounds; ‘warning against a deterioration of inward character that would surely result, whatever pecuniary award might be secured, from acting in bad faith’.141 The exchange theory as an example of the contractual nature of the patent grant shares some roots with the incentive to invent. Indeed, it was often the case that they were deployed together as twinned justifications. Lord Granville, speaking in the House of Lords Debate on the Patent Law Amendment (No 3) Bill 1851, did just this. He stated that ‘the only principle on which patents could be justified was, that the patent was a bargain between the inventor and the public, by which the inventor 134

Carpmael, n 131, above, at 3. Quoted from Coulter, n 35, above, at 78. Coulter, ibid. For a more modern appreciation of the information function patents see Beier & Straus, ‘The Patent System and its Information Function—Yesterday and Today’ (1977) 8 IIC 387. See also, Unknown,‘The Disclosure Function of the Patent System (or lack thereof)’(2005) 118 Harvard Law Review 2007. 136 Hindmarch, n 132, above, was at pains to point out that patents, regardless of their social utility, were not a natural right of the inventor, rather they were a ‘matter of favour’. 137 See Hindmarch, n 132, above, at 1; see also Coulter, n 35, above, at 79. 138 This case is referred to in Harmer v Plane (1807) 14 Ves (Jun) 131. 139 See the statement of Romilly and Scott, counsel for the plaintiff in Harmer v Plane, ibid, at 131. Eldon’s judgment in Harmer v Plane ends (at 136) with his statement that ‘I adhere to the law, as I stated it in the case of Cartwright v Eamer’. 140 Per Eldon, LCJ, in Cartwright v Eamer. 141 Coulter, n 35, above, at 80. 135

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was encouraged to make inventions, and afterwards encouraged to make them known to the whole world’. Granville, however, was in favour of abolition and concluded that in the ‘present state of the world’ there was no need to offer such incentives, as ‘to scheme and invent was almost a madness with some people’.142 By eliding the justifications in this manner, his Lordship missed the main point of the argument: the incentive to disclose is discrete of the incentive to invent. For, whilst it is common ground between the theses, for instance, that technological progress and industrial growth are socially desirable and that invention is necessary for this progress, crucially they differ in their expectations and estimations of the inventor. Both the reward and the incentive theses, suffered at the hands of the abolitionists’ preconception that invention was, in essence, discovery. Viewing the inventive process in this way enabled opponents of the system to turn the argument that the patentee was owed by society for his intellectual expenditure around so that the patentee now owed society an ‘intellectual debt’.143 As Stirling, a Glasgow manufacturer, stated: the ‘inventor has the benefit of all foregone human thought, of all existing civilisation. He has the unbought advantage of all laws, all language, all philosophy. He has the free use of all methods and appliances, spiritual and material, which have been painfully elaborated by the thinkers and workers of all time. Why, then, should he alone have an exclusive privilege in respect of the infinitesimal addition which he makes to the work of ages?’144 The exchange theory enabled the pro-patent lobby to side-step this difference in views and to say that even if the abolitionists’ picture of invention was correct, the patent system could still be supported on the ground that it encouraged the dissemination of knowledge. It did not matter about the ‘whys and wherefores’ of the inventive process, the important thing was that without some incentive the inventions that contributed to the technical prowess of the nation, of which all were so proud, would go to the grave with their creators. The patent, it was argued, should not, therefore, be seen as a privilege, but rather as the result of a bargain whereby the inventor agreed to tell the world of his invention in return for a temporary monopoly.145 Put simply, a ‘patent is the price of disclosure’.146 Predictably, the argument did not proceed unchallenged. The Economist, for example, doubted that the technological progress of the State would be at all harmed if inventors were not encouraged to disclose their inventions as ‘nearly all 142 See the speech of Lord Granville in the Lords’ Debate of the Patents Bill 1851, Hansard (3rd Series) HL Vol 118, cols 12–17 for these quotations. 143 See Coulter, n 35, above, at 85. 144 Quoted in Macfie, Recent Discussions on the Abolition of Patents, n 70, above, at 119. See also Coulter, n 35, above, at 86. 145 See further; Machlup & Penrose, n 36, above, at 26; Dutton, n 33, above, at 22; Machlup, n 29, above, at 24; Coulter, n 35, above, at 94–5. 146 Dutton, n 33, above, at 22, attributes this quote to the testimony of John Farey before the 1829 Select Committee, at page 21 of the report. Although Farey’s testimony appears at this page, the quote does not. On the following page, however, when discussing the priority of two competing applications, Farey is reported as saying: ‘The first applicant who is able, and willing, to make disclosure of the secret, ought to have the patent, that is to be given as the price of such disclosure’. Report of the 1829 Select Committee, n 19, above, at 22. It is assumed that Dutton was misquoting this reference.

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useful inventions depend less on any individual than on the progress of society’.147 In making this point the abolitionists aimed to distinguish the patent system from copyright, which the literary property debate of the late-eighteenth century had settled as intrinsically valid. Thus, Rogers dismissed the claim ‘that literary works and inventive adaptations are identical in their nature . . . each literary work is a unique creation, capable of distinct appropriation and limitation’; inventions, on the other hand, lacked the required uniqueness.148 Therefore, the counterargument went, if an inventor wished to keep his creation secret, so be it, it would not be long before another made the discovery and bought the innovation to the masses. Such an argument is, however, dependent not only upon the view that inventions exist in the ether, waiting to be made, but also the assumption that the next person to ‘invent’ the same improvement would choose, or be forced, to make it public. Whilst the probability of the invention moving to the public domain will increase with the number of people practising it, it is still far from certain, in the absence of any incentive, that such a move will be made, especially if it can be effectively concealed. Critics of the theory argued that an invention would inevitably leak to the public even if its creator tried to keep it secret. They stressed the difficulty of maintaining secrecy, suggesting it was so great that under the social contract theory protection was given for nothing in return. The difficulty of keeping most inventions secret was a point that had previously been utilised by those in favour of the system in order to justify its existence. Indeed, even with patent protection in Britain there was considerable concern, justifiably so, that patented technology would be stolen and sold to foreign industry who did not have to abide by such laws, and who could then undercut British manufacturers.149 Supporters of the system had cited the ease with which competitors could adopt unprotected technology and thereby profit from the ‘true’ inventor’s ingenuity, and now suffered from the success of their argument. However, this did not stop them defending the system on this ground, even ‘if the possibility of maintaining secrecy was confined to special circumstances’.150 In addition, they questioned the competitive advantage that the abolitionists said

147

The Economist, Jul 26, 1851; Quoted from Machlup & Penrose, n 36, above, at 27. Rogers, ‘On the Rationale and Working of the Patent Laws’ (1863) 26(2) Journal of the Statistical Society of London 121 at 135–8. See also, Coulter, n 35, above, at 86. 149 This concern was most apparent within the textile industry during the industrial revolution where many measures were adopted in order to stem the flow of valuable information out of the mills and into the hands of outside (especially foreign) interests. Thus mill windows were made small and high so that outsiders could not easily look in, oaths of secrecy signed by the workers were commonplace, and in 1719 and 1750 Parliament imposed restrictions to prohibit skilled artisans and manufacturers from emigrating. See Coulter, n 35, above, at 24. 150 Machlup & Penrose, n 36, above, at 27. They quote McCulloch as stating that ‘it would plainly be for the interest of every one who made a discovery, to endeavour, if possible, to conceal it. And notwithstanding the difficulties in the way of concealment, they are not insuperable; and it is believed that several important inventions have been lost, from the secret dying with their authors’. McCulloch, ‘Patent’, in A Dictionary, Practical, Theoretical and Historical, of Commerce and Commercial Navigation, n 38, above, Vol II, at 274. 148

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would be gained by all in the absence of patent protection, wryly asking; ‘When do we hear of an important invention coming to maturity in Switzerland?’151 A consequence of the need to keep an invention secret before a patent was obtained led some opponents of the system to claim that, rather than encouraging disclosure, it actually promoted secrecy. Prince-Smith states that, in the absence of a patent system, ‘secret and isolated work would cease and its place would be taken by a cooperation of all qualified talent’.152 Interestingly, the model of scientific research he advocates closely resembles the corporate-led research efforts of the present day. However, these comments apparently provoked little, if any interest during the debate, probably due, at least in part, to the entrenched view of the lone inventor battling against a sea of competition.153 The difficulty of maintaining secrecy led the system’s opponents to their third criticism of the theory: only those inventions that could not be kept secret would be patented.With this in mind, Rogers described the bargain between the patentee and the public as ‘thoroughly one-sided’ as the inventor only seeks to obtain a patent where he fears that his invention will be discovered.154 Machlup & Penrose quote the German Economists, Böhmert and Rentzsch, as holding that this argument alone reduced the exchange theory to tatters.155 However, as we shall see, it suffers from a similar inadequacy to that of Granville’s attack on the system in the Lords.156 It will be recalled that his Lordship elides the issues and assumes that incentive and exchange are so intertwined that the mere fact that ‘to scheme and invent . . . [is] almost a madness with some people’ justifies abolition of the system. In doing so he ignores the distinction between the two justifications and paints the system with too wide a brush, disregarding the fact that different areas of technology, different inventions, can be justified in different ways. Böhmert and Rentzch, on the other hand, separate the theories too much and, in doing so, make the same mistake. They fail to see the continuum of invention, the spectrum of technology, much of which cannot be kept secret but which needs special incentive to appear at a socially beneficial rate, and the few inventions that must be coaxed from the fog of secrecy that would otherwise enshroud them. In treating invention as something inherently likely to leak to the public, they highlight the need for a system that protects the inventor from misappropriation of his idea, and therefore implicitly offer justification for the system.

151 Day, On Patents for Inventions (London, Smith & Sons, 1870), at 35. Quoted from Coulter, n 35, above, at 97. 152 Prince Smith, n 116, above, at 160; quoted in Machlup & Penrose, n 36, above, at 28. 153 For a picture of the inventor and their creations in Victorian Britain see MacLeod, ‘Concepts of Invention’, n 124, above. 154 Rogers, n 148, above, at 128. 155 Machlup & Penrose, n 36, above, at 27, quoting Böhmert, n 86, above, at 67, and Rentzsch, n 46, above, at 629. 156 See text accompanying n 142, above.

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Postscript The anti-patent debate marks a period of intense hostility to the notion of creating property rights relating to inventions. It was prompted, in part, by feelings of injustice provoked by free competition from (generally patentless) outside states. Abolitionist rhetoric appealed to this perception of injustice, the media became involved and the debate was taken to the masses. Battle lines were drawn, and territories marked, which divided those who advocated abolition from those who wanted reform. However, even the most vocal of the abolitionist crowd did not fully embrace the laissez-faire attitude and advocate removal of all state intervention in the inventive process. True, there were those that upheld such heterodoxy, but it would appear that this sentiment, the true laissez-faire, went practically unnoticed during the debate. Critics that called for abolition eventually caved in under the weight of history. Being unable to prove that there was no link between Britain’s prosperity and the patent system, between patents and progress, they were forced to attack the system on less concrete grounds, to suggest that there were better, more cost-efficient methods of promoting the ‘useful arts’. Laissez-faire sentiment was all well and good, but it did not really gain the same foothold in Britain that it did on the Continent. Very few, and certainly not Macfie, despite his vociferous condemnation of the patent system, trusted an unregulated market to harbour the required amount of inventive activity to keep Britain ‘Great’. Thus, by the end of the nineteenth century, two distinct conceptions of the patent system are in evidence. The first is that of the patent as a tool of commercial leverage, as reflected in the works of Smith, Bentham, Mill and others in the pro-patent camp. The second is that of the patent as a constraint on trade, the old monopoly argument, demonstrated by Macfie, Rogers, Grove and the other abolitionists. The legal system at this time was ill-equipped to deal with treating the intangible as property; patents did not fit within existing constructs of excludability and exhaustibility that had been used to define and justify the concept in the past. Therefore the courts did the only thing that they could do, they tried to force the shoe to fit. They treated invention like land and required that it be defined accurately and precisely, they stated that what is not claimed is disclaimed, and in doing so they promoted the specification to the fore. It was no longer simply sufficient to work the invention and therefore introduce the technology to the Realm in that manner, now the workings had to be taught to all who would care to read about them. Bureaucracy had built up around the specification and the smallest of errors could cause invalidation. The grant was still too close to the Crown for any other rule to apply, but the gap was widening. The political economists were keen to mark the patent as a tool of commerce, a mercantile invention and to cut it free from the mire of its roots. Furthermore, by the closing years of the nineteenth century, the nature of invention was undergoing

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fundamental change. The image of the lone inventor was on its way out, slowly being replaced by the new corporate structure of research and development, however the underlying rationales stayed the same. Technical progress was good for the country, invention was necessary for technical progress, and the patent system existed to encourage, promote, and reward. It had history on its side. Clearly, the fact that the debate could rage in public with such vitriolic fervour at this time demonstrates that the issues at stake were of critical importance. Perception of the patent system was, in many respects, more important than the role that it actually performed. The perceived fairness, or otherwise, of the grant was paramount, made core by both side’s difficulties in demonstrating, or disproving, its actual efficacy. Given that the system was in place it was impossible to predict the effects that abolition would have. If the anti-patent lobby were correct then only benefit would be gained from its destruction. However, if they were wrong the consequences for the country could be dire. It was this uncertainty, in no small measure, that eventually enabled proponents of the system to win the day as, despite the many problems, society could clearly survive with patents. The inconvenience of the extant system, however, could not be ignored and so important legislative and administrative changes were undertaken to assuage the popular discontent. During this process of refining and redeveloping the system, both the patenting process and the quality of the grant were greatly improved. Key to modernisation of the law was the decision that the patentee must take more responsibility for their grant. Therefore the specification was promoted to the fore, with disclosure and enablement being considered as the price of protection. Most importantly, in the revisions of 1883, the requirement that this ‘specification . . . must end with a distinct summary of the invention claimed’157 was introduced. Finally, the patentee was placed at the centre of their grant, responsible not only for the teaching of their invention, but also for defining the scope of protection that they were to enjoy. The Victorian era is therefore responsible for transformation of the grant from an instrument of crown patronage to a free-standing economic property right regulated by the state; in other words, for the birth of the modern patent system. However, not all pressure for reform of the system was internal to Britain. Building throughout the nineteenth century, there was an increasing international movement to secure reciprocal protection for, and harmonisation of, industrial property like patents. The first conference to consider such international aspects of the protection of inventors met in Vienna in 1873. It was prompted by pressure from the US government over concerns for the security of American inventions to be exhibited at an international exposition to be held in Austria-Hungary that same year.158 It is perhaps somewhat ironic that, as Penrose notes: ‘the first international conference on patents was held while the controversy between the patent and 157

s5(5) Patents Act 1883. See Penrose, The Economics of the International Patent System (Baltimore, John Hopkins Press, 1951) at 45–8. 158

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anti-patent forces throughout Europe was still lively and bitter’.159 However, the tide was turning in favour of patents and as just Britain’s own national patent debate was coming to an end, the wheels of international reform were moving fully into action. The peak of the late-nineteenth century trend of growing internationalism was probably provided by the Paris Convention or 1883. This followed three conferences, held in 1878, 1880 and a very brief one in 1883 itself, in which provisions that were ‘hoped would overcome the worst difficulties facing patentees with international interests, and would at the same time be politically practical’ were debated.160 The Convention was incorporated into the British Patents Act 1883, and provided for new concepts like ‘national treatment’161 and ‘Convention priority’.162 By the beginning of the twentieth century, therefore, a much-improved grant was in existence. Reforms prompted by the anti-patent debate had been implemented and many hallmarks of the system recognisable today, such as preliminary examination, fence-post claims, priority arising from application rather than grant, etc, were in existence. Fees had been reduced and the application process simplified, however, distrust of monopoly was still evident. Therefore, perhaps due to the combined effect of a changing face of invention, the last vestiges of the grant being a grant of crown favour, and the lack of any anti-trust laws, whilst the specification had assumed its place at the centre of the patent, it was being judged with a highly critical eye, the odour of monopoly still strong in the air.163

So what can we Learn from the Victorian Controversy? At a time when much thought is directed towards expansion of the system, it is wise to consider whether any proposed changes will uphold the basic tenets of its existence. It is important to understand why we have patents in order to assess whether any given approach to patentability or claim construction is correct. The antipatent debate was the first time that economic argument was explicitly utilised to defend and, indeed, criticise the patent monopoly. The system was literally fighting for its life. Therefore the arguments that were deployed at this time reveal its true core. They do not attempt to model, or predict; rather they seek to uphold, and as such should not be forgotten by modern lawmakers.

159 See Penrose, The Economics of the International Patent System (Baltimore, John Hopkins Press, 1951), at 48. 160 Extensive coverage of the conferences that lead up to, and the patent provisions contained within, the Paris Convention 1883 can be found in Penrose, n 158, above, at 48–87. 161 The requirement that a Convention country must treat applications from nationals of other Convention countries as it would its own. This is found within Art 2 Paris Convention. 162 Therefore an application for a patent in one member state will not prejudice a later application in another member state as long as it is within the prescribed period. The prescribed period is 12 months. See Art 4 of the Convention. 163 This conclusion is made apparent in the judgment of Salmon LJ in Ethyl Corporation’s Patent [1972] RPC 169 at 193 that: ‘From 1883 until after the end of the last war, the courts tended to regard patent monopolies with some disfavour as being generally contrary to the public interest.’

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Of all of the justifications outlined above, the final two show the most promise as validation of the modern system. The incentive theories have changed over time as our understanding of the inventive process has evolved. As we shall see, Schumpeter’s pioneering work164 at the beginning of the last century clarified the connection between invention and innovation, and enabled specific recognition that the motivations for an entity to invest in the inventive process are clearly not the same as those that inspire an individual to invent.165 Seen in this broader manner, the traditional incentive is now sidelined, replaced by realisation of a broader truth: the patent system serves to secure returns to the investor in invention. In return, society enjoys the advances that they have enabled and perfected, consideration for the grant being disclosure in the specification. This disclosure element of the patent grant has strengthened significantly since the Victorian Era, indeed, it could be argued that the poor quality of the patent specification in the late nineteenth century rendered justification as a social contract improbable at best. Yet the question that remains is whether the other side of the bargain has been similarly fortified. Whilst undoubtedly valuable in certain sectors, the patent system has become unwieldy in others. As we shall see in later chapters, recent litigation has demonstrated a fundamental weakness in the system when considering the protection that should be provided for pioneering breakthroughs. The approach taken by their Lordships in Kirin-Amgen,166 in particular the tests laid down therein, provide clear illustration of, at the very least, an unconscious prejudice against quantum technological leaps. At the beginning of the twenty-first century therefore, the law is favouring incremental over explosive advance. With a patent system whose heritage lies in improving the technological standing of the Realm, and economic justification for the grant based on incentive being the most rational of the theories hitherto advanced, it is clear to see that, if the operation of the system fits the philosophy, patent law today not only fails to encourage such pioneering advances, it also actively discriminates against them when made. With this in mind, we now turn to consider the reality of the system and ask: does the philosophy fit the facts?

164 165 166

Above, n 128. See further, text accompanying n 38 et seq in ch 5, below. Kirin Amgen Inc and others v Transkaryotic Therapies Inc [2005] 1 All ER 667.

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4 Patents within the Market Economy (Part II) Does the Philosophy Fit The Facts? Introduction Analysis of the patent grant cannot simply be undertaken by utilising traditional definitions and constructs of property. The patent is more complex than that: its area of influence is secondary, concealed behind the words used to define its scope. Yet, as we have seen, the court’s approach to the interpretation of patent claims, the tangible evidence of the intangible subject of protection, in early-twentieth century Britain, was clearly influenced by traditional constructs of what property should be. Therefore, in Lord Russell’s famous dictum in EMI v Lissen, that there is: no canon or principle which will justify one in departing from the unambiguous and grammatical meaning of a claim and narrowing or extending its scope by reading into it words which are not in it; or which will justify one in using stray phrases in the body of the specification for the purpose of narrowing or widening the boundaries of the monopoly fixed by the plain words of a claim.1

The analogy with tangible objects is clearly evident. In land law, for example, there is no principle of equivalence whereby the owner of a strip of land can prevent access to property outside of the literal fence-posts of his claim.2 Equally, the owner of a chattel cannot prevent another (absent ingenious placing of the item) from coming within six feet of his prize on a claim of trespass by equivalents. Intangible property, on the other hand, has an infinitely more complex nature and therefore does not stand up to close analogy with its physical brethren. This said, tangible property is something with which all of us is familiar, it is something that the human mind can directly relate to, and therefore the temptation to draw comparison is great and the capacity for misinterpretation still greater. It is also clear that there is significant public confusion over the nature and effect of the patent grant. Indeed, it is not uncommon for relevant members of the public to be unable to distinguish 1

EMI Ltd v Lissen Ltd (1939) 56 RPC 23 at 41. Notwithstanding the restriction of certain uses of the land under covenant or by recourse to the tort of nuisance. 2

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between categories of intellectual property at all, let alone identify patent content as a separate entity: One will often hear about copyright in an invention, or a patent in a book, etc, in the course of any given conversation on the topic. The press are no better. The following passage appeared in The Guardian on 26 October, 2006, and illustrates this perfectly: Starbucks, the giant US coffee chain, has used its muscle to block an attempt by Ethiopia’s farmers to copyright their most famous coffee bean types, denying them potential earnings of up to £47m a year . . . [Oxfam] . . . said the Ethiopian government last year filed copyright applications to trademark its most famous coffee names—Sidamo, Harar and Yirgacheffe.3

If the anti-patent debate of the mid- to late-nineteenth century, discussed in the preceding chapter, has taught us anything, it is that public perception of the patent system is not based on an in-depth understanding of its inner workings; it is reliant upon popular misconceptions, emotive calls-to-arms and the stigmatic association with odious monopoly. The problems that this lack of understanding causes are magnified when one considers the symbolic power of a patent. For example, it is irrelevant to the majority of the consuming public whether or not a patent will stand up in court. Validity is not their concern. For the general populous, the power of the patent is linked to their misunderstanding of the system and the suggestion of official endorsement that the word ‘patented’ carries with it. In short, the grant adopts totemic value as a symbol of power and protection. Recent illustration of this effect can be found in the public furore over basmati rice patents in the United States.4 Here the potency of the grant lies not in the actual monopoly that it provides, if indeed it can be called a monopoly at all,5 but rather in its symbolic nature. The mere fact that a patent has been granted is sufficient to engender fear that there is monopolisation of the production of all basmati rice. The perception of such grants therefore reinforces the societal view of patents as odious monopolies, a view that is inevitably reflected in the treatment that intellectual property is given in the courts.6 If one accepts that the system is a part of a capitalistic society and that its abolition is not commercially possible, and further that the consumer is overwhelmingly self-interested in the present, with little or no scope for anything other than personal forward thinking, then a broad interpretation of any instrument that would increase price is clearly not a popular option.

3 Seager,‘Starbucks, the coffee beans and the copyright row that cost Ethiopia £47m’ The Guardian, 26 Oct, 2006. Available at The Guardian, http://www.guardian.co.uk/frontpage/story/0,,1931675,00.html. 4 A web search for ‘basmati rice patent’ in any of the major search engines returns literally hundreds of articles, discussions, and web-site postings on the subject, very few of which display any knowledge, or even understanding, of patent law whatsoever. 5 See text accompanying n 9–30 in ch 5, below. 6 A good illustration of derisory treatment in a related field can be found in the Patents Court decision in Zino Davidoff v A&G Imports Limited & Tesco Stores [2000] Ch 127, where Laddie J stated (at para 36) that the trade mark can give its owner a ‘parasitic right to interfere with the distribution of goods’.

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The narrowest logical construction of the patent is that based on a literal interpretation of the claims.7 Indeed, on a purely proprietary analysis this is the only scope that can be justified. In order to expand from this position and offer any degree of equivalence it is necessary to have recourse to at least one of the philosophical or economic justifications of the patent system discussed above, or a variant thereof. Therefore, in order that we understand this basic position, the literal core of the assessment of patent scope, it is necessary to inquire into the patentee’s apparent motivation in seeking a patent and the process of its construction. This investigation enables assessment of the intrinsic value of the grant and therefore allows better understanding of the economic considerations for the determination of scope. It also allows discussion of the totemic value of the grant and provides a point from which to examine the substance of the folkloric claim that about 90 per cent of patents on the register are invalid: in addition, it enables us to ask whether, if this figure is true, it actually matters. Our first task is therefore to examine the patentee’s motivation in seeking a grant in order that we can contrast the system’s commercial and philosophical purposes.

Why Patent? Based on the foregoing discussion the reader might be excused for thinking that the answer to this question is simple. The purpose of the patent system is clearly to foster invention, whether by reward or incentive. It is designed to further the technological prosperity of society; this was the explicit intention of the Elizabethan grants and there is nothing to suggest that things have changed. The patent provides protection from competition. The corollary of this is that one therefore obtains a patent in order that this benefit is realised. This said, the principal reason for patenting is to get monopoly protection. This is a logical conclusion based on the facts as presented, and is superficially satisfying. There is a cause and an effect that naturally dovetail; the patent is justified on the ground that it promotes innovation/disclosure, because it awards a monopoly to reward or stimulate the inventor, or compensates them for letting society benefit from their idea. However, as Taylor & Silberston note, the ‘indiscriminate promotion of invention is clearly not a defensible economic objective from any point of view, except probably that of those who earn their living as professional inventors or research workers’.8 Therefore, we redraft our hypothesis and state that the patent system can only be justified if it causes or rewards the correct type of inventive activity and attendant disclosure. 7 Although, as shall be seen in ch 8, below, there are other, even narrower, constructions that have sometimes been used. 8 Taylor & Silberston, The Economic Impact of the Patent System: A Study of the British Experience (Cambridge, Cambridge University Press, 1973) at 28.

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This latter view of the system is supported by the requirements for patentability. An invention must be new in order to gain patent protection.9 In addition, it must contain an inventive step (ie not be obvious to the person skilled in the art, based on their specialist knowledge of the technical field in question).10 Furthermore, it must be ‘capable of industrial application’ and not fall within one of the prohibited categories of things that are ‘not inventions’ for the purposes of British law.11 The legislation that implements patent policy is tuned towards the encouragement of inventive ideas that have been reduced to practice. Therefore, it is not possible, for example, to get patent protection for a discovery, as such, in the UK. However, one can obtain a patent for an invention that utilises a discovery in a practical manner, for instance the discovery of the virus responsible for Hepatitis C could be utilised to enable the manufacture of a testing kit, which would not be excluded from patent protection on policy grounds.12 Everything is relatively neat. The prospective inventor is encouraged to use their inventive faculties in order to create something new in an area that attracts patent protection. They are then encouraged to make this innovation known to the world in return for a patent, which they can use to keep everyone off their patch for the time that is required for them to realise the value of their invention. The raison d’être of a patent is the monopoly that it confers. Under this view of the inventive process, the patent system acts in various stages to incite and reward invention whilst simultaneously demanding that the inventor make their creation available to the public and compensating them for doing so. The theories under this model are intertwined and therefore the scope of the monopoly granted should reflect this balance; it should extend to cover that which the inventor has disclosed where this is sufficient to encourage the invention to be made. The reward that is offered, or the incentive given, should relate to the contribution that the invention makes to society, and the scope of the patent should be determined by the technical contribution that it makes to the state of the art. This process of balancing the extent of the reward or incentive with the invention and its scope of protection should also take into account the possibility, and plausibility, of any benefit to the creator actually being realised, for part of the decision to patent should rationally depend upon such a calculation.13 By placing the invention in a market unencumbered by direct imitation, the patent system enables the patentee to charge a monopoly price and therefore maximise the value of the granted rights and the attendant profits. This value will be primarily dependent on the creation’s utility, either to the user in terms of cost reductions etc, or to the consumer, arising because it provides a better, cheaper, 9

s2 Patents Act 1977 (PA 1977). s3 PA 1977. 11 s4 and s1(2) PA 1977, respectively. 12 See Chiron v Organon (No 12) [1996] FSR 153, although such a testing kit would still be liable to attack on grounds of novelty or inventive step. 13 This will be especially important to the individual inventor or the small and medium enterprise (SME), as the cost of enforcement of any right that they later obtain should be a major consideration. In addition, such enterprises are less likely to have the ‘fighting funds’ of larger entities. 10

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more straightforward, or simply more desirable, means or matter for doing something. There is, after all, no value in something that nobody wants. However, the security of this value is inextricably linked to the scope and stability of the patent itself, as the value of the invention is necessarily dependent on the availability of substitutes, the availability of substitutes is linked to the scope of the patent, and the scope of the patent determines its value as it controls the zone of exclusion. The patent is therefore the shell that protects the delicate invention within, which provides its ultimate value and utility. Under this model, the patent is obtained precisely because of its ability to exclude competition and provide monopoly profit to the enterprise that owns and exploits it. However, there is at least one other reason for desiring patent protection that stands independent of the scope of the monopoly conferred. Obtaining a patent, rather than being a means to an end, may be an end in itself.

Motivation to Patent: Other Considerations The real reason for seeking a patent may be a far-cry from the traditional view of patenting for monopoly. This may, in turn, have considerable consequences for the scope with which the specification and claims are actually drafted, for there is little point in exposing the patent to increased risks of invalidity by creating broad claims if the grant is never intended to be used for protection. Central, therefore, to the creation of a patent’s ‘instrinsic scope’, ie the aimed for and desired breadth of the patent right, are questions of what the patentee desires and, more importantly, whether they can forsee having the funds to enforce protection of their rights.14 As one patent attorney said: [The first question is always to ask] what they want a particular patent for, what they wish to cover with it. Do they want something that is fairly all embracing to keep people off their patch? . . . Sometimes a client doesn’t want a claim that is too broad because they don’t want to tread on other people’s feet—perhaps because they want a patent which is merely a licensing vehicle for a product that they have in mind and nothing more. Other times it’s a fairly basic patent in which they want as much as possible protected to prevent other people from competing, in one way or another, with them. So that’s the first point—why are you drafting with the breadth that you plan to draft with? . . . There are other reasons for patents. Some governments will . . . give tax breaks to patent holders or the holders of patent applications, and the tax breaks may be worth an awful lot more than the cost of filing the patent application—and of leaving it pending for as long as possible regardless of its potential validity . . .You may wish to file a patent application to stop someone else from getting one by publishing it . . . so you file your own application and just drop it, let it go, let it publish . . . [A] significant amount of others are gained because they are assets, regardless of how worthy they are. Venture capital companies see them and think that the entity

14 Again, the reader will note that this will be more problematic for smaller enterprises as, despite the possibility of costs being awarded for successfully defending a patent right, there are a number of upfront charges that the lone inventor or SME may be unable, or unwilling, to pay.

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holding them is worth putting money into—in a lot of cases they needn’t even see a granted patent, they are just as happy with an application.

Therefore, it is easy to see that there are many reasons for obtaining a patent that don’t necessarily conform to the traditional model of patent for protection. The patent grant, and in particular the publication of that grant, is an effective tool for signalling your position to others operating, or simply interested, in that technological area.15 Whether in the interests of attracting investors or potential buyers, or even for secondary purposes such as the RAE,16 the signalling function of the patent system cannot be doubted. This does not, however, undermine the fundamental conclusion that the patent is a tool of commerce which is obtained simply because there is a commercial advantage in doing so. Often the advantage is monopoly protection, in which case the patentee will see the scope of the patent (in terms of maximising its coverage) as crucial. However, it is apparent that there are many instances in which this is not the patentee’s primary concern. For example: There are some patents that people know they have that aren’t valid, they’re aware of the fact that there are major problems with their case. They would prefer that we didn’t tell them that in writing, but they know that. But they like to have a large portfolio of patents. They have a few that they could sue people with and that they’re happy with, but one of the ways that you can value your business is on the value of the IP that you own. So, ‘get me some patents, I don’t really care that they aren’t really valid and won’t stand up in court, I’ll never sue anybody with them’. . . . From that point of view, does it matter what I put in the claim? In that sort of case I don’t need to worry so much about what will happen if this were ever litigated, because this one’s not going to be. Their only purpose is to enable the patent holder to tell the shareholders that they’ve got ‘X’ number of patents world-wide.

The majority of those interviewed were able to recount first-hand experience of this kind of patent grabbing, and all had at least anecdotal evidence of its existence. All areas of technology were considered to be equally susceptible, however in recent years it was noted that the dotcom companies seemed to be leading the way in obtaining patents of dubious quality. The reasons advanced in connection with this observation were all very similar and centred around the fact that such companies were not very likely to have significant material assets against which to secure investment and this therefore forced their intellectual property holdings to the fore. Where this is the case, and the prospective patentee knows that the invention that they are seeking to protect is less than wholly meritorious, the attorney will be drafting in the knowledge that the examiner is the only person they have to impress. In this case they know that the patent’s purpose is to squeeze money from the banks; it will never be used in anger and therefore the attorney will modify their style accord15 This signalling potential lies at the core of Long’s radical departure from the traditional view of the patent as a trade-off between secrecy and protection. See Long, ‘Patent Signals’ (2002) 69 University of Chicago Law Review 625, discussed in text accompanying n 199–219 in ch 5, below. 16 Research Assessment Exercise. The RAE 2008 is ‘the sixth in a series of exercises conducted nationally to assess the quality of UK research and to inform the selective distribution of public funds for research by the four UK higher education funding bodies’. See http://www.rae.ac.uk.

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ingly. The scope with which they draft will be the scope that is likely to elicit the least objections; it will be pitched narrowly. There are, in addition, some instances in which the intrinsic scope of the patent will be determined by other motivations. One patent attorney gleefully recounted a case in which he had been instructed to draft a specification that left one particular embodiment of the invention, which would solve the same problem, free and accessible. The catch was that this method of manufacture would have been ‘prohibitively expensive, to the point of lunacy’. He explained: [The patentee in such a scenario] doesn’t want to keep the competitor right out, but wants him to see a method of manufacture . . . that’s so expensive that he can’t compete in the market place—that amuses them a lot more than keeping them out altogether.

Others, when asked about this behaviour, simply stated that they had heard of such cases, but could provide no first-hand experience of the patentee’s sense of humour.

Drafting a Patent: Determinants of Scope It is clear from the foregoing discussion that the motivation for seeking a patent may have serious implications for the scope with which it is drafted. Those patents that are sought for reasons other than to ward off competition will be drafted in a manner designed to maximise the chances of getting the application through to grant. However, whilst certainly not universally, most patentees will, at least initially, desire to protect their invention from appropriation by others, and thus desire broad protection: In general, you try and get the broadest cover that you can for the invention commensurate with what [the inventor has] come up with and what the prior art encroaches on.

The reasons for this are many and varied. They range from the fact that it is possible to amend a specification in the UK by narrowing the scope of the claims, but not by adding matter,17 to the view that a patent only protecting a precise embodiment is, at least under traditional thinking, not worth the paper it is written on: It’s a very expensive piece of paper to put on the wall and I can find much cheaper art that looks much better than any patent.

Therefore, assuming for the moment that the majority of patent applications are drafted in cases where the prospective patentee wishes to maximise their protection (or at least does not communicate their intention to restrict it to their patent attorney), it is prudent for us to inquire into what other factors may affect the intrinsic 17

See s76 PA 1977.

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scope of the grant. The first of these other factors is the stage within the process of innovation at which the patent is drafted.

Timing The majority of patent systems, including the British, subscribe to a first-to-file paradigm. Therefore, the first person to file an acceptable application concerning a given invention at the national patent office is, in principle at least, the person entitled to the grant of a patent on that invention.18 This race to the patent office door is clearly incompatible with any justification of the patent system based on a natural rights theory, but logically dovetails with the idea of the patent as a contract between inventor and state. It should be noted that some other countries, most notably the US, grant patents to the first-to-invent rather than the first-to-file. Thus giving protection to the person who proves they reduced the idea to practice before anyone else, whether or not they were the first to apply to the US Patent and Trademark Office. The first-to-file system is considered to have the benefits of simplicity and expediency, as it is far less complicated to determine priority of application rather than priority of invention. However, it has been criticised as providing rough justice and causing premature filing of applications.19 The exact timing of the application will usually depend upon the perceived proximity of potential competitors; the fiercer the competition, the fiercer the race and therefore the earlier the application. Thus, if the particular research sector from which the invention emerges is notably dense, the patent is likely to be drafted very early in the innovative process, possibly before a best method has been settled upon. At this point in time, the attorney will have little information at their fingertips: [W]e become involved very much at an early stage [in the innovation process, although] . . . it varies slightly . . . depending on who your client is, whether you’re talking about a small inventor or a multi-national chemical/drug company, they’re after different things . . . [I]f you take pharmaceuticals as an example, they all know that their competitors are working in the same sort of field, so they can’t really hang around for long enough to decide which one of a range of drugs is actually the good product because some other swine will be out there patenting it before you . . . We often come in at a stage where we don’t really know . . . which [of a number of possible chemicals] is going to be the active one. With a drug, at the time you’re drafting the patent 18 In principle because a later application may, in fact, claim priority from an earlier application—s5 PA 1977 deals with the priority of applications. 19 See Gholz,‘First-to-File or First-to-Invent?’ (2000) 82 JPTOS 891. For a comparison of the relative benefits and disadvantages of the first-to-file versus the first-to-invent systems, see, eg; Nicolai,‘First-toFile vs. First-to-Invent: A Comparative Study Based on German and United States Patent Law’ (1972) 3 IIC 103; Kingston,‘Is the United States Right about “First-to-Invent”?’ [1992] EIPR 223; Roberts,‘Paper, Scissors, Stone’ [1998] EIPR 89. See also, Parchomovsky, ‘Publish or Perish’ (2000) 98 Michigan Law Review 926; Moore,‘A General Period of Grace in a First to File World: Key Issues’ [2002] IPQ 75; Wegner, ‘Elsner: Judicial Drive to Eliminate Territoriality Limitations of “Prior Art” ’ (2004) 23 Biotechnology Law Report 747.

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it’s probably still on the drawing board. It might have been through the pilot plant—a few lab experiments will have been done . . . It almost certainly hasn’t been on a full-scale plant, so who knows what modifications will be made before actually bringing something out at the end. So at the time that you’re drafting there’s a lot of crystal ball gazing and a lot of our job is to say to people ‘could it work like this?’‘Have you thought of this?’

Therefore, provided the patent is desired for the protection that it affords, the intrinsic scope of an early filing will be initially broad, as it is far easier to reject claimed matter than it is to add new material. Where, on the other hand, the application is made later in the day the patent can be tailored more specifically. By this time the best mode may have been identified and experiments are more likely to have been carried out that have demonstrated that various permutations either work or do not work, therefore the intrinsic scope can reflect this: [Y]ou have to take a very practical attitude as to where you draw your fence around your invention in the sense that there is no point in drafting something so broad that it’s never going to be valid, but equally there’s no point in drafting anything so narrow that it effectively teaches a third party how to compete with you.

The trimming of the claim is all important as it enables the patent attorney to dictate a course around what has actually been invented, therefore complying with requirements of sufficiency, whilst avoiding the submerged rocks that are the prior art. Leaving the prior art aside for one moment, the only way that a net can be cast around the invention is if the patent attorney actually knows what has been invented. It may sound obvious, but problems with communication can provide great barriers to the formation of the intrinsic scope that an invention deserves.

The Importance of Knowledge All of those questioned considered that the first, and most important, stage in the drafting of a patent specification was to obtain the relevant information from the inventor: It seems banal to say this, but you can only include what you know, and so you can only draft with appropriate scope if you have sufficient knowledge of the invention and the way that the invention works to be able to do so.

It sounds deceptively simple, but most described this as the hardest part of their job, and further suggested it as the cause of failure for a number of well-known patents: The Van der Lely case is a prime example of bad communication, a patent agent who didn’t ask the right . . . questions . . . It is not the inventor’s job to look for alternatives; they’re concerned with getting something that works . . . It’s the job of the patent agent to ask for clarification.

The inventor comes in a variety of shapes and sizes and also has varying levels of technical expertise, communication skills and, most importantly according to those

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interviewed, varying levels of experience in the patenting game. However, a common complaint, applied across the board, was that prospective patentees tended to be very narrow-minded: The trouble is that most inventors only see one tree and it’s the patent attorney’s job to define the wood, or at least the species of tree, if not the genus that the species lies in. It all depends on how new it all is, if it’s the first tree that anybody’s ever seen and nothing other than a cabbage has been known before then you could have a pretty broad claim. But if it is some minor variant of black maple then that’s what you’re going to get—I mean you couldn’t, but you know what I mean.

This criticism is ‘equally applicable to the big players as it is to the smaller concern’, said one of those interviewed. He continued, ‘there are some people that I’ve known for years that still come in here and say “We’ve invented this, here’s how it works.” And I ask them if it would work if we changed this bit here or that bit there and they look up with a puzzled expression and say “We’ve invented this and here’s how it works” ’. One of the skills of the patent attorney is therefore to break the inventor out of this immutability of focus and to get them to generalise their invention as much as possible. They must then shape the inventive concept behind the embodiment into something that can be accorded legal protection. The attorney should therefore question everything that the inventor tells them: I think the way that the patent attorney should go about it is that he should cross question the inventor hard and you will usually find that when you say to him ‘what might a competitor do when he sees this? How would he avoid your patent? Could he do this or could he do that?’ The inventor, being fixed, only having seen his way of doing things will have great difficulty and will be inclined to say ‘well, nobody would want to do it that way’ and you would have great difficulty in persuading the inventor that you ought to include other variations . . . You must remember that you’re dealing with human beings, and that is a great part of it.

However, sometimes the answers that are received are not exactly what the attorney is looking for.

A Breakdown of Communication The communication skills of some scientists were treated with disdain.Whilst it was accepted that standards varied greatly from person to person, the following general comments were made: Scientists have one major failure in that they tend to equate expertise with a close progression down a very narrow avenue; they use the most up to date jargon and acronyms that mean little or nothing to the rest of humanity. The very worst at this are the microbiologists whose whole language is made up of abbreviations, acronyms and shorthand—it’s almost as if they think that they will appear more intelligent if they can encode what they are doing so that no-one outside of their circle can understand. The simplicity of a lot of what they are doing is often concealed within their abbreviations.

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Scientists, as a whole, seem little interested in communicating with people outside of their profession and so make no effort to do so—have you ever tried to read a scientific journal? It’s usually impenetrable. If you then compare that attitude with the function of a patent and the number of people that you need to communicate with then the tension is obvious. A patent in the general run of things is designed to be understood by the Patent Office in examination, by other patent attorneys should the need arise, by licensees/assignees, and by lawyers and judges. A patent attorney must take all of the technical bunkum that you are fed by the inventor and reproduce it in a comprehensible form.

The problem of technical jargon is lessened by the fact that the patent specification is directed at the skilled addressee—the person of ordinary skill in the art— therefore a certain degree of knowledge of the technical field, and language used within it, is taken for granted. However, it is critical to remember that this skilled person is, in reality, a judicial construct; the mask that the court wears when considering the construction of the claim. The court, in England and Wales at least, is seldomly scientifically trained. As such, there is a gulf between scientific and legal language that the patent attorney needs to fill, or at least paper over. A further point, that according to one ‘cannot be over-stressed’, is that if the patent attorney is unable to understand the explanation of the invention that the inventor gives him then he is at a loss to be able to adequately describe it in the specification or to claim it. Another noted that the idea of the skilled addressee is, at best, a familiar fiction, for: [Whilst] you’re not addressing . . . [the specification] to the idiot drafting it or to a person who knows nothing, you’re not really addressing it to a hypothetical person who works in that field and who knows how it goes either. The true answer of who a specification’s aimed at, of course, is that it is addressed to a judge on the third day of a trial, when he’s usually already come to his decision and is bored to tears of the whole show.

Therefore, the simplicity with which the inventor can relate their invention to the patent attorney is vitally important to the production of a strong patent: You have to be very careful, especially when you’re starting out, because the skilled addressee that you have in mind might not be the same as the skilled addressee that the court, or even your Partner has in mind, and it can change how much you need to put in [the document].

A number of those questioned said that the ease with which they were able to extract the information required from the inventor varied enormously with the technical field within which the invention lay: [G]etting information from . . . [computer programmers] is like pulling teeth from hens, impossible. The reason that it is so difficult to do this is that the programs that they write grow under their fingers. They don’t, by and large, plan exactly what they are going to do, they have some aim in mind, but that might change by the time the thing goes into the marketplace. The process is inherently iterative, something doesn’t work so they move on, if it does work then it might lead them in another direction, there isn’t, in general, any plan until you ask then to write one for you, and even then it’s not usually up to much. [B]iotechnologists are definitely the worst, their reports are scant, their methods iterative and their language bizarre. The problem is compounded when you realise that it is

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generally the case that the people who actually find the sequences are not the ones who know how to deal with them. The way that they deal with the problem if they come and see you is to pretend that the actual introduction technique is something that everyone knows, often they don’t know themselves, they expect you to do the understanding for them.

In the traditional engineering fields where the invention itself could be relatively easily reduced to plan form, whether by way of technical drawing or electronic circuit, the problems associated with the extraction of the relevant information were: [I]ndisputably less . . . [T]he inventor has a prop, you see, and I can ask him questions about this or that and can see what he’s referring to. It makes the whole process far more straightforward—it’s amazing what a scrap of paper can do for an explanation.

The chemical and pharmaceutical industries also gained praise, those questioned suggesting that they ‘usually make quite good reports’, and besides, they ‘keep good lab books’. The reasons advanced for the distinction between general chemists and pharmacists and those in the field of biotechnology were mainly based on the relative youth of the biotech industry: Of course, chemical and pharmaceutical companies have been doing this sort of thing for a long time, they know the procedure, they know what they want and how to get it . . . [B]iotech has really taken off in the last few years, and that’s one of its main problems.

Some were slightly more scathing: It’s the biotech boys that think they’re God’s gift at the moment because they know some words that the rest of us don’t, and because they can make the papers with a bloody sheep . . . It’s better now than it used to be though, we understand a lot more of how things work and why they work than we used to . . . if you look at some of the old cases it was pretty much hit-and-run—and people are amazed when their patents are too broad and not supported or whatever!

The throw-away comment at the end of this statement is a telling point, which can be expanded to cover all forms of technology. One of the consequences of a lack of knowledge is that it will generally lead to a broader claim than would otherwise be created, therefore opening the patent up to the prospect of invalidity by anticipation or lack of support in the disclosure. This, again, relates back to the fact that it is far easier to narrow the scope of a patent in the UK than it is to enlarge it: Drafting [a claim] is always a matter of keeping your options open as much as possible when you don’t have all of the information—you don’t always have the information about the prior art, you don’t have the information about what your client’s ultimately going to market, and in many cases you don’t have the information on which of the things he presents you with is best. [Our] primary concern is not being too narrow and, well, making sure you understand how it works . . . So you define it in terms of what it is or how it’s done as broadly as you can—which covers all the species in that genus, excludes things which you already know to be old or which don’t work . . . [and] that’s made all the more difficult if you don’t know which bits don’t work, . . . if you don’t have all of the information.

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This may go some way to explain the historical problem of broad claiming in the biotech industry.

The Peculiar Problem of the Prior Art Inexorably linked with the issues of timing and extraction of information is the problem posed by the prior art. Since the enactment of the Statute of Monopolies it has been expressly forbidden to grant a patent for an invention that is not new, such a grant being an odious monopoly and therefore ‘without law’.20 The ill-timed emergence of prior art material is the cause of many a headache for both patent drafter and patentee alike. Therefore, the discovery of submerged pieces of prior art is of the utmost importance to the patent attorney: A lot [of how wide you decide to draft] depends on context, the context of the prior art, I mean just how different is the invention from what was known before? If it’s very different then you ought to be able to have something broader than if it’s a minor variation on a known thing.

The reader will appreciate that the prior art impacts from the point of view of obviousness as well as novelty; however, it would appear that this is less of a concern to the patent attorney: Novelty is the key. I would say that unless you’re doing an exam you’re not terribly bothered about inventive step—it’s such a subjective thing, you don’t really want to restrict the claim because of perceived doubts about inventive step too early, it’s something you can always do in prosecution . . . [But] you will always try to draft a claim that is novel of the prior art that you’re aware of.

At the time that the patent is drafted there are two states of knowledge of the prior art that the patent attorney may have; they either know nothing or they know something; omniscience is an impossible dream. The amount of prior art that is known to the patent attorney will depend on the time available to conduct a private search, and the willingness of the client to pay for one: [Whether you’ve searched it or not] depends on the client’s strategy . . . whether they want something filed tomorrow because they think that there’s a competitor around, or if they’re willing to wait for a few weeks for the search results and you can write something a bit better.

If a search hasn’t been done then the patent attorney is effectively shooting in the dark; where this is the case it is deemed prudent to cover the invention, as far as it is known, with a broad initial claim and many sub-claims to act as fallback positions: A lot of clients really haven’t got a clue; they don’t know what’s happened other than in their own heads, their own laboratories, their own garden sheds or wherever they’re 20 This comes from Coke’s famous quote that such monopolies were ‘ever without law, but never without friends’. Coke, Part III of the Institutes of the Laws of England (London, Clarke & Sons, 1817; reprint) at 182.

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inventing things. If they don’t want to pay for any searching up front it’s a fairly hit-andmiss approach as to whether what I put together in terms of defining the invention comes anywhere near being novel and inventive, or not. Very often it’s not. Very often it needs to be restricted quite considerably. But in those circumstances if I were to define the invention in narrow terms so as to make sure it stands up I would be losing out on a lot of protection that the client deserves to get.

Thus, it would appear that the secret of a good specification is leeway. Room to manoeuvre in prosecution combined with a structurally sound framework is of vital importance to ensure, as much as is possible, the integrity of the patent. By provisioning fallback positions, even if one of the claims falls in examination or litigation, some degree of protection may still be afforded by the others. Knowledge of the prior art is one of the areas in which the patentee with larger financial muscles will generally have an advantage over less affluent inventors. Wellestablished patentees, now usually associated with research and development (R&D) labs of large corporations, will probably have significant past experience in dealing with patents and, it was suggested, are more likely to be aware of the relevant prior art. Such an entity will: [U]sually have documentation available to let [the patent agent] have the most relevant materials. They’ll be able to see for themselves, more or less, the direction in which the invention is going and will be able to draft a protoclaim; a statement that defines the invention in their terms from which I can then work. That’s obviously a good situation from my point of view because they’ve done some of the background searching; they know the direction in which they’re headed. All I have to do then is check the prior art documents that they’ve sent me to see that the claim isn’t ridiculously broad. That being said, it isn’t always best to produce a claim of the scope that I expect to succeed at that stage because it’s always good practice to have a search conducted by the patent office on a slightly broader basis than the protection I desire would suggest—in other words to try and get them to draw prior art out of the woodwork. So slightly too broad a claim at this point is better than one that is slightly too narrow.

Simple economics dictates that larger corporations will have less of a problem paying a few thousand pounds for a comprehensive search than a smaller entity would. Indeed, such expense may place the search out of the reach of many small enterprises; a risky patent with a chance of success may be seen as far more valuable than no patent at all. The gamble inherent in deciding against having a private search done is not, however, as great as it first appears. As one interviewee candidly stated: [S]earching is very much a black art. If you find something, you know you’ve found it, if you don’t find it then you probably weren’t looking in the right place, it doesn’t mean there’s nothing there. If you just have a quick look then you’ve probably spent all that is justified by the position . . . bearing in mind at this point you still don’t know whether the invention is ever going to make it to market so why spend a lot of money on it?

This said, the efficiency and reliability of the searching process has undergone a revolution in recent years due to increasing amounts of information available on

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the internet. The cost of searching has been dramatically reduced and the probability of finding what you are after has risen in equal amounts. The European and the US Patent Offices now have comprehensive online patent databases, which enable the attorney to perform full-text keyword searches in a fraction of the time in which a title search could have been performed in the past. There was universal praise for this advance in the speed of data recovery: [N]o one really likes doing the searching for a patent application, but you tend to do a small one just in case; so what you submit doesn’t look too stupid. Also clients are often not very willing to pay for anything other than a quick look. . . . [seven or eight] years ago even a quick look was very difficult, now you type in three or four words and ‘bingo’, there you are.

If items of prior art are known they can be relatively easily dealt with by amending the claims so that they no longer cover the offending subject matter. However, sometimes the patent attorney will choose to deliberately claim the prior art, making sure that they have narrower claims on which they can fall back when objection arises: Maybe you’ll write a claim which is drawing something that you’re pretty sure is obvious or not novel because you’ve had a search done—but you’ll write another sub-claim that you know you’re pretty sure isn’t; or you have a claim that that you think might be a bit dodgy so you write another one claiming the obvious and retreat from it in an examination—give the examiner his pound of flesh.

If no private search is conducted, the earliest that the patentee and patent attorney may learn about anticipations and possible novelty destroying disclosures will be after filing when the Patent Office conducts its own search. A number of interviewees took issue with the efficacy, efficiency, and value of Patent Office searches, suggesting that in the majority of cases they were a waste of time: In my experience although the process of examining in the Patent Office might weed out the very weak things—because there’s a limited amount of time and effort that you can put into the searching and examination—essentially, it’s only when you start getting into litigation that people start performing really thorough searches, and then you find out what the true previous things are because you dig much more deeply.’ ‘[T]here’s a strong argument that can be made for having no searches and no examination as in the old French system where you just filed it and let the world sort it out. . . . There’s nothing scientific about the searching business, it’s very much a hit and miss procedure most of the time . . . [However], there’s a direct correlation between the amount of money you throw at a search and the results that you find. It leads to a very uneven playing field.

Thus, the intrinsic scope of the patent specification can be directly linked to a number of things. These include: the purpose for which the patent is desired; the knowledge that the attorney has about the way in which the invention works; the amount of time they have to draft the thing; and their degree of knowledge, and the proximity, of prior art. Patent attorneys regularly draft claims with purposeful imprecision to enable them to cut back and prune the monopoly should esoteric,

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potentially novelty destroying, disclosures materialise. They play games and play the system to get their clients what they want: this is not always a monopoly. It is hardly surprising therefore that a great deal of the patents on the register probably are, in fact, invalid. Indeed, this appears to be the conclusion of Jacob LJ when he states, in Nokia Corp v Interdigital Technology Corp, that: There can hardly be a patent agent who, privately, will not readily admit that he or she has got lots of things ‘past the office’ on flimsy grounds. In the nature of things a patent office, however hard it tries, can only be a coarse filter. Patents that pass the filter cannot be taken as necessarily valid.21

Whilst undoubtedly correct, this revelation carries with it an uncomfortable subtext; there is a suspicion, if not presumption, held by, and indeed made public from within, the judiciary that any given patent is not, in fact, valid until proved to be so by litigation. However, the quote also carries with it an implicit assumption that all patents are desired for their scope of exclusion and therefore all are drafted equal, or at least with equal intention. This, as we have seen, is clearly not the case. The second assumption acts to reinforce the negative aspects of the first in that it fails to note that there are many disposable patents that undoubtedly will use smoke and mirrors to glide past the examiner, but that these will rarely, if ever, be used aggressively and end up being judged in court. When taken together, we see that there is a risk that patents will be judged according to the sins of the father, and hence subjected to critical examination as something that should not have been granted, rather than truly placing the burden on the opposite party. Faith in the system of grant may therefore be seen to be of significant importance to the scope of the protection that the patent is to enjoy, both in terms of what one considers one can get away with in the drafting process and upon interpretation.22 The coarse filter of the Patent Office therefore serves to compound the, already evident, distaste for the patent grant that, as we have seen, pervades historic considerations of the system. Moreover, the conclusion that there are many invalid patents masquerading on the register is further reinforced when the nuts and bolts of the drafting process are considered, and it is to this topic that we now direct our attention.

The Drafting of the Specification The patent specification is of vital importance to the scope of the monopoly that a patent commands. As already stated, the claims not only define the invention, but also determine how far the penumbra of the patentee’s monopoly should be 21 Nokia Corp v Interdigital Technology Corp [2005] EWCA Civ 614, para 13 of the judgment. It was awarded the dubious honour of being proclaimed ‘Quote of the Year’ in the CIPA Journal; Cordery & Nettleton,‘Review of Patent Cases in the English Courts in 2005’ [2006] CIPA Journal 255 at 255. 22 The significance of this statement is reconsidered in chs 6, 7 and 9, below, when discussing the American, German and modern British approaches to claim interpretation.

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allowed to extend. It was therefore somewhat surprising to be informed that the total amount of time spent drafting and refining the specification, including technical time spent before the Patent Office, typically amounts to a figure of between ten and thirty hours.23 The time spent on drafting the claims—the defining feature of the patent—is approximately 30 per cent of this total. Some of the attorneys that took part in the survey stated that they expected to write24 something in the order of two hundred specifications a year. When these figures are considered along with the non-traditional, commercial, reasons for obtaining a patent, it is easy to see that the authority of the register may be more suspect than sacrosanct. There is no set way to begin to draft a patent specification. Some of those interviewed stated that they like to start with the description to focus their minds; others said that the claims came first; some liked to build up from the specific embodiment and some liked to chip away from the general idea.Whatever the approach, there are a number of common factors in the way that the process of creation proceeds: [Y]ou can’t simply put it down on paper, you go backward and forwards, backward and forwards, backward and forwards . . . Your thoughts are likely to change during the drafting, but the thing that I’ve learnt is that you have to start, you have to put something down, if you don’t put something down, you never get anywhere. So even if it’s rubbish you must put something down, and then you toy with it, and out of that you develop what is hopefully a useful specification. [O]ur minds . . . go backwards and forwards. You ask if the claim as drafted covers something ridiculous, and if it does you reduce it in scope a bit. The eventual aim is to try and reach a delicate compromise between what is too greedy and what is sensible and what will stand up in court. So I don’t think that you can just sit down and draft a patent specification, it takes lots of going backwards and forwards, of carving and refining. The first step is to look at the invention and to try and define it, basically with reference only to the invention. . . . [H]aving got this very woolly definition down on paper, it’s a matter of analysing it phrase by phrase, group of phrases by group of phrases to see whether there are any unwanted interpretations, meanings, ambiguities, whatever. Then, having got an internally consistent definition I’d compare that with the prior art documents of which I’m aware, usually provided by the client, and if they suggested a change in direction, a restriction of scope, or whatever then I would implement that. It’s an iterative process. . . . The next stage after prior art, it’s probably going back over the terminology in the claims making sure that I’ve not used a word which the prior art generally tells me means something different in that technology, or whatever.

The process of patent claiming was compared to sculpture; ‘whether you work in granite or bronze, whether you build up or chisel down, the process is broadly the same,’ you are constantly refining the structure, constantly redefining the fascia. Occasionally the subject matter will dictate the approach, but the end product will have the same volume whichever way you work. The important thing is to retrace your steps, to deconstruct and interpret as you construct and define: 23

None of those interviewed gave figures greater than 30 hours for a ‘typical’ application. Or redraft and file if the specification arrived via a PCT application for introduction into the European market. 24

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[The primary concern is to create a technical definition, a secondary concern is to] try and find language that is appropriate to [get it through the Patent Office]. There are tricks of the trade that are sometimes used here. But getting it right . . . it has to be new and it has to be inventive, to have inventive height as they sometimes call it, often you can’t take a view on that because you don’t always know what the prior art is. You take a fly, you draft broadly, you put in lots of fallback positions—that’s terribly important, it’s no use drafting it terribly broadly and then showing one or two specific embodiments because there’s nothing to fall back on. If the broad is too broad, where do you go? Right down to narrow, to the specifics, and what good is that? ‘[I]t makes it easier if you know what’s out there because you know what you can get away with and what you can’t. It also allows you to write the description so that the examiner thinks that it’s clever when it might not be, or at least it appears cleverer than it is. . . . [Y]ou should write your description and your introductory paragraphs of the specification and dress them up so that the examiner gets to the end and thinks how clever it is. It might well be very inventive, it doesn’t have to be subterfuge . . . but on the other hand, you can . . . dress mutton up as lamb in the same way, it’s no different. It’s a game. It’s just a matter of telling the story.’

The intrinsic scope of the patent is dependent upon a whole host of factors, but at the end of the day, tricks of the trade or no, the patent attorney can only provision for the equivalents and fallback positions that they and the inventor can think of. Therefore, we now turn to address the question of whether those interviewed thought that any degree of latitude should be given to the interpretation of the patent if, and when, it gets litigated.

Literal or Liberal Interpretation? It is at this point that the attorneys interviewed split into two distinct factions. One group hold what shall be called the literal view; that the patent is defined by its claims and that these should, in the interests of certainty (and ease of drafting subsequent patents), be construed moreorless literally. The other group holds the liberal view; that the patentee should benefit from having disclosed their invention to the world, and should not be judged according to the depth of their pockets. Interpretation under this latter ideal should be concerned, first and foremost, with fairness to the inventor as they have chosen to lay their invention open to the scrutiny of the world in return for a temporary grant of monopoly power.

The Literal View The literal view focuses upon the claims as defining the legal monopoly being sought. It sees them as immutable: the words used are specifically selected for the job by agreement between the patentee and patent attorney. The inventor asks for

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protection and the drafter grants this wish, utilising their experience and skill to create and hone the desired scope of protection. When combined with the specification, the claims form their own dictionary, and once all of the patent documentation has been finalised no further leeway should be given. To interpret the claims in a more liberal sense than their literal meaning would suggest is to give the patentee something that they have not specifically asked for. This cannot be allowed: [The claims] are the definition of the legal monopoly that you seek, so you are required to define them definitively. . . . If something is outside of your claims then you haven’t claimed it. . . . A lot of the things that go to court are very much “oh well, I haven’t claimed it, can I have it? Please sir, I meant to claim it, honest”. . . [Now], quite often they know they won’t get it, but there’s so much money at stake that they have to try—shareholders expect it for a start . . . [Y]ou have to remember that with a lot of cases the stakes are so big that you have to fight even if the chance of winning are quite small.

A number of those questioned stated, perhaps surprisingly, that even the current tradition of giving a purposive construction to the claims was going too far: If you don’t agree that whatever isn’t claimed is disclaimed[25] then you’re really saying that whatever isn’t claimed could be claimed but we’ll argue about it. That road leads to lack of clarity and essentially removes the need to claim in the first place—if you’re not bound by what you say. Essentially all the requirements in law, in the European Patent Convention, the rules in the High Court now are for clarity—the public needs to know where they stand. And importantly, so does the patentee—a point that is often forgotten in the quest for ‘fair protection’, if you, yourself don’t know where the limits of your patent lie how is that fair? So you need to be precise, you’re going to be given a massive monopoly that could be worth millions of pounds—your half of the bargain is first to produce an invention and show that it works and is useful and second you have to tell the rest of the world what you claim and what you don’t claim—and that’s why you have claims at all. Yes, the more I think about it the more I’m firmly of the view that if it isn’t claimed it is disclaimed—because otherwise where are you?

If one follows this approach then, as the attorney in question went on to state, the ‘only problem arises where you use very narrow and precise definition for something that oughtn’t to have been narrowly and precisely defined.’ In such a case the patentee places the court in a potentially difficult position: [If there is] a broader concept in his invention [than that claimed], and we agree that latitude will be given to the interpretation of what he has actually claimed, are we going to give him the benefit of the doubt and give him the neighbouring counties, as it were, even if he hasn’t specifically asked for them? If we are then how many does he get?

Where, in other words, would the borders to protection lie? When the traditional, pre-harmonisation, German position26 was mentioned as example of a system wherein the borders could be divined with relative ease, even if not explicitly defined by the claims, the reply was stock: 25 26

See the speech of Lord Russell in EMI v Lissen (1939) 56 RPC 23 at 41. See ch 7, below for further discussion of this traditional German position.

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Ah, but I’ve seen German cases where the patentee has got away with blue murder. Allowing a bit of latitude may be OK, but not that much, and damn right, the public needs to know where it stands.

They continued, reasoning that a patent is not a God-given right. It is only a right under the terms of the Patents Act: You don’t have a divine right to a monopoly, you have to do something for it, you have to claim it, and if you claim it badly and you don’t ask for the right thing, well caveat applicant if you like. I don’t, myself, think that the law should fall over backwards to assist you, unless it’s clear that you paid an attorney to do it and he did a bad job and it’s not your fault— you’d get a bit of a following wind there, but not a lot. It’s like the old saying,‘if you make a wish, make sure you think very hard what you wish for’. . . . The duty is on you to frame your wish. . . . [If a patent is framed badly then] I don’t think [the claims] . . . should be more broadly defined when they got to court, [the patentee] . . . chose to define something narrowly, they needn’t have—they were of sound mind when they did it. Tough. It is, after all, a contract—there’s a weight on both sides. A patent is not something that comes in the water; it’s something that you are allowed to have in exchange for invention and you have to define what you want. The onus is on you to define it. . . . It’s something you have to work for—it’s not sort of ‘all have done well and all shall have prizes’. You’ve actually got to invent something and then the second half of the requirement is that you’ve got to actually define what you want, the state’s not going to do it for you.

Whilst undoubtedly factually true, the underlying argument lacks theoretical rigour, skipping, as it does, over any justification that may be advanced in order to explain the provision of patent protection in the first place. To merely assert that the patent exists because the relevant piece of legislation states that it should is, in the opinion of this author at least, placing the cart firmly before the horse. Whilst the Patents Act obviously dictates the parameters within which the grant is to operate, the legislation itself is promulgated for a reason. In this game of chicken and egg, the patent predates the legal framework that it now operates within by hundreds of years, yet the underlying rationale must still be focussed upon providing for the encouragement of inventions due to their possible influence on the development of trade and manufacture. The patent for invention is a clear exception to the prohibition on monopolies provided for by the 1623 Statute,27 but viewing the grant in the manner suggested by the above quotes relegates it to be judged again. In other words, the Statute’s legacy, that the protection of inventions by the award of temporary monopoly is essentially valid providing the creation falls to be defined as proper subject-matter, is placed into doubt by overly intense focus on the framework within which the grant operates. The effect that this has on one’s consideration of the scope of the grant is undoubtedly subtle, but it reinforces the notion that the patent is an exception to be fought for rather than legitimate right which does not fall within an otherwise outright prohibition on monopoly. 27

The Statute of Monopolies 1623, discussed more fully in ch 2, above.

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Furthermore, all of those holding the literal view stated that they were professionals who were paid a lot of money to get the drafting aspect of their job right. They were covetous of their training, insisting that if you can’t draft properly then you shouldn’t be in the patent writing business; a view that has certain charm. They rationalised that a lack of certainty may benefit the rich patent holder who can threaten and bully his competitor and who can easily absorb the cost of litigation, but asked if it can really be fair on the smaller enterprise not to know how far their monopoly extends. The professional view is that patents are for the big boys and that you should get what you ask for; if you don’t know how to ask then that’s your bad luck: If you can’t draft properly then you shouldn’t be in the business. I take the British view of it, that this works in two ways, if you’re wearing the hat of the patent holder, you want uncertainty, because that gives you effectively broader scope—particularly if you’re a rich patent holder, if you’re a poor patent holder, it means not a lot, but if you’re a rich patent holder, yes, that uncertainty around the edge of your claim, if you can make it great enough, gives you a more powerful tool. But we must not forget that we often represent the other guy in this profession—hired guns, we shoot who we get paid to shoot—we represent both sides, we act for the patent holders or as patent busters. So . . . my view is coloured by working for both sides of this. I think it is important to have certainty in areas of law, which is an old British principle. This applies particularly where someone is asking of the government the grant of a monopoly, which is a favour; they should be precise in what they’re asking for. Why should the government give them something furry or fuzzy? They should be given what they ask, nothing more, nothing less, certainly nothing more. And if they can’t ask properly then that’s their bad luck, they’re asking to be given something, their also asking for something to be taken away from other people, a freedom to do something, a freedom to act in a certain way. . . . I think if you are asking to be granted something like that . . . if you get it wrong then that’s your bad luck, sorry. [P]retty much everybody is represented in this game, patents are not really for private individuals unless they are really serious entrepreneurs, they’re for businessmen and nobody in business (as far as I know) is foolish enough to write their own patents, they all have them done professionally—and if your patent agent makes a mistake then perhaps you should sue him. That should be your redress, if it’s not a mistake and you genuinely thought that your patent was limited to what you had written in your claim then tough, why should you be entitled to come back and say ‘ah, but what I really meant was . . .’ which is what it all boils down to.

Those holding the literal view continued saying that, if nothing else, their view was the safest: I think my viewpoint is the safest one because I can guarantee that even given a hard-nosed interpretation I still get what I thought I would. I would never rely on some vague, broad interpretation to get me my infringer. . . . It seems to me that by doing it my way you win whichever jurisdiction you’re in because we’ve probably got one of the hardest nosed jurisdictions in the world, so if you draft towards a British court, it’ll be OK anywhere else with the local rule of interpretation.

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The people who lose out are the Continentals because of the way they tend to draft, but they’re not as bad as they used to be.

A further justification for the approach taken by those holding the literal view was that, in their eyes, the efficacy of a patent is nowadays largely dependent upon the financial might of the patent holder. If the owner is wealthy enough then even a weak patent can be used (or abused) highly effectively—3M was a well cited example of a particularly aggressive patent holder likely to press forward with legal action even in respect of some of the more dubious grants in its portfolio. Literal interpretation was therefore lauded as not only providing certainty for third parties, but also limiting the effects of big corporations like 3M throwing their weight around. Whilst this viewpoint does have a certain charm, it might also be argued that the converse is true; that more liberal interpretation might dissuade large corporations from feeling that they have to flex their muscles as much, and that insisting upon a purely literal interpretation would give them added incentive to tread on the little people. It could also be said to provide the more affluent corporation with a better opportunity to exploit weaknesses in their competitors’ patents by throwing money, time and effort at designing around the right, as in Van der Lely v Bamfords.28 Whatever the justification, there is another, perhaps less popular, but nonetheless strongly held view within the profession that deserves explanation.

The Liberal View Those holding the liberal view know that the patent attorney is not, nor will ever be, perfect. They reason that the patent specification, in its entirety, will be written in between 10 and 30 hours, with perhaps a further 5 hours of technical time during its examination by the Patent Office, and recognise that, when all is said and done, this is not long at all. They consider the disparity between this and the amount of time that will be spent examining the documentation if the patent ever becomes litigated as a significant factor that should be taken into account when determining the latitude accorded to interpretation of the claims: When that patent comes to be considered by lawyers for any reason they will spend thousands of man-hours picking over it and ripping it apart, already the deck is stacked against you.

A further consideration is the relatively large29 amount of money that is made available for the litigation of a patent compared to that committed to its filing, and the commensurate increase that this provides in the danger of attack from the prior art. It is commonsense that where an alleged infringer is threatened with a significant quantum of damages it is worth spending a large fraction of that amount searching the prior art to attempt to invalidate the patent. The equation is simple. 28 29

[1963] RPC 61. In some cases, vast may be the more appropriate word.

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More money equals more man-hours of scrutiny, which in turn equals more chance of striking upon that elusive piece of prior art that will invalidate the patent. More money also means that the search net can be cast further afield, high translation costs not necessarily being as limiting as when filing for protection in the first place. Thus, even before the Court steps in to give the claims a purposive construction, the odds are against the patentee. The liberal view therefore holds that the patentee should benefit from having disclosed their invention to the world, and should not be judged according to the depth of their pockets. They answer the literalists and their call for and unyielding and steadfast interpretation by stating that: Patents are not statutes and should not be interpreted as such. They are written relatively quickly against cost. Moreover, they are written usually by one person, and we all make mistakes—you only have to look at the atrocious wording of some statutes to see that even Parliament makes mistakes. It is impossible to get it right in all cases. [T]he client should benefit from having disclosed, he should then be on a level playing field with competitors. He should not gain extra benefit from having happened upon a better patent agent, or from having employed a patent agent on a particularly good day.

The court should therefore be encouraged to look at the patent for what it is, a description of the invention. It should be encouraged to take the viewpoint that anyone in the marketplace can get the specification and ask ‘what are the common features between what I’m building, etc, and the patent; are they new and related to the patent or are they different?’ Counsel and the courts, it was stated, seem to take the viewpoint that to give any latitude is to adopt a position whereby you might give out a monopoly of incorrect scope, and that if this occurred it would be the end of the world. Attorneys pick up on this and tend to agree that anything other than literal interpretation encourages deviants to deprive the public of what is rightly public property. However, it was stated that in the vast majority of cases if one asks a few simple questions the problem vanishes. Besides: It is often forgotten that the job of the patent agent is not to make sure that infringers can get away with infringing, the primary purpose of the agent is to protect the patentee’s invention. It is also forgotten that little mistakes are so easy to make and that it is very rare for anyone to be expected to be perfect all of the time.

They reasoned that the injustice of a literal interpretative doctrine is further compounded if you take a patent document and file it abroad. The original document is produced with a certain amount of effort, and if it is taken around the world the patentee incurs vast costs in translations alone. If the original document is then knocked out or avoided because of a technicality in the wording then the rest is vanity. Some of those interviewed therefore suggested that the teaching and disclosure of the patent should be promoted to the fore. The ability to capture the returns from an invention and therefore to encourage investment was said to be the ‘rational’ basis for having patent protection in the first place, but it was noted that this justification was

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really only relevant as a consideration ex ante. Ex post the invention, the patent system’s main contribution was the fact that it could teach others—or at least provide avenues for further research and investigation. The information function of the patent was also something that should be considered when determining the scope of protection, and this suggested providing protection commensurate with the patentee’s contribution to the art. Those holding the liberal view explained that maintaining the claims as the outer boundary of protection, as required by the European Patent Convention,30 did not necessarily mean that scope should be determined via their literal interpretation. Furthermore, a static view of the claims was ‘not realistic’ as times and technology change with rapid pace and the teaching or inspiration that may be derived from any given patent would, necessarily, fluctuate accordingly. They argue that the claims must therefore be considered in a more fluid manner in order to reflect the patentee’s actual contribution to the art, and fixing the point of reference at the time that they were drafted or published simply did not do this. In answer to the question of what would happen if someone changed the technology so that, even though using the same principles (and possibly even falling within the scope of the claims as currently understood), nevertheless the new invention solved the problem with considerable inventive flair, some of those holding the liberal view pointed towards the US doctrine of ‘reverse’ equivalents as a possible solution.31 This doctrine states that where the allegedly infringing article departs so much in principle from the patented article that it performs the same or a similar function in a substantially different way, then infringement should not be forthcoming. This was seen to be as much of an issue under the current interpretative regime as it would be under a more relaxed, contributive, approach. Nevertheless, and notwithstanding the redevelopment of this area of the law following the House of Lords’ decision in Kirin-Amgen,32 it is submitted that the current state of affairs in the United Kingdom is closer to the literal, more traditional, view than to that of the liberalists. Therefore to return to a quote that has been used before: [I]f you make a wish, make sure you think very hard what you wish for

. . . It may come back and bite.

Conclusion The traditional and liberal views of patent interpretation are not merely different; at their extremes they are irreconcilable. They stem from different perceptions of 30 Art 69 European Patent Convention states that the extent of protection of a patent is to be determined by the terms of the claims, interpreted with the aid of the drawings and description. This provision forms the basis for s125(1) PA 1977, which essentially reiterates its content. 31 Discussed more fully in ch 5, below. 32 Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667. Discussed more fully in ch 10, below.

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the grant and, importantly, different perceptions of the attorney’s own jobs and that of the patent system. The fact that the majority of those questioned saw themselves as potential double agents, one day working for one client and the next working for their competitor, is a highly significant factor in the determination of the intrinsic scope of patent protection. This split allegiance necessitates (at least in the majority opinion) a minimalistic approach to the latitude that should be given to their wording of the claims. In addition, a fierce professional pride seemed to dictate that scope should be restricted to the words as they had written them. One of those interviewed likened the drafting of a patent to the copying of a painting; it simply wasn’t good enough until you could fool the experts. You couldn’t claim success if they said, ‘well, this could be the real thing if we give it a broad enough interpretation’, perfection was the only outcome that would suffice. The fact that the majority of those interviewed branded the patent grant an economic monopoly is also highly significant. The reader is reminded of the stigmatic effect of monopoly rhetoric and the boost that it gave to the abolitionists’ argument during the anti-patent debate of the mid- to late-nineteenth century.33 The fact that those most intimately involved with the creation of the patent, indeed those charged with shaping it in the first place and defining its literal scope, class it as a monopoly that needs to be contained, is saddening. It demonstrates distaste for the grant and, as we shall see,34 a misconception of the actual effects of the patent in the majority of cases. This, in itself, is significant. We have seen the traditional justifications of the patent system and are now in a position to answer the question of how these fit in with the commercial realities. Classical economists clearly saw the patent grant as reward or incentive; the reason for offering a patent was to enable protection from competition. In the modern sphere there has been a subtle, but significant, shift in the underlying reasons for patenting. The old justifications still hold true to an extent, however, other motivations behind seeking the grant are now evident which may supplant the older notions in the majority of cases. These new considerations have far-reaching effects on the intrinsic scope with which these patents are drafted, as the preceding study suggests that they are utilised as waypoints to dictate the direction in which the drafting exercise is to move. Furthermore, the amount of time devoted to the preparation of a patent, when compared to the amount of time that will be devoted to scrutinising it should it ever come to be litigated, is very small. This is necessarily the case; however, it is something that some say should be taken into account when the claims come to be interpreted and their scope defined. This point is made all the more significant when the depth of the patentee’s pockets is also considered. If the patentee is rich, then not only will they be more readily able to defend their patent should the need arise, but also they will have been able to pay for a better patent in the first place. Money is indeed the key to better patent protection. Large, wellfunded entities are doubly benefited, for as well as capacious pockets, they will have 33 34

See ch 3, above. See ch 5, below.

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the patenting know-how that is so important—possibly even their own in-house patent attorneys.As noted, one of the most important things that the patentee needs to know when they are seeking a patent is exactly what they want, experience can only improve their chances of getting something that works. As we have seen, the determination of the intrinsic scope of the patent is of vital importance to its final breadth of protection because the literal wording of the claims is generally considered to define the narrowest interpretation that the patent can have.35 However, the creation of any specification is beset by myriad of obstacles and difficulties that make this task more of a ‘black art’ than a scientific endeavour. Indeed, such are the odds stacked against the applicant that it is amazing that any patents are ever held to be valid at all. Yet the majority of those involved in the crafting of the grant would still promote legal certainty over fair protection; the narrow interpretation over the broad. Self-interest, it would appear, is the main reason for holding this view, as it is no doubt far easier to draft subsequent patents in the same area where one does not have to do anything more than interpret their claims in a literal manner. However, can it really be said that this narrow approach to the interpretation of claims is any more certain than an alternative ‘equivalents’ analysis? As many of those interviewed pointed out, the patent game is no longer one for individuals; it is a business, and in business you employ professionals, experts, to do your drafting for you.36 Why then, would it be so difficult to seek professional advice on the scope of a competitor’s patent to see if your invention infringes? Adopting such an analysis would not encourage sloppy drafting, but may help to right the balance between the ivory tower of certainty and the much maligned outcast that is fair protection. The sad reality of the patent system is that, as the economy has developed, it has turned into something that protects the strong at the expense of the weak. It is a matter of historical fact that the majority of groundbreaking, or pioneer, inventions have come from individuals, not from the hallowed halls of big business.37 The economic reasoning for this is simple, big firms are led by profit, the cost/benefit ratio of a pioneer invention is uncertain, therefore the expected profit that flows from any investment in R&D associated with such an invention is highly uncertain. It makes far more economic sense to proceed down a narrowly defined path investing in R&D that forecasts say has a better than average chance of leading to profit. Put simply, bean-counters mean that big firms are highly unlikely to be responsible for the most spectacular technical contributions, unless serendipitously stumbled upon.38 35 However, as we shall see, in ch 8, below, when discussing the Japanese patent system, this is not necessarily the case. 36 Indeed, this is the very conclusion that Lord Hoffmann comes to in his judgment in Kirin-Amgen, n 32, above, when he states, at para 34, that ‘the words [in the specification] will usually have been chosen upon skilled advice’. 37 Eg, Morse’s telegraphy patent, Watt’s steam engine patent, Selden’s horse-less carriage patent, etc. See also, n 54–7 in ch 6, below. 38 It should, however, be noted that initiatives such as the establishment of University IP centres may be one potential solution to this stagnation as they tend to be motivated by subtly different considerations.

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Discussing realities before considering the post-classical economic theories and the hard economics of the patent system may seem like putting the cart before the horse. However, this is not so. The foregoing discussion provides the reader with specific context in which to critically evaluate the following chapter. It will allow the reader to question the validity of the theories advanced and to note, in the light of practical examples, where they depart company with fact. Therefore, we now turn our attention to the hard economics of demand, cost, and price, as well as the postclassical economic theory; and ask whether a patent can actually be described as a monopoly?

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5 Patents within the Market Economy (Part III) Post-Classical Economic Thought & Theories of Protection Some Basics of Economic Analysis In order to understand the value of the patent grant, and modern economic modelling of patent scope, it is necessary to understand the economic effects that a patent is traditionally seen to have on the marketplace. Therefore, before proceeding to discuss the issue of value within the market economy, a little time is taken to examine some of the basic concepts underlying the economic analysis and to define a number of key terms. The principles stated can be found in any good basic economics text. Posner, Economic Analysis of Law 1 and Baxter, Legal Restrictions on Exploitation of the Patent Monopoly: An Economic Analysis,2 have been extensively utilised by the author in the preparation of the following.

Demand and Price The starting point in our economic exploration of the patent system is the inverse relationship between price and demand. Put simply, if the price rises then, in general, demand for the product or service will fall, and vice-versa. This is demonstrated in Figure 1 (below). Here the y-axis represents price (£) and the x-axis is the quantity of the item supplied in unit time (Q/t). The downward sloping line is the demand curve for the product. The reason that the demand curve slopes down and to the right is twofold: First, as the price falls some consumers that would only buy a small number of units at the higher price will now buy more. Second, there will be some consumers that will buy no units at high prices but who will buy some units when the price is lower. 1 2

(Boston, Little, Brown & Co, 1992; 4th Ed). (1966) 76 Yale Law Journal 267.

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£ Demand Curve

P1 P2

Q1

Q2

Q/t

Figure 1: The Demand Curve

Therefore, under this model, the sales volume will increase as the price falls. If we take a simple example to illustrate this and imagine an island (as a closed system) on which there is one shop. It sells apples and pears and these are the only food items available on the island. The price of apples and pears are £1 per kg and the shop sells 10 kg of apples per day. The consumers that buy apples value them at £1 per kg or more, at this price the pear is a poor substitute. If the shopkeeper raises the price of apples to £1.50 per kg (keeping everything else equal), many consumers will continue to buy apples as they did before, however at this price some consumers will reduce the amount of apples that they now purchase and will buy pears instead. The quantity of apples demanded by the consumers, and therefore the amount produced, will fall to avoid wasteful production. This example is necessarily simplistic and assumes that the only things changing in the system are the relative price of the goods and the quantity demanded. It ignores other factors that might impact on the sale of apples; such as other shops opening, the quality of the apples falling, fluctuations in the income of the consumer, other products being introduced that indirectly compete, etc. However, it provides simple illustration of the principle at the core of the traditional economic analysis of patent protection.

Elasticity The value that the consumer places on the goods (ie the need, or desire, that they have for them), combined with the substitutability of other products, will affect the

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slope of this curve. The slope of the curve at any given point is referred to as its elasticity. This is a measure of the rate of change of quantity with respect to price. It is calculated by comparing the percentage change in quantity brought about by a percentage change in price. The higher the elasticity, the greater the impact that a given price movement will have on the quantity demanded. Where the slope of the demand curve at a given point is greater than one, the curve is said to be elastic. Where it is less than one it is inelastic; and at exactly one it is said to be of unitary elasticity. If we consider the example of apples and pears once more we can see why this is the case. If we suppose that the population of the island adore apples but really dislike pears and will only eat them if there is no other alternative, it will take a very large increase in the price of apples to affect the quantity demanded, as the alternative (buying pears or going hungry) is a poor substitute. Here the curve is inelastic. If, however, the substitutes are more acceptable then the slope of the demand curve will be shallower as people will more readily replace apples with pears when the price rises too high. The elasticity of the curve at any given point can be described by the mathematical formula: Eq = –p/q dq/dp Where p is the price, q is the quantity demanded at that price and dq/dp is the inverse of the gradient of the demand curve.

The Demand Curve under Competition The demand curve illustrated above is that for the product, in our example for apples. It will also be the demand curve that the seller will face where the seller is in a monopoly position and is the only outlet for the product. Where the seller has competition, they will obviously have to share the market and sell only a fraction of the total quantity of goods at any given price. The introduction of competition will mean that the demand curve that the seller faces will usually be slightly more complicated than that of the total demand for the product. This is because another factor enters the equation—substitutability of supply. If we return to our island, we can see the effect of this extra complication if we introduce another shop next door to the first. Now, there are two shops selling apples and pears. If the price of apples rises in one shop only (assuming all other variables are constant) then consumers, rather than substituting pears, will simply turn to the other supplier (the fact that it is next door means that we can factor out any costs associated with travelling to the other shop). Therefore, the demand curve facing the seller of the product will lie to the left of the demand curve for the product (as the seller has to share the market, the quantity demanded will be less than the total quantity). In addition, it will usually be more elastic (at least for prices higher than the current market price). The reason for this

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qualification comes from the fact that the other sellers in the market may learn of a reduction in price and therefore also lower their prices. It is tacitly assumed that other suppliers would not respond in a similar fashion to an increase in price,3 as they could catch an increased market share by simply selling at current price. Where the seller reduces the price of the product and the competition follows, they will not increase their share of the market. They will, however, sell more units in line with the demand curve for the product. In any given market, the slope of the demand curve for our hypothetical seller will primarily depend on two factors: the first is the demand curve for the product, and the second is the number of other sellers in the market. Where the seller is a monopolist, the demand curve that they face will be the same as the demand curve for the product itself. However, where there are a small number of firms competing, such that the conduct of each firm significantly affects the situation of the other firms,4 then the demand curve faced by each may look something like that in Figure 2 (below).

£ Demand Curve ( Seller )

D Demand Curve ( Product )

P0

D

Q/t Figure 2: Oligopolistic Competition

The kink in the curve occurs at the existing price (P0), below which the market is assumed to respond to a reduction of price by similarly lowering prices, therefore the slope roughly parallels that of the demand curve for the product. Where the price is raised the market is expected, for the reasons outlined above, not to respond in a similar way, therefore the curve is more flattened. As more sellers enter the marketplace the oligopolistic interdependencies between them are softened, as the effects of competition diminish the impact that a price change by one seller has on the rest of the market.Where the market is not perfectly competitive, either because the number of sellers is too small or because the product is not homogeneous, the demand curve faced by the seller may look something like that in Figure 3 (below). 3 4

As long as it is not caused by an increase in cost that they all experience. This is known as an oligopolistic industry.

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£ d

D

Demand Curve ( Seller )

Demand Curve ( Product )

d D

Q/t Figure 3: Imperfect Competition

Where the market is in perfect competition—ie the goods of one seller are perfectly substitutable for the goods of another, and there are many separate sellers, each with small market share—the demand curve for each seller would look like that in Figure 4 (below). Here the curve is flat, the elasticity is infinite; such a system is said to be perfectly elastic. The seller in this scenario can sell all that he produces at the existing price and nothing at higher prices, as customers would simply go elsewhere. It is apparent that any rational trader will always wish to sell at the price that maximises their profit—the difference between their costs and their sales revenue. However, under perfect competition, at every point up to the lowest profitable price, the seller faces the prospect of being undercut and therefore losing sales. Thus the market price will gravitate towards this breakeven price.

£ D

Demand Curve ( Seller )

d

Demand Curve ( Product )

d D

Q/t Figure 4: Perfect Competition

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Marginal Revenue Another useful concept employed by economists is the ‘marginal revenue curve’. This is the curve that can be drawn for any given demand curve that represents the net effect on revenues of making ever-larger numbers of sales. If we turn, once more, to our island example we can see a practical illustration of this principle. Imagine, once again, that there is only one shop on the island, it sells apples and pears. The highest price the shopkeeper can charge for apples is £1 each, however at this price he only sells one per day—this is the unit price. If the shopkeeper drops the price to £0.95 per apple then he sells two per day5—this is the two-unit price. However, the sale of two apples at £0.95 is less than the sum of the unit price and the two-unit price (ie £0.95 + £0.95 is less than £1.00 + £0.95). Here the marginal return is £0.90 (ie £0.95 + £0.95–£1.00). If the shopkeeper wishes to sell three apples he must again reduce the price. The return to revenue as a result of the last (marginal) sale will always be less than the price at which the last sale was made. If the marginal revenue curve is sketched, a number of points become apparent. First, it will always lie below the demand curve for a product at every quantity after the first unit (at least where the demand curve is not perfectly elastic. Where the demand is perfectly elastic the marginal revenue curve will be incidental with the demand curve as every unit produced can be sold at the prevailing price). Second, the marginal revenue curve will, itself, slope downwards for as long as the demand curve follows a linear descent. Third, the marginal revenue curve will hit the x-axis at the point of unitary elasticity and will then fall below it (ie the marginal revenue will become negative), as the curve becomes inelastic. This occurs because, after the point of unitary elasticity, it is necessary to cut the price by more than one-per cent in order to gain a one-percent increase in quantity sold. This principle is best illustrated by example. Therefore, suppose that the demand curve for apples in the shop looks like that shown in Figure 5 (below) and our shopkeeper can sell four apples per day if he prices them at £0.60 each. The revenue he gets from the sale is £2.40 (ie 4⫻£0.60 ). If he drops the price to £0.50 each, he can sell five apples a day. The revenue that he will get from the sales at this new price is £2.50 (ie 5⫻£0.50). Therefore the marginal return in moving from four to five apples per day is £0.10 (£2.50–£2.40). If our shopkeeper wishes to sell six apples per day he has to drop the price to £0.40. The revenue he gets from the sale of six apples is 6⫻£0.40 = £2.40, ie less than the revenue that he gained from selling five apples at £0.50 each. The curve at the six-apple price is inelastic. The marginal revenue that accrues from moving between sales of five apples at £0.50 each and six apples at £0.40 each is negative. The shopkeeper loses money by dropping the price to this level. This is an example of the law of diminishing returns.

5 The demand curve slopes downwards to the right, therefore in order to sell more units the price must drop.

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Price (£) Demand Curve ( Apples)

0.60 0.50 0.40

0

4

5

6 Quantity/Day

Figure 5: Marginal Revenue Example

Cost It should now be apparent to the reader that the demand curve for any given product is of vital importance to the seller or producer of that product, as it will dictate how, and when, the sale of the product will be profitable. However, this is not the end of the story for there is another factor of equal importance to demand that affects the market of a product: cost. The interrelation between the demand and cost curves for a given product provides information on the level of production that will take best economic advantage of the situation. The lowest profitable price in any situation will be the price that the resources consumed in the production and sale of the item would command in their next best use. This is the price that economists refer to as the ‘opportunity cost’. For example, assume our shopkeeper has a small piece of land that is lying unused. He decides to start growing lettuce on the land to sell in the shop. The opportunity cost of the lettuce will be the price that the labour, materials and transport, etc involved in bringing it to the point of sale would have commanded if sold to the next highest bidder. This is because the producer must have outbid their nearest rival to obtain the resources. However, importantly, it will not include the purchase of the land, as this is a sunk (or incurred) cost at the time that production is contemplated and commenced. The shopkeeper already has the land, it is lying unused and therefore will not (assuming that he is rational) factor in the price he charges for his lettuce. To take another example, if it cost £10 to assemble a widget, but now that it is assembled the most that it can

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be sold for is £1, the fact that it cost £10 to build should not affect the sale price, as selling at the lower price is preferable to not selling at all. A consequence of defining cost as ‘the value of the resource in its next best use’ is that cost will only be incurred when someone is denied the use of a resource. This definition means that those resources that can be classified as free goods (goods not exhausted by use) are, in fact, costless. A commonly quoted example of this concept is the air that we breathe. Air is costless as one can breathe as much as one wishes without depriving anyone else of the air that they want. There is no ‘economy’ of air as there is no next best use because one cannot, under normal circumstances, be denied use of the resource. This has important implications for the patent system that will be explored below. For expediency, economists often divide the total cost for the production of a particular item into two elements. The first is fixed cost. This is, by definition, the same for all levels of output available within the seller’s normal operating range (ie given their current premises and contractual obligations). The second is variable cost, which rises and falls according to the level of output. Costs may be described in aggregate or per unit, depending on which is more helpful for any given purpose. Aggregate variable costs will generally rise as production output increases, as it will generally cost more to make X+1 items than it did to make X. The total cost of production is calculated by adding the aggregate variable cost at any given point to the fixed cost. An illustration of possible fixed cost (FC), aggregate variable cost (VC), and total cost (TC) curves is given in Figure 6 (below). The average variable cost (variable cost per unit) (AVC), average fixed cost (AFC), and average total cost (ATC) are calculated by dividing each category by the number of units of output for any given cost.An illustration of possible average cost curves is given in Figure 7 (opposite)

£

TC VC

FC

Q/t Figure 6: Cost Curves

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In much the same way as we calculated the marginal revenue curve from the demand curve earlier, it is possible (and very useful) to calculate a marginal cost

£

ATC

AVC AFC Q/t Figure 7: Average Cost Curves

curve. Marginal cost is the additional amount of cost associated with each successive unit of product, or, put another way, it is the cost avoided by producing one unit less. Given that fixed costs are, by definition, the same for all levels of output within the normal operating range, the marginal cost will be attributable to changes in the variable cost and will bear close relationship to the average variable cost curve. Just as the marginal revenue and demand curves coincided at unitary production, the marginal cost curve at this level of output will be incidental with the average variable cost curve and the total variable cost curve.6 For as long as the incremental cost of producing another unit of product is less than the incremental cost of producing the last unit, the marginal cost and the average variable cost will both fall. Additionally, as the marginal cost curve is, by definition, not affected by the higher incremental costs of producing earlier units but the average variable cost curve is, the average cost will be greater than the marginal cost. At the point at which the cost of making an additional unit ceases to be less than the incremental cost of making the unit before, the marginal cost curve will reach its minimum. It will still be below the average cost; however for successive units it will now start to rise, whereas the average cost will continue to fall. Where the incremental cost of producing another unit exceeds the average cost of producing all of the units before it, the average variable cost curve will find its minimum. This will occur where the marginal cost curve intersects the average variable cost curve. The marginal cost will 6 It is simple to see why this is the case, the marginal cost of moving from no units to one unit of production will obviously be equal to the cost of the first unit.

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always be more than the average variable cost where the latter is rising, and less where it is falling. See Figure 8 (below) for graphical representation of this point.

£ MC

AVC

AFC

Q/t Figure 8: Marginal Cost, Average Variable Cost and Average Fixed Cost Curves

Profit The motivating factor of all economic behaviour is assumed to be profit maximisation. If the cost and demand curves for any given period are superimposed then it is possible to see that profit may be maximised if operation proceeds at the level where marginal cost is equal to marginal revenue. This is because failure to produce a unit whose incremental cost was less than the incremental revenue that its sale would bring, would not be consistent with the purpose of maximising profit. Similarly, it would not maximise profits to produce an additional unit where the incremental cost of production was more than the incremental return to revenue that its sale would bring. If, for simplicity’s sake, we assume that the marginal cost (and therefore the average variable cost) for a particular product is constant, then we might see a situation such as that represented in Figure 9 (below). The firm, under imperfect competition, will wish to maximise its profits and therefore produce quantity Q, the quantity that corresponds to the intersection of the marginal revenue (MR) and marginal cost (MC) curves. It will sell the goods at price P, dictated by the incidence of line q with the demand curve (D). The total (gross) revenue is the area of the grey shaded rectangle formed by lines p, q and the axes (ie the price per unit multiplied by the number of

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units produced). The total cost of production will be the average total cost per unit (the average variable cost plus the average fixed cost) at quantity Q multiplied by Q (i.e. the area of the hatched rectangle formed by MC, q and the axes in our example). If the point at which Q intersects the demand curve is above the average total cost curve then profit will be earned; if it is below it, a loss will be sustained; and if on the curve, then normal returns to capital will be experienced. Production at point Q (corresponding to the intersection of MC and MR) will maximise any profit or minimise any losses; production at any other level will be sub-optimal.

£

P p

MC = AVC

D q 0

MR

Q

Q/t Figure 9: Maximising Profit

Under perfect competition, on the other hand, the price will be driven down to the opportunity cost; as if the price charged is higher other sellers will be attracted to the market. Their production will add to the current total production and, due to the downward slope of the demand curve, this increase in quantity will lead to a lowering of price until it reaches its minimum level. The opportunity cost of the resources used to produce a unit of product will dictate the minimum price for that product, as below that price the bidder would have lost out to the next best use. Where the product in question is a free good the marginal cost will be zero and therefore the optimal price (to maximise use) will also be zero. Where one-person controls the entire supply of goods, ie where there is a monopoly, the monopolist can dictate the quantity produced in order to maximise profits. As a consequence, production will be less than under competitive conditions. This means that there will be an under-utilisation of the resources associated with the production of the goods—as more units of product could be produced at a cost that is less than the consumer would be willing to pay for them. The price that the producer charges for each unit will still be dictated by the demand curve; however, the

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monopoly price will be more than the competitive price for obvious reasons. Therefore, society will be charged more for the goods than they would under competitive conditions. This will mean that some consumers will satisfy their desire for the monopolised goods (for example, apples) by switching to overall less desirable products (pears), as the high monopoly price of the apples makes pears more desirable. The effect of monopoly on the supply of a product can be seen in Figure 10 (below). In the absence of monopoly, competition will push the price charged for the goods down to the marginal cost of their production (ie to Pc —for simplicity it is assumed that marginal cost is constant and that there are no fixed costs, thus, marginal cost equals average total cost). Therefore, production will be at Qc, as this is the point at which the demand curve for the product and the marginal cost curve intersect.7 If the supply of the product is monopolised, however, the monopolist will be unencumbered by competition and will be able to set production at a point that maximises profit (price Pm and quantity Qm in Figure 10). The high price causes some consumers to substitute to other products. Where these goods cost more to produce than the monopolised goods, this added cost is a waste to society. The cost of moving from perfect competition to monopolistic price is approximated by the shaded triangle marked DW (deadweight loss) in Figure 10. The deadweight loss associated with monopoly can be simply defined as the ‘welfare loss suffered by those who stop buying the [preferred] product [which] is not off-set by any gain to the seller’.8 In addition, the restriction on supply will mean that there is a possible underutilisation of resources associated with the production of the product. £

Pm MC = ATC DW Pc MR

0

Qm

D

Qc

Q/t

Figure 10: Deadweight Loss 7

See the foregoing discussion for an explanation of why competition has this effect. Corones, Restrictive Trade Practices Law (North Ryde (NSW), Law Book Co, 1994) at 5. Quoted from Loughlan,‘Patents: Breaking into the Loop’ (1998) 20 Sydney Law Review 553 at 565. 8

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Despite harming society, monopoly benefits the monopolist in a number of ways. First, the fact that the monopolist is, by definition, the only producer in the market means that they do not need to share any profits made, but instead can keep them all to themselves. Second, the ability to dictate supply means that any such profits can be maximised, either by taking advantage of economies of scale without fear of the market being flooded, or by limiting production to get the best price. It is this potential for monopoly profits that provides the traditional incentives associated with the patent system. The trade-off between the harm inflicted upon society by the imposition of monopoly and the gains from increased levels of inventive activity has been the main focus of economic attention in this area. Implicit in the early studies was the idea of the patent as a perfect tool of appropriation, a perfect monopoly. However, more recently commentators have asked whether this can really be said to be the case. Throughout discussion of the patent system the word monopoly has been deployed, with what verges on reckless abandon, to describe the grant. This use of the term has been influenced by factors including convenience, tradition and expediency; however, now that we have a basic economic appreciation of the nature and effect of monopoly in the marketplace it is time to question its suitability to the task. Therefore, before considering the economics of the patent system in any more detail, we turn our attention to the nature of the grant once more, and ask if it can really be called monopoly at all.

Patents as Monopolies—What’s in a Word? It may be thought that the labelling of the patent grant as a monopoly is a largely academic point and that its discussion has no real value. The patent, call it what you like, has an economic effect; its presence distorts the market structure experienced by the product or process that forms the subject matter of the grant. It creates scarcity where there would naturally (at least once the invention has been made) be none and, in doing so, shelters the proprietor from the full rigors of competition and increases their resistance to price pressure. It creates an area of calm in an otherwise busy market and reduces the availability of substitutes that would fall within the scope of its protection. It unifies source. However, as already noted, the consequences of monopoly are more than simply economic. The word itself has potent effect in the societal mind. Images of high prices, low quality, and short supply are all conjured up at the mention of monopoly; economists distrust them, the judiciary dislikes them,9 and people-at-large feel a 9 See, eg, much of the extra-judicial writing of Robin Jacob and Hugh Laddie (before his departure from the Bench) for illustration of this point. In particular, Laddie, ‘Copyright—Over-Strength OverRegulated and Over-Rated’ [1996] EIPR 253; Jacob,‘Industrial Property: Industry’s Enemy’ [1997] IPQ 3.

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pull at their purse-strings at the mere mention of the name. The effects of censure and denunciation in the sphere of criminal law are well known,10 the susceptibility of the trade mark to tarnishing is also widely acknowledged,11 however the detrimental effect of calling a patent a monopoly is often overlooked. Classification is important: [The] question whether a patent privilege is a monopoly is not a mere question of words. It is the point of departure for two distinct theories, under whose influence courts and legislatures may be led to widely different conclusions as to the dividing line between the rights to be conceded to inventors and those to be reserved to the public.12

As the late Giles Rich, one of the authors of the United States’ Patent Act of 1952 and respected patent judge, stated: ‘The tendency is to call a patent “monopoly” when it is to be invalidated or restricted and to say it is not a monopoly when it is held to be valid and infringed’.13 However perhaps more importantly, if the patent cannot be said to be a monopoly, then the traditional economic modelling of the system may have to be reconsidered as it is predicated upon the assumption that the patent holder will face a downward sloping demand curve. To what extent, therefore, may a patent be called a monopoly? The Shorter Oxford English Dictionary defines monopoly as: Exclusive possession of the trade in some article of merchandise; the condition of having no competitor in the sale of some commodity, or in the exercise of some trade or business; or, An exclusive privilege (conferred by the sovereign or the state) of selling some commodity or trading with a particular place or country.14

The definition in the Oxford Dictionary of Economics is somewhat narrower—‘A market situation with only one seller.’15 At its loosest, a monopoly is the right to exclude others from the thing monopolised. However, this is one of the defining features of all forms of private property,16 and by comparing a patent to a car, a house, or an apple, etc, critics of the monopoly nametag attempt to collapse the conceptual distinction between the patent and other, less objectionable, forms of property.17 It is therefore simple to see that 10 See, eg, Feinberg, ‘The Expressive Function of Punishment’ (1965) 49 The Monist 397, discussing the symbolic significance of punishment. 11 See, eg, Case C-251/95 Sabel v Puma [1998] RPC 199, at para 48. 12 Robinson, The Law of Patents for Useful Inventions (Boston, Little, Brown & Co., 1890), § 12, at 18–19. Rich,‘Are Letters Patent Grants of Monopoly?’ (1993) 15 Western New England Law Review 239 at 239. 13 Ibid, at 240. A stark example of such conduct may be found in Justice Douglas’ opinion in Great Atlantic & Pacific Tea Co v Supermarket Equipment Corp, 340 US 147 (1950, Supreme Court) at 154, that: ‘Every patent is the grant of a privilege of exacting tolls from the public. The Framers plainly did not want those monopolies freely granted’. 14 ‘Monopoly’ in Trumble & Stevenson (eds), Shorter Oxford English Dictionary (Oxford, OUP, 2002; 5th Ed). 15 Black, The Oxford Dictionary of Economics (Oxford, OUP, 1997), at 307. 16 See conclusions to this end in Rich, n 12, above, at 254. 17 Loughlan, n 8, above, at 566.

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reliance on the pedantry of definition can cloud the issue. Indeed, it is perfectly possible to ‘ “prove” a patent to be what . . . [you] want by selection of the proper “authority” ’.18 Whatever its definition, it is clear that the monopoly effects of a patent will vary from invention to invention. Indeed, they will vary from definition to definition, but for any particular definition it is possible to imagine situations in which total exclusion will be effected. A popular example is where there is only one drug with which to treat a particular disease, in such a case there is usually no substitute product. However, this situation will be rare, not least because if there is a large enough profit to be made other producers will be attracted in an attempt to ‘invent around’ the patent. Where the monopoly effects of the grant are strong the scope of the exclusion will therefore become of paramount importance. In other situations such effects will be less severe, as there will be effective substitutes that expose the patentee to price pressure. But again the scope of the grant will be critical, as it will dictate the proximity of any new competition. The breadth of protection that a patent offers is necessarily affected by the perception of the grant as a monopoly, with focus upon the exclusionary characteristics that it provides; therefore the degree of monopolisation is contingent upon ultimate recognition of the patent as a good or bad use of monopoly power. Loughlan sums up the issue succinctly when she states that ‘Patents are rapidly becoming one of the defining characteristics of the market economies of contemporary capitalism and yet their inherent nature as an economic monopoly seems to defy the very ideology of competition which constitutes and drives those market economies.’19 She continues, quoting Kastriner, Chief Patent Counsel at the time for Union Carbide Industrial Gases, Inc: ‘[o]nce the public misperception of patents changed from anti-competitive “monopolies” to useful stimulants for creativity and economic growth the patent system was revived to an extent’.20 Again we see perception of the grant being identified as having significant influence over the efficacy of the system in pursuing its goals. Just as in the nineteenth century, public faith in the patent is now seen to offer its own stimulus to the use that is made of the system and so may be held partly responsible for fulfilling its justificatory role. In America, Dam21 notes that the patent as monopoly argument showed up frequently in antitrust cases in the period spanning from the 1930s to the mid-1980s, and was accompanied by a tangible enmity towards patents. He states that if ‘hostility had been limited to antitrust cases, it might not have been so serious’, however, the same anti-monopolistic sentiment was to be found in patent validity cases as well.22 18

Rich, n 12, above, at 248. Loughlan, n 8, above, at 565. 20 Ibid. Quoting Kastriner,‘The Revival of Confidence in the Patent System’ (1991) 73 JPTOS 5 at 8. 21 Dam,‘The Economic Underpinnings of Patent Law’ (1994) 23 Journal of Legal Studies 247. See also Rose, ‘Patent “Monopolyphobia”: A Means of Extinguishing the Fountainhead’ (1999) 49 Case Western Reserve Law Review 509. 22 Ibid, at 268–9. In support of this proposition Dam quotes Justice Douglas in Great Atlantic & Pacific Tea Co v Supermarket Equipment Corp, n 13, above, at 154, 155, 158, that: ‘Every patent is the grant 19

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In his discussion of the patent grant, Rich notes the symbolic potency of the monopoly nametag—‘to talk of the “patent monopoly” weds patents to prejudice’23—but accepts that ‘monopolistic power is the engine of the patent system’.24 He reasons that monopoly does not have the capacity to be good or bad, it is simply a power that can be put to good or bad uses. Therefore, in much the same way as Coke distinguished odious from unobjectionable grants in his commentary on the Jacobean Statute,25 Rich separates monopolies into two categories. First are those in which the use of the monopoly power takes something from the public that they previously enjoyed unrestricted access to. Here the individual has gained at the public’s expense and therefore the monopoly is odious in the manner traditionally understood. The second category concerns things that never belonged to the public, even before the creation of the monopoly. To these there can be no objection. Whereas Coke interpreted monopoly to exclude patents, Rich simply states that patents, due to the criteria that need to be satisfied in order to obtain the grant (ie that the invention must be novel and inventive), necessarily fall into the category of legitimate use of monopoly power. In other words, until the patentee invented it the invention did not exist and ‘Unless the grant of a patent gives some kind of economic power to the patentee that he or she would not otherwise have, the patent system would not work’.26 Thus stated, the patent grant can be said to confer monopoly privilege on the right-holder, but this does not necessarily lead to a de facto monopoly. Indeed, it is wrong to assume that protection from imitation and the ability to collect supracompetitive rent necessarily means that the patent owner is placed in a position of significant market power at all. Figures could be taken from any of the world’s Patent Offices to provide clear illustration of this: taking the European Patent Office as an example, in 2004 it received almost 180,000 applications, which resulted in the grant of 58,730 patents.27 It would be utter madness to state that this means almost 59,000 markets have been monopolised. Indeed it is unlikely that any one of these patents has provided, or will provide, its owner with a single monopoly in any market.28 A television advertisement for a ‘Dyson’ vacuum cleaner that was aired in the summer of 2000 boasted that the machine was protected by no less than 156 patents, yet Dyson, despite its best attempts, does not have a monopoly of the vacuum cleaner market. of a privilege of exacting tolls from the public . . . The Constitution never sanctioned the patenting of gadgets . . . The fact that a patent as flimsy and as spurious as this one has to be brought all the way to this Court to be declared invalid dramatically illustrates how far our patent system frequently departs from the constitutional standards which are supposed to govern’. 23 Rich, n 12, above, at 239. 24 Ibid, at 252. 25 See Coke, Part III of the Institutes of the Laws of England (London, Clarke & Sons, 1817; reprint) at 184. See also, text accompanying n 113 in ch. 2, above. 26 Rich, n 12, above, at 251. 27 See http://annual-report.european-patent-office.org/facts_figures/_pdf/facts_figures_05.pdf. The actual number of applications in 2004 was 178,579. 28 See Dam, n 21, above, at 250 for a similar conclusion utilising figures for the US.

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The best that a patent can hope to provide is an increased economic rent for its owner, and this is not in itself objectionable. There are, for example, many instances of natural supra-competitive rents flowing from such things as real estate location, artistic or sporting talent, etc29 that demonstrate this effect. However, it is clear that the distaste which is displayed for the increased rent resulting from the patent grant is inextricably tied to the misconception of the patent as a monopoly. Therefore, to summarise, the presence of a patent creates property in an invention as it imposes an artificial scarcity on the knowledge resource required for its operation. Terming the patent grant a monopoly does little to aid any analysis of the system; rather it engenders distaste and breeds distrust. The patent cannot accurately be described as a legal monopoly, although it does create and confer monopoly power. The use of this power is legitimate as nothing is taken from the public that it had previously enjoyed full access to, indeed, before the invention was made the subject matter of the patent was not in existence. Moreover, very few patents will ever give control of any particular market; competition from other sources, products, and processes operate to erode any monopolistic exclusionary effects that an individual grant may provide. The essential point, as Epstein clearly notes, is that: ‘when you have monopolies that are close substitutes to one another, in practice, you have a competitive market with strong property rights’.30 However, monopolyphobia clouds the issue and the arguments for and against the system. Therefore, with this in mind, and having already considered some of the early economic and philosophical arguments for the patent system, we turn our attention to discuss the modern economic theory and consider some of the determinants of patent value in the market economy. This discussion necessarily involves consideration of the scope of the patent grant and the various theories that have been advanced to attempt to model the system.

The Economic Argument for the Patent System As we have seen, the patent system has been justified on the basis that it increases the incentive to invent and invest in invention.31 Invention is considered to be necessary 29

These examples are given in Dam, n 21, above, at 250. Epstein,‘The Structural Unity of Real and Intellectual Property’, text of a speech given to the Aspen Summit organised by the Progress and Freedom Foundation on 21st Aug 2006. Available online at: http://www.pff.org/issues-pubs/pops/pop13.24RAE_9_26.pdf. [Link no longer active—however, a recording of the speech can currently (as of 1 Jun 2007) be accessed at: http://www.tvworldwide.com/ showclip.cfm?ID=7278&clip=2] 31 See ch 3, above. Consideration of non-patent incentives, such as lead-time, trade secrecy etc, is outside of the scope of this work. Those interested in these matters are directed to Beckerman-Rodau, ‘The Choice Between Patent Protection and Trade Secret Protection: A Legal Business Decision’ (2002) 84 JPTOS 371, and Reichman, ‘From Free Riders to Fair Followers: Global Competition under the TRIPS Agreement’ (1997) 29 New York University Journal of International Law and Politics 11, particularly text accompanying n 206–249 therein. 30

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to the technological progression of society, which, in turn, leads to the creation of societal wealth. In the absence of some form of incentive the level of invention would be too low (sub-optimal). Therefore, under the traditional model in which a patent is desired to provide shelter from competition, the system offers an ex ante incentive to invent and to invest in research and development (R&D) as the offer of a patent grant provides expectation that, as long as there is a market for the invention, monopoly profit can be realised. R&D will receive investment if the expected net revenue from the invention over the period of protection exceeds the cost of creating it in the first place.32 The ex ante incentive to invent under this model is directly related to the ex post protection that the patent provides, assuming, that is, that the patent is desired to provide a zone of exclusion.33 Inventions are public goods which, absent some form of protection from competition, could be costlessly copied by competitors who did not share the same burden of R&D as the originator. Without protection, competing firms could undercut the inventor and drive price down to the marginal cost of production. In this ex post analysis the sunken costs of the originator are bygones and will not affect the price at which the product is sold (for, where there is competition, the inventor could not charge monopoly price, as they would then sell no units). Within a market unencumbered by legal protection (or other compensation), the creator of a new product, or process, would therefore face a disincentive to invest in R&D. This is an example of where a competitive market will produce an unfair (and economically inefficient) outcome. As noted in chapter 3 above, even Macfie, the most ardent of abolitionists during the anti-patent debate, accepted that an unregulated market would produce a disincentive to invent.34 However, he doubted the efficacy of the patent system in righting the balance between the market and the inventor, and instead suggested the provision of government-funded rewards. This is a suggestion that finds relatively little support in the modern economic literature, however in one study Shavell and Ypersele conclude that a system of optional reward—where the inventor chooses between rewards and patents—is socially superior to patent protection.35 The same arguments against monetary rewards exist now as did in Macfie’s time, viz that such a system is too bureaucratic, that the government is ill equipped to make judgement on the value of invention, that the patent system is fairer since it only taxes those 32 As one of the patent attorneys interviewed in connection with ch 4 stated, ‘There’s a saying in the pharmaceutical industry that whilst the second tablet costs tuppence to make, the first costs several million pounds . . . You have to make the numbers add up somewhere, without patents, your competitor makes tablet two and never has to make the first’. 33 If it is not, then the non-traditional incentives provided for by the grant itself will clearly be independent of its scope as long as the patent is valid. In such a case, the narrower the patent, and therefore the smaller its chance of being invalidated by prior art, the better. 34 See text accompanying n 109 in ch 3, above. 35 Shavell & Ypersele, ‘Rewards versus Intellectual Property Rights’ (2001) 44 Journal of Law and Economics 525. This topic is also explored by Abramowicz,‘Perfecting Patent Prizes’ (2003) 56 Vanderbilt Law Review 115, and is given an interesting twist by Mandel,‘Promoting Environmental Innovation with Intellectual Property Innovation: A New Basis for Patent Rewards’ (2005) 24 Temple Journal of Science, Technology & Environmental Law 51.

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who actually use the invention, etc. However, the point is made; the inventive/innovative system sometimes needs stimulus—a concession that, in itself, provided one of the justifications for patents.36 The classical economic and philosophical rationales of the patent system are, however, unsubtle. The arguments advanced in the anti-patent debate are essentially binary in their approach; the patent system either is, or is not, justified on balance. Yet ‘[p]atents, once established in principle, can either be too broad or too narrow’.37 Early economic treatment of the grant makes no attempt to objectively criticise the scope of the system and to try to re-model it, refining the protection that it affords in order to maximise benefit and minimise loss. In other words, under such classical economic theory there was little or no consideration of variables that could affect the balance; the question of the strength/scope of the grant, for instance, was left open. This narrow approach can be attributed to a combination of factors, including the relative infancy of economic reasoning, the nature of the debate and the stigmatic association with monopoly, and the changing face of industry. The rationale behind this observation is not, however, of primary importance to our discussion; it is sufficient to note that a line can be drawn at the beginning of the twentieth century between the classical and post-classical theories.

Post-classical Models and Justifications The modern appreciation of the innovative process stems from the seminal works of Joseph A Schumpeter, who argued that the traditional view of perfect competition, characterised by perfect knowledge and therefore costless appropriability of invention, was not conducive to innovation (ie the process of investing in invention).38 He therefore rejected the orthodox view, formulated around quality, price and sales effort, in favour of ‘competition from the new commodity, the new technology, the new source of supply, the new type of organization’.39 This process, what Schumpeter calls ‘Creative Destruction’, ‘is the essential fact about capitalism’.40 In essence, therefore, Schumpeter puts flesh on the bones laid down by Bentham, and extends the argument that there will be a sub-optimal level of invention in the absence of some form of incentive being offered to the process of innovation itself. By the time that he was writing the world had changed significantly from that experienced by Bentham; large corporations had begun to take the place of single inventors and the era of corporate led R&D had dawned. 36

Much, one would imagine, to the chagrin of Macfie! Grady & Alexander,‘Patent Law and Rent Dissipation’ (1992) 78 Virginia Law Review 305 at 307. See Schumpeter, Theory of Economic Development (Cambridge (MA), Harvard University Press, 1936). This work was first published in German as Theorie der wirtshcaftlichen Entwicklung (Leipzig, Duncker Humblot, 1911). 39 Schumpeter, Capitalism, Socialism, and Democracy (London, Allen & Unwin, 1947; 2nd Ed) at 84 40 Ibid, at 83. 37 38

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Schumpeter’s analysis is significant as it recognises that the motivations for an entity to invest in a process that may result in an invention are clearly not the same as those that inspire someone to invent. The profit-seeking firm will not pour funds into the process of invention if it cannot reasonably expect to be rewarded/ compensated for its efforts, whereas the individual may invent for any number of non-profit related reasons, for example, enjoyment, fame, necessity, etc. Schumpeter acknowledges the primacy of innovation over invention in the modern economy and therefore limits his discussion to creating industry structures conducive to investment. As Loughlan notes, Schumpeter’s arguments were ‘not about how to get a scientist into a lonely lab at night’.41 This change of focus marks a distinct shift in the theories of protection. Indeed, an understanding of the process of invention (inventing the method of invention, if you like) was in itself a milestone discovery.42 The classical natural law or justicebased theories 43 still maintain their integrity as justifications for the system per se, but the economic rationale now divides. The traditional incentive argument, where patent protection is justified for only those inventions that were induced by the patent system, still operates in an isolated sphere where the required causal relationship between the invention itself and the prospect of a patent can be established. However, Schumpeter’s work opens up the arena and clarifies the relationship between innovation and economic growth, enabling others to build and model outside of the classical constraints.44 It therefore enables the justification of grants where the innovative process would have been hampered if the invention could have been freely appropriated in the absence of protection. In other words, even if the invention is not induced by the patent system, protection can be justified on the basis that the investment required to bring it to the public would not have been forthcoming without it.

The Patent-induced Theory It might be argued that the difficulty comes in distinguishing between patent induced and non-patent induced innovation. Utilisation of the criteria of inventive step (or non-obviousness) is one method that has been deployed in an attempt to differentiate between those inventions that are patent-induced and those that are

41

Loughlan, n 8, above, at 568. As Whitehead states, this understanding was the greatest invention of the nineteenth century; Whitehead, Science and the Modern World (Cambridge, Cambridge University Press, 1927) at 126. 43 Discussed in ch 3, above. 44 It is clear that Schumpeter was not attempting to provide a model or theory to explain intellectual property, indeed, he mentions patents and other intellectual property rights only in passing. The theories that he advances are limited to increasing understanding of the economic nature of the process of innovation, and are necessarily confined to a capitalist private enterprise economy. 42

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not.45 Eisenberg explains this point succinctly when discussing the function of the non-obviousness standard in patent law. She states that: patents are unnecessary to bring about mundane improvements that are within easy reach of those working in the field, but may be needed to motivate inventors to pursue the nonobvious advances that require something beyond routine work.46

However, as Oddi points out, ‘no means are provided for eliminating the economic costs associating with inventions that can satisfy the nonobviousness standard but still would have been invented without a patent system’.47 Oddi’s discussion is directed at the traditional patent-induced invention theory and does not directly address the wider issues that arise from a post-Schumpeterian analysis where innovation, and not invention, is the key. Here the patent acts as a means of directly protecting the investment that has been made in order to get the invention to the public: but-for the prospect of a patent the money would not have been put into the research that resulted in the invention, or the invention would not have been brought to the market. Concentration on investment removes some of the problems that are apparent under the traditional theory. For example, where an invention is serendipitous or accidental, it cannot be said that the prospect of a patent induced it. However, investment is essentially proactive: whereas creation can be the result of luck or chance, investment cannot. Therefore, by adding another stage to the analysis, and stating that the process of technological growth is dependent upon innovation (which itself produces invention), protection for all but the market-induced innovation and the trivial invention can be justified. It will be noted that this still leaves the problem of identifying the non-patent induced innovation. In a highly influential study, Scherer developed a categorisation of inventions based on a cost/benefit investment analysis and used this to establish whether, in any given category, the patent was needed to induce that investment, thereby drawing invention and innovation together.48 This ‘topology of inventions’49 provides the apparatus required to solve the patent-induced problem and, in addition, enables further comparison between groups. Scherer’s categorisation proceeds along the following lines.50 First there are those inventions that can be described as revolutionary, ie those that may be defined as producing ‘a genuine revolution in consumption or production’.51 For these inventions, which are classified as having an uncertain benefit-to-cost ratio, the patent 45

Loughlan, n 8, above, at 568. Eisenberg,‘Analyze This: A Law and Economic Agenda for the Patent System’ (2000) 53 Vanderbilt Law Review 2081, at 2092. 47 Oddi, ‘Un-Unified Economic Theories of Patents—The Not-Quite-Holy Grail’ (1996) 71 Notre Dame Law Review 267 at 278 (Oddi,‘Holy Grail’). 48 Scherer, Industrial Market Structure and Economic Performance (Boston, Houghton Mifflin, 1980; 2nd Ed) (Scherer, Market Structure). 49 Oddi,‘Holy Grail’, n 47, above, at 278. 50 The classification is condensed from Scherer, Market Structure, n 48, above, at 443–50. 51 This definition is given in Oddi,‘Holy Grail’, n 47, above, at 278. Scherer simply states that these are inventions that provide ‘spectacular technical contribution’, Scherer, Market Structure, n 48, above, at 448. 46

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system provides a necessary incentive, as it is likely that they would not be forthcoming, or would be seriously delayed, without it. The second class contains inventions with a high benefit-to-cost ratio. This category includes those resulting from accident, serendipity, or chance. These inventions cam be classified as non-patent-induced, as there is a high probability that they would be created even in the absence of a patent system. These are often termed market-induced; clearly they may currently still be the subject of patent protection, but it would be incorrect to state that this was the driving force in their creation. Third is the invention with a low benefit-to-cost ratio. This subset includes inventions characterised by high development costs compared to the rent that they could support under favourable pricing conditions and inventions that are developed in an industry where there is a high degree of competition. In such cases the patent system can be said to be necessary for the production of the invention, as without its protection they would be relatively easily copied by others and there would therefore be little other incentive to produce them.52

Questions of Scope Justification for patent protection per se is only the first step in any analysis, however, for once the decision to have patents is made, or the need for patents highlighted, the next step is to determine their scope. Scherer’s topology of invention is, again, helpful in this area as it enables restriction of the inventive field and establishes orderly points for comparison between the different theories that are to be advanced. For revolutionary inventions, the scope of protection suggested by the patentinduced theory is necessarily broad. The sine qua non of these creations must, due to their uncertain cost to benefit ratio, be the patent system. Market factors alone would not be sufficient to justify entities investing the amount of time, effort and money that creation of a spectacular technical contribution would require. Broad protection for these inventions is, therefore, justified; for as Schumpeter demonstrated, such revolutionary creations are an important driving force behind economic growth.53 This point is easily accepted today, but it is clear that it took a number of influential empirical studies, including those of Abramowitz54 and Solow55 to make economists fully aware of the link between innovation, technological progress and economic growth.56 52

See Scherer, Market Structure, ibid, at 447. Also Oddi,‘Holy Grail’, ibid., at 279. The link between innovation and economic growth was one of the revolutionary points made in Schumpeter’s Theory of Economic Development, n 38, above. Studies following on from Schumpeter’s Capitalism, Socialism and Democracy (New York, Harper & Row, 1942) investigated and refined his hypothesis that monopoly and large firms are inherently conducive to innovation. 54 Abramowitz, ‘Resource and Output Trends in the United States Since 1870’ (1956) 46 American Economic Review 5. 55 Solow, ‘Technical Change and the Aggregate Production Function’ (1957) 39 Review of Economics and Statistics 312. 56 These two studies are originally sourced from Takalo, Essays on the Economics of Intellectual Property Protection, an academic dissertation presented to the University of Helsinki and available online 53

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For the second and third of Scherer’s categories (the high benefit/cost and the low benefit/cost inventions) the patent-induced theory would predict narrow scope. For the former this is because the theory posits that the incentive should not extend further than is necessary to induce the invention. Therefore, as non-patent factors would probably be sufficient to procure an invention with a high benefit-to-cost ratio any extra incentive is over-kill. For inventions with a low benefit-to-cost ratio, on the other hand, broad scope would reduce the incentive for others to make improvements and would also restrict the use that could be made of the invention, thereby increasing the costs associated with the patent grant.

Criticisms of the Patent-Induced Theory The primary criticism that can be levelled at the patent-induced theory stems from the difficulties associated with divining which inventions are actually induced by the prospect of a grant, and which are not. Oddi, in an article proposing the adoption of a ‘revolutionary patent’ for the protection of inventions that provide significant social benefit, suggests the establishment of an ‘extraordinary to experts’ test to determine patentability.57 Whilst this might solve the problem for revolutionary inventions (and even then prompts the questions ‘How extraordinary?’ and ‘Which experts?’), it does nothing for those of a less groundbreaking nature, where the difficulties in separating the patent-induced from the non-patent-induced are far greater. Scherer’s topology of invention must also be subject to some degree of suspicion for, whilst it is useful in classifying innovative activity in terms of the uncertainty of a return on investment, it seems to penalise low-cost inventors and therefore encourages wastefulness.58 This application of the patent-induced theory also poses what Kitch had previously described as an ‘impossible factual inquiry. How is a court to determine the hypothetical cost of a hypothetical marginal inventor of making an innovation he may or may not have made?’59 This process is made all the more difficult with the realisation that, as Lemley bluntly comments, ‘we at http://ethesis.helsinki.fi/julkaisut/val/kansa/vk/takalo/. More recent studies and papers on the importance and effectiveness of patents in inducing invention and research include those of Scherer, Patents and the Corporation: A Report on Industrial Technology under Changing Public Policy (Boston, JJ Galvin, 1958); Taylor & Silberston, The Economic Impact of the Patent System, (Cambridge, Cambridge University Press, 1973); Mansfield, Schwartz and Wagner, ‘Imitation Costs and Patents: An Empirical Study’ (1981) 21 Economic Journal 907; Cohen, Nelson & Walsh, ‘Protecting their Intellectual Assets: Appropriability Conditions and why US Manufacturing Firms Patent (or not)’ (Feb 2000) NBER Working Paper Series, No 7552. Available at http://www.nber.org/papers/w7552.pdf.; Schankerman, ‘How Valuable is Patent Protection? Estimates by Technology Field’ (1998) 29 RAND Journal of Economics 77. See also Merges, ‘Commercial Success and Patent Standards: Economic Perspectives on Innovation’ (1988) 76 California Law Review 803. 57 See Oddi, ‘Beyond Obviousness: Invention Protection in the Twenty-First Century’ (1989) 38 American University Law Review 1097. 58 A criticism also levelled at Scherer’s ‘strong’ version of the reward theory—that rewards should explain actual patent decisions—by Grady & Alexander, n 37, above at 313. 59 Kitch,‘The Nature and Function of the Patent System’ (1977) 20 Journal of Law and Economics 265 (Kitch,‘Nature and Function’) at 281–2.

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don’t have a clue how innovation works’ (emphasis added),60 and the same can be said of invention itself. The mysteries of the innovative and inventive processes are compounded by the fact that they differ so greatly across individuals, industries and firm sizes. Serendipity also has its own role to play. Therefore, the factors that drive the process in one enterprise are not guaranteed to work as a model for all. Added to this conundrum is the fact that there is evidence that stretches back to Brunel’s comments before the 1851 Select Committee61 that patents may, in certain cases, act to inhibit innovation rather than encourage it.62 Further, Ko observes that the entire patent-induced theory ‘rests on the dubious assumption that the invention would not exist but for the efforts of the inventor who patented it’.63 This is a strong point of contention for those commentators that subscribe to the social evolution theory of invention. This theory is based on the premise that invention will occur, with or without patents, when the state of basic knowledge and other social conditions are ripe.64 If this is the case, or even if there is duplicative research in the area of the invention, then the correctness of granting a patent to the first inventor must be questioned. In addition, the patent-induced theory is very simplistic. Oddi puts this criticism clearly when he notes that: ‘The only conclusion that can be drawn from the theory is that if patents were restricted to those inventions that are, in fact, induced by the patent system, then a net benefit would accrue to society’.65 Whilst in one sense this is unobjectionable as a general aim of the system, it is far from rigorous as a justification—especially when the reality of the patenting process is considered. The simple truth is that the system is not that particular; if it is presented with a creation that fulfils the definition of an invention, is new, non-obvious and capable of industrial application, then a patent will be forthcoming whether that creation was induced, serendipitous, or whatever. Moreover, the theory takes no account of the benefit or hindrance that the patent might give to future generations of inventions. It is to this topic that we now divert our attention.

60 See Lemley, ‘Reconceiving Patents in the Age of Venture Capital’ (2000) 4 Journal of Small and Emerging Business Law 137, at 139. 61 That he ‘could hardly introduce the slightest improvement in [his own] machinery without being stopped by a patent’. See Report and Minutes of Evidence taken before the Select Committee of the House of Lords Appointed to Consider of the Bill, intituled, ‘An Act to further amend the Law touching Letters Patent for Inventions’ and also of the Bill, intituled, ‘An Act for the further Amendment of the Law touching Letters Patent for Inventions’ and to report thereon to the House, (Report of the 1851 Select Committee on Patents) House of Commons Sessional Papers, Vol XVIII, 1851 (Command Paper No 486), at 248. 62 See further, the discussion in Jaffe & Lerner, ‘The Dark Side of Patents’ in Innovation and its Discontents (Princeton, Princeton University Press, 2004), ch 2; also Heller & Eisenberg, ‘Can Patents Deter Innovation? The Anticommons in Biomedical Research’ (1998) 280 Science 698. 63 Ko,‘An Economic Analysis of Biotechnology Patent Protection’ (1992) 102 Yale Law Journal 777 at 792. 64 See, Ko, ibid, at n 105 in his text. Also, for an interesting aside on the process of creative thought see Koestler, The Act of Creation, (London, Hutchinson, 1976; 2nd (Danube) Ed). 65 Oddi,‘Holy Grail’, n 47, above, at 281.

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A Brief Aside—The Problem of Cumulative Research Most early studies of the patent system looked at innovations in isolation, building on Schumpeter’s conclusion that big businesses and monopolies are conducive to their production. These embryonic attempts at modelling and understanding the economics of the patent system were necessarily based on the more traditional patent theories, and failed to take into account the cross-fertilisation, or spillover, that occurs within the system itself. Scotchmer elegantly summarises the complexity of the situation by observing that the real challenge is not only to ‘reward early innovators fully for the technological foundation they provide to later innovators’, but also to ‘reward later innovators adequately for their improvements and new products as well’.66 Studies conducted by Arrow67 and Usher68 in the early 1960s were among the first to demonstrate that the incentive to innovate deteriorates as the level of knowledge spillover increases. However, these early studies tended to see innovation as a linear process, building one block upon the next. The reality is far more complex. It is clear that the interaction between first- and second-generation inventions will depend on the scope of the primary patent, often called the upstream right.69 If the patent on the original technology is narrow then this will allow many improvements to be patented and marketed without infringing the primary right.70 Where the protection is broad, licenses will need to be obtained in order for secondgeneration creators to be able to do the same. As Scotchmer states, this may tempt the reader to conclude that broad protection encourages ‘firms to find fundamental technologies, but discourages them to from seeking out second-generation applications and derivative products’.71 However, this conclusion is only partially valid, as the correct incentive may only be provided if the primary patent holder is able to profit from the second-generation technology in a more direct way. Strong patent protection provides strong incentive to invest in R&D that is likely to result in a patent. However, it also leads to potentially large social costs, such as the inefficiencies associated with monopoly profits (deadweight losses).72 Further, it is possible that the incentive created by strong protection may be too great, attracting firms to the race for a patent and causing them to over-invest in research 66 Scotchmer, ‘Standing of the Shoulders of Giants: Cumulative Research and Patent Law’ (1991) 5 Journal of Economic Perspectives 29 (Scotchmer,‘Standing on the Shoulders of Giants’) at 30. 67 Arrow,‘Economic Welfare and the Allocation of Resources for Invention’, in Nelson (ed), The Rate of Inventive Activity: Economic and Social Factors (Princeton, Princeton University Press, 1962). 68 Usher,‘The Welfare Effects of Invention’ (1964) 31 Economica 279. 69 See, eg, Rai, ‘Fostering Cumulative Innovation in the Biopharmaceutical Industry: The Role of Patents and Antitrust’ (2001) 16 Berkeley Technology Law Journal 813. 70 For an example of a system traditionally seen as providing such rights see ch 8, below. 71 Scotchmer,‘Standing on the Shoulders of Giants’, n 66, above, at 30. 72 See the section on ‘Profit’, above.

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in that area.73 The fact that only one of the competing firms can be awarded a patent on the invention means that the funds that the others diverted to the race are effectively squandered. This position is further complicated by the fact that the social value of the primary invention will also include the boost that it gives to subsequent innovators. The signalling potential of the patent is something that is close to the core of Grady and Alexander’s rent-dissipation theory, discussed below.74 However, for now it is sufficient to note that the extra social value added to the primary innovation by its signalling potential can fall into one of at least three broad groups.75 The first occurs where the second generation is reliant upon the first for its existence—ie the second generation could not have been developed without the first. Here the primary innovation’s value to society includes the incremental increase in social surplus added by the second-generation innovation. The second category encompasses situations in which the first innovation reduces the costs associated with the second innovation, i.e. the costs of production or of achieving the second-generation. This cost reduction is an additional benefit of the primary innovation, and is added to its social surplus. The final category includes the added-value of obtaining the second-generation more rapidly if the primary innovation accelerates the process of its creation. The additional benefits created by one generation of technology in respect of the next are often overlooked in the patent literature. It is easy to see why this is the case when the potential permutations and leads offered by any given piece of ‘new’ technology are considered.76 However, this oversight provides one of the main criticisms of the existing patent theories. Put plainly: ‘There are no simple conclusions to draw about the optimal breadth of patents’.77 Prior agreements and licences of technology make the situation even more complicated as they enable circumvention of the potential blocking effects of earlier rights.78 Furthermore, the breadth of any given bundle of patent rights must be dictated by the observable aspects of the patented technology (ie the external view of the patent), and not ‘prior expectations regarding technological outcomes and costs of research’.79 Because the efficacy, or attractiveness, of incentives offered necessarily involves a consideration of the 73 This is especially pertinent if the real cost of achieving the invention is far less than the market value of the patent. See Scotchmer, ‘Standing on the Shoulders of Giants’, n 66, above, at 31; see also Loury, ‘Market Structure and Innovation’(1979) 93 Quarterly Journal of Economics 395. In addition, see the criticisms of the prospect theory set out in text accompanying n 101 et seq, below. 74 See text accompanying n 157 et seq below. 75 These three groups are given in Scotchmer,‘Standing on the Shoulders of Giants’, n 66, above, at 31. The remainder of the paragraph is extensively based on her work. 76 This said, developments in patent mapping software that allows detailed investigation of the landscape in which a patent operates and has influence are beginning to have an impact on the manner in which the patent’s zone of influence is understood. Although it should be noted that interpreting these patent maps meaningfully and relating them to the economic breadth of individual patents is still an impossible task. 77 Scotchmer,‘Standing on the Shoulders of Giants’, n 66, above, at 37. 78 On the issue of blocking patents see, eg, Merges, ‘Intellectual Property Rights and Bargaining Breakdown: The Case of Blocking Patents’ (1994) 62 Tennessee Law Review 75. Also see Rai, n 69, above. 79 Scotchmer,‘Standing on the Shoulders of Giants’, n 66, above, at 38.

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inside of the grant (ie a cost/benefit analysis of the value of the invention compared to the cost of the research and the probability of success), the effectiveness of the patent system in protecting incentives is greatly restricted. One further consequence of the cumulative nature of innovation is that the scope of the patent right will also effectively determine its duration. Schumpeter’s process of ‘creative destruction’, whereby competition comes from new and improved inventions, means that a broader patent will have a longer effective life, as the period of time before it is surpassed by competing technology is extended. It should be noted that this will only be the case where the second-generation product is in competition for the same subset of the consuming public as the first. If the situation is otherwise, for example if the new technology serves a different market, then the life may be independent of breadth.80 Therefore, it is clear to see that ‘patent policy is a very blunt instrument trying to solve a very delicate problem’.81 Up to this point we have been considering the patent grant in terms of the single innovation without really focussing on the impact that it will have on the downstream incentives to innovate. This competition between the static and dynamic effects of the patent system is something that has troubled many, but has been glossed over by most. For example, as recently as the early 1990s, both Klemperer82 and Gilbert and Shapiro83 created economic models for optimal patent scope that did not consider the problems of cumulative innovation. This is somewhat surprising, since in 1977 a theory was first advanced that looked at the benefits that could accrue from granting broad primary patents to co-ordinate downstream research. It is to this theory that we now direct our attention.

The Prospect Theory The prospect theory is advanced by Edmund Kitch in his 1977 article ‘The Nature and Function of the Patent System’.84 He argues that the traditional analyses offer an incomplete view, as they do not take account of the fact that the system increases the output from resources used for technological innovation. In other words, it promotes efficiency by enabling the patent holder to co-ordinate further R&D efforts by creating a prospect, ‘a particular opportunity to develop a known technological possibility’.85 As Duffy notes, ‘Kitch’s justification for the patent system was therefore forward looking: The function of the patent system is to encourage investment 80

Although the value of the patent may be eroded by non-infringing competition. Scotchmer,‘Standing on the Shoulders of Giants’, n 66, above, at 40. Klemperer, ‘How Broad Should the Scope of Patent Protection be?’ (1990) 21 RAND Journal of Economics 113. 83 Gilbert & Shapiro,‘Optimal Patent Length and Breadth’ (1990) 21 RAND Journal of Economics 106. 84 Kitch,‘Nature and Function’, n 59, above. 85 Ibid, at 266. 81 82

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in a technological prospect after the property right has been granted’.86 It therefore promotes efficiency in the development of each prospect as it publicly awards an exclusive right in that prospect shortly after its discovery, thus placing it firmly, and clearly, under the control of one entity, which can manage all subsequent development. This enables the holder to co-ordinate further investment in the enhancement and exploitation of the prospect and thus ensures that duplicative investment is avoided.87 As such, Kitch likens it to the US mineral claims system. Kitch takes three features of the patent system and uses them as illustrations to justify the importance of the prospect function in its US embodiment; all are, to a greater or lesser extent, also applicable to the British system. The first feature that he highlights is that the scope that is awarded to patent claims is ‘a scope that reaches well beyond what the reward function would require,’ often exceeding the contribution of the inventor.88 The second feature concerns the fact that the system encourages early filing and hence early claiming (whether or not a valuable ‘reward’ has been found), thus emphasising the prospective nature of the grant. Kitch’s third observation centres on the fact that there are many patents that have been granted for inventions long before their commercial application became possible, making recovery of any ‘reward’ difficult as the patent may expire before the invention is worth much. He notes that all three points have played an ‘important role in the antipatent arguments so recurrent in the economics literature, for each is troublesome under the reward theory’.89 In developing his theory, Kitch questions the applicability of the traditional downward sloping demand curve to the patented product, suggesting that, as ‘[m]any patents face competition from other processes or products’, the slope will vary from case to case.90 However, the implication is clearly that the demand curve should be substantially horizontal; a point that is reiterated in later work.91 Kitch examines the benefits, or public welfare effects, of a system that offers both trade secrecy and patent protection, and compares it to a system that only protects secrets.92 He notes seven distinct advantages that the former holds over this alternative. These include: increased efficiency with which investment in innovation can be managed; a lowering of the costs of contracting with other firms for complementary information and resources;93 reduction of the amount of duplicative research; 86 Duffy,‘Rethinking the Prospect Theory of Patents’ (2004) 71 University of Chicago Law Review 439, at 440. 87 Kitch,‘Nature and Function’, n 59, above, at 276. 88 Ibid, at 267. It will be recalled that the traditional ‘reward’ theory seeks to reward inventive effort and therefore does not justify patent protection for serendipitous or accidental inventions. See further, text accompanying n 53 et seq in ch 3, above. 89 Kitch,‘Nature and Function’, n 59, above, at 267-8. 90 Ibid, at 274. 91 See Kitch,‘Patents: Monopolies or Property Rights?’ (1986) 8 Research in Law & Economics 31. 92 Kitch reasonably assumes that a system without trade secrecy as an alternative to patent protection is an impossibility ‘absent the most draconian and costly measures’. Ibid, at 275. For a discussion of the business decisions that are involved in choosing between trade secrecy and patent protection see Beckerman-Rodau, ‘The Choice Between Patent Protection and Trade Secret Protection: A Legal and Business Decision’ (2002) 84 JPTOS 371. 93 As no obligation of secrecy needs to be imposed the discussions can be conducted in the open.

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reduction of the cost of maintaining control over technology; and provision of returns based on the economic value of the technology rather than speculation on its wealth distribution effects.94 In making his comparison, Kitch notes that the arguments advanced could be ‘offered in support of exclusive ownership of anything of value’, including land.95 In essence, therefore, he draws analogy between the intangible patent property and the tangible sphere with which we are all familiar. He attempts to dissolve the intellectual barriers between the two, and insists that the patent right could be treated as any other property right. If this is the case, Kitch advocates creating such rights along the ‘frontier of technology’, leaving an older core that is free for all to use, concluding that this is a rational distinction since the advantages of the prospect function are confined to the areas where movement is taking place. When discussing the boundaries of this ‘frontier’, he rejects the non-obviousness standard as a criterion for patentability as ‘not particularly helpful’, instead suggesting that the test of invention should be one of substantial novelty. The question that should be asked when deciding if a patent should be granted is therefore whether this is ‘information whose significance should be further investigated? In the case of any substantially new technological information the answer to this question is yes because new information could not have been (by definition) previously investigated’.96 Kitch places particular emphasis on the information and notice functions of the patent grant and stresses that in the absence of a system that promotes publication and dissemination of knowledge the same mistakes and successes will be duplicated and this will lead to independent creation and attempts to improve the same inventions, which will waste valuable resources. At the core of Kitch’s theory is therefore the notion that the public good will be best served by imposing organisational control at an early stage in the innovative process. His basis for this conclusion is a variation on Barzel’s argument that innovation represents a classic example of a common resource, as the right to innovate is a right shared by all, and that competition for this resource is wasteful.97 However, whereas Barzel proposed a ‘conceptual way to overcome this kind of misallocation . . . by granting (or by auctioning) monopoly rights on potential innovations before resources are committed to the innovating activity’,98 Kitch saw the patent system’s award of publicly recorded ownership as being socially superior.99 The grant of early patent rights, he claims, allows their owner to ‘coordinate the search for technological and market enhancement of the patent’s value’ which therefore ‘increases the efficiency with which investment in innovation can be managed’.100 The prospect theory has, however, attracted widespread criticism and, despite having been accepted as ‘a standard part of the law-and-economics literature on 94 95 96 97 98 99 100

For a complete list of Kitch’s benefits see Kitch,‘Nature and Function’, n 59, above, at 275–80. Ibid, at 275. Ibid, at 284. See Barzel,‘Optimal Timing of Innovations’ (1968) 50 Review of Economics & Statistics 348. Ibid, at 352. Kitch,‘Nature and Function’, n 59, above, at 266. Ibid, at 276.

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patent law’,101 remains a contentious subject.102 In a damning article, McFetridge and Smith state that, amongst other things, Kitch does not ‘understand the implications of allowing basic knowledge to remain a common property right’.103 In particular, any efficiency gains that are made as a consequence of co-ordination through the prospect are ‘dissipated in the rivalry for the patent itself ’.104 All that the system does is to move competition one stage back from the commercialisation of the invention, ‘since there is no pre-patent right to a patent’.105 Indeed, mention of the California Gold Rush is notably absent from Kitch’s discussion of the prospect theory, an example, if ever there was one, of a wasteful race for a prospect.106 McFetridge and Smith therefore conclude that the prospect theory is ‘not a useful framework within which to assess the merits of the patent system’.107 Duffy, in his restatement of the prospect theory, argues that whilst McFetridge and Smith are correct in noting that Kitch’s model of increasing the efficiency of post-patent investments in developing the technology merely shifts the rentdissipating race back to the pre-patent stage, they ‘overlooked the value of the prospect features’.108 The argument is simple: by shifting the race to an earlier point in time, the prospect theory actually channels rivalry into a quest for earlier patenting and, given the finite length of the grant, into earlier dedication to the public, as the patent will expire at an earlier point in the technology’s lifecycle.109 However, whilst potentially answering this particular criticism of the prospect theory, there are others that are not so easily overcome. A significant criticism of the theory, also noted by Duffy in his reappraisal, is the fact that the grant of a patent does not actually provide a right to exclude all others from rent seeking within the scope of the claims. In other words, whilst the patent provides rights to exclude others from exploiting the fruits of their labour within the claimed area, it does not similarly prevent them from developing the claim themselves.110 The possibility of being granted a patent within the first patentee’s prospect therefore remains; a possibility made all the more plausible by the experimental use defence contained within all major economies’ patents Acts.111 This is a significant weakness in a theory that is predicated upon the organisational benefits that a single party’s control of an area of technology can bring. Therefore, as Duffy 101

Duffy, n 86, above, at 441. Oddi, for example, describes it as ‘highly controversial’, Oddi,‘Holy Grail’, n 47, above, at 269. 103 McFetridge & Smith, ‘Patents, Prospects, and Economic Surplus: A Comment’ (1980) 23 Journal of Law & Economics 197 at 202. 104 Ibid. 105 Ko, n 63, above, at 801. 106 See Grady & Alexander, n 37, above, at 314. 107 McFetridge & Smith, n 103, above, at 203. 108 Duffy, n 86, above, at 443. 109 Ibid, at 445 and 464–75. 110 Ibid, at 455–8. 111 In the UK, this exception is provided by s60(5)(b) Patents Act 1977 (PA 1977). For a discussion of this provision see Cook, ‘Responding to Concerns about the Scope of the Defence from Patent Infringement for Acts Done for Experimental Purposes Relating to the Subject Matter of the Invention’ [2006] IPQ 193. On the corresponding provision in the US, see Eisenberg, ‘Patents and the Progress of Science: Exclusive Rights and Experimental Use’ (1989) 56 University of Chicago Law Review 1017. 102

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concludes, ‘Kitch’s article can be faulted for failing to explain precisely how a prospect patent holder can control and coordinate further development’ given this defect.112 In addition, Kitch’s assumption of a horizontal demand curve is not one that finds much support amongst commentators; Scherer, in particular, expresses extreme discomfort with the notion.113 Merges and Nelson, in advancing their own theory of patent protection,114 dismiss the prospect theory and argue that elimination of rivalry, a goal so close to the core of Kitch’s propositions, leads to inactivity and complacency as it ‘diminishes the threatened costs of inaction’.115 They state that practice shows that co-ordinated development is not better than rivalrous, and note that ‘there are many instances when a firm that thought it had control over a broad technology rested on its laurels until jogged into action by an outside threat’.116 Scherer also takes issue with Kitch’s view of the ‘inventing around’ problem that is created by the development of broad prospects, stating that it ‘seems little influenced by any concern for reality’.117 Furthermore, given that it is not possible to know for sure ‘what possible inventions are in the technological pool’, as multifarious parties are likely to view the prospects differently, Merges and Nelson argue that Kitch’s attempts to model in order to prevent wasteful overexploitation of the inventive prospect are misplaced. The real danger is not, they insist, from overexploitation, but rather from underutilisation of the prospect post-grant.118 This last criticism is especially pertinent when the implications for patent scope that flow from the prospect theory are considered.

Implications for Claim Scope In essence, the prospect theory is concerned with achieving efficiency in coordination of research and development by the elimination of inefficient competition. Central to Kitch’s proposal, therefore, is the idea that a wide patent (or prospect) should be granted initially that would extend to protect subsequent improvements, or refinements, of the invention. This function is consistent with the criticisms levelled above concerning the patent’s inability to provide the sole right to exclude from the patented prospect, as it would still confer an exclusive right that could be used to protect against the commercial exploitation of embodiments falling within the scope of the claims. The grant of such a right would enable the patent holder to control all versions of the invention until it expires, and would therefore be of great co-ordinating value to its owner. This broad scope would be available for all inventions that passed the test of ‘substantial novelty’. Such a wide 112

Duffy, n 86, above, at 458. Scherer,‘Comment on Edmund Kitch’ (1986) 8 Research in Law and Economics 51. 114 Discussed in more detail below. See text accompanying n 129 et seq below. 115 Merges & Nelson, ‘On the Complex Economics of Patent Scope’ (1990) 90 Colombia Law Review 839 at 872. 116 Ibid. 117 Scherer, Market Structure, n 48, above, at 449. 118 Merges & Nelson, n 115, above, at 873. 113

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patent right would be especially important for those inventions that could be defined as ‘revolutionary’, and therefore of uncertain cost to benefit ratio according to Scherer’s topology.119 For such creations the co-ordinating benefit of a broad scope, enabling control of improvements, would be great as it would offset a degree of uncertainty surrounding the accrual of the invention’s benefits. Ko claims that the prospect theory finds a certain degree of support in US patent law through the application of the doctrine of equivalents, although co-ordination of future research has never been explicitly stated as one of the justifications of the doctrine.120 As noted, Kitch’s model would seem to support increases in scope being awarded to ‘pioneer’ inventions over ‘mere improvements,’121 the degree of co-ordination possible for major advances being significantly greater than that applicable for incremental ones. However, this conclusion seemingly exposes inconsistencies in Kitch’s internal reasoning and raises questions concerning its application to decided cases. As Grady and Alexander state: under the prospect theory the scope of the rights given to each inventor of a ‘substantially new’ invention should be much the same, ‘regardless of how many other inventors might be tempted to develop and exploit improvements’.122 The prospect granted would be a right to exploit the inventive area around the invention, and with Kitch’s test of ‘substantial novelty’ rather than obviousness governing the grant of the patent, ‘mere improvements’ would not, in general, be patentable. Moreover, Beck observes that the Patent Office and the courts have usually avoided granting wide prospects.123 Furthermore, specific problems with the application of the prospect theory arise in areas such as biotechnology where unpredictability confounds its central notion of co-ordination.124 The uncertain nature of some experiments carried out in the field renders predictability, and therefore co-ordination gains, most vague.125 If gains are low then the impediments to creativity that a broad prospect entails will probably outweigh them. This may provide one possible explanation of the fact that small, independent, firms and not corporate monsters, can be seen to drive the biotech industry, in contrast to other areas such as traditional pharmaceutical research where size is an important factor.126 If, as another possibility for biotech 119

See text accompanying n 49, above. Ko, n 63, above, at 802. The doctrine of equivalents is discussed in ch 6, below. 121 See, eg, the wide approaches formulated by the court in Westinghouse v Boyden Power Brake Co, 170 US 537 (1898, Supreme Ct) and Ludlum Steel Co v Terry, 37 F.2d 153 (1928, Distict Court of New York) when compared to the narrow approach in Kinzenbaw v Deere & Co, 741 F.2d 383 (1984, CAFC). Also Ko, n 63, above, at 802. 122 Grady & Alexander, n 37, above, at 315. This appears to be in conflict with Ko’s conclusion that in the US broader protection should be provided to the extent that co-ordination will be gained. 123 Beck, ‘The Prospect Theory of The Patent System and Unproductive Competition’ (1983) 5 Research in Law and Economics 193. 124 Ko, n 63, above, at 803. 125 Although it should be noted that as the subject matures, and the processes it deals with become better understood, the predictability of outcome will become much more certain and the prospect theory may be better applied. 126 See Schumpeter, Capitalism, Socialism and Democracy, n 39, above, for the conclusion that large firms and monopolies are conducive to innovation. See also, Taylor & Silberston, n 56, above, who conclude that of all types of industry, pharmaceuticals are most dependent on patent protection. 120

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patents, direct co-ordination is rejected in preference of wide licensing, so that others develop the patented technology, then the prospect justification for the grant is removed. This, as Merges and Nelson state, would mean that ‘subsequent development of prospects would proceed in spite of, or at least in indifference to, the broad patent’,127 which cannot have been within Kitch’s contemplation. Therefore, clearly the prospect theory has significant problems matching the reality of the system, even in the US. This problem is compounded if the system that it is applied to is that extant in the UK where there is no doctrine of equivalents, only purposive construction, which, at its most liberal, gives only narrow supra-literal protection.128 Thus, having concluded that Kitch’s prospect theory is at best limited and at worst fundamentally flawed, we now turn our attention to a third post-classical model of patent protection—Merges and Nelson’s race-to-invent theory.

The Race-to-Invent Theory Merges and Nelson first advanced the race-to-invent theory to describe the patent system in their 1990 Colombia Law Review article ‘On the Complex Economics of Patent Scope’.129 Like Kitch, they lament the relative dearth of economic writing on the issue of patent scope when compared to other, more settled, topics such as duration of grant and compulsory licensing, and then set down the criteria for their model. The basic premise of their argument is the principle that ‘when it comes to invention and innovation, faster is better’.130 As noted above, one of the side-effects of Kitch’s theory (seemingly unappreciated by Kitch himself) is that the race for a prospect shifts the rent seeking behaviour of competitors backwards in time, therefore spurring on early introduction of innovations. However, it is clear that Kitch saw any race for rewards as being socially wasteful, this being the raison d’être of his coordinating function. Merges and Nelson, on the other hand, accept that competition will often cause waste, but, unlike Kitch,‘have little faith in the imagination and willingness of a “prospect” holder to develop that prospect as energetically or creatively as she would when engaged in competition’.131 In addition, as the reality of human organisational thinking and behaviour means that an entity’s ability to coordinate and orchestrate development is less than perfect, the prospect theory’s grip with reality is also questioned. Therefore, they conclude: ‘we are much better off with considerable rivalry in invention than too little’.132 127

Merges & Nelson, n 115, above, at 907. The revision of the European Patent Convention, agreed at the Diplomatic Conference of Nov 2000, which inserts an equivalents clause into the Protocol on the Interpretation of Art 69 EPC, will not, if Lord Hoffmann is correct in his judgment in Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667, have any effect on the prevailing stance on interpretation of patents in the UK. See the discussion of Kirin-Amgen in text accompanying n 35–131 in ch 10, below. 129 Merges & Nelson, n 115, above. 130 Ibid, at 878. 131 Ibid, at 877. 132 Ibid. 128

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The link between the speed of innovation and their overall number is first explored in terms of simple economic reasoning.‘For the same reasons people prefer to have money in hand now, as compared to the same amount (and more, depending on the interest rate) later, so society prefers to have improvements now, rather than later’.133 And second, by searching for consistency with the goals and purposes of patent law itself. Thus, the preference for early reduction to practice, the constant threat of novelty-destroying disclosures, and the priority of the first-to-file system, all favour early invention.134 Having satisfied themselves that the race-toinvent theory is consistent with both the economics and policy of the system, Merges and Nelson then use historical case studies to show that technological development has been retarded in industries where broad patent protection was granted relative to those in which there was significant developmental rivalry.135

Criticisms and Implications for Claim Scope The degree of impedance to the progress of technology, based on historical, economic and policy considerations and case studies, enables Merges and Nelson to define three different areas of invention and to tailor application of the general theory to each. The categories are dynamic, so that a particular field of invention may fall under a different classification now than it did in the past, or may in the future when the field matures.‘As a result, the issues involved in setting appropriate patent scope change as an industry advances’.136 The three categories are also startlingly broad; indeed, it might be argued that they are more akin to scientific and technological ‘concepts’ than industries per se. Merges and Nelson choose cumulative technologies, the chemical industries, and the science-based industries as the basis for their comparisons and critique.137 In all, the conclusions are startlingly similar: ‘multiple and competitive sources of invention are socially preferable to a structure where there is only one or a few sources’.138 Therefore the scope of any patents should be narrow in each area in order to preserve competition, and to place the 133

Merges & Nelson, n 115, above, at 878. Merges & Nelson actually use the US first-to-invent theory, however, the first-to-file system prevalent in most of the rest of the world also stands up as a good example: The reason being that the application, in the UK eg, must, according to s14(3) PA 1977, ‘disclose the invention in a manner that is clear enough and complete enough for the invention to be performed by a person skilled in the art’. This can clearly not be done if the invention has not been made. Therefore the requirement of priority by filing indirectly encourages early invention. The US first-to-invent system is, clearly, more direct. Here the person able to prove that they created the particular invention first is prima facie entitled to the grant, regardless of whether they were the first to file an application for that invention at the Patent Office. This system clearly encourages early invention. 135 Merges & Nelson, n 115, above, at 880-908, especially 884 et seq. 136 Ibid, at 908. 137 Industries dependent on scientific breakthroughs rather than incremental improvement, and which are, therefore, capable of great advance in a relatively short space of time. The biotechnology and superconductor industries are examples of this type of business. See Merges & Nelson, n 115, above, at 907-8. 138 Ibid, at 908. 134

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‘inventors of significant improvements . . . in a strong bargaining position vis-à-vis the inventors of basic inventions’.139 This conclusion is the antithesis of Kitch’s prospect function, where co-ordination is of paramount importance. Merges and Nelson’s justification for awarding only narrow scope, that ‘every potential inventor is also a potential infringer’,140 is one that was repeated many times during the interviews conducted in connection with the empirical study in chapter four, above. It is also a comment that conjures images of anti-patent sentiment; patents to be confined and controlled, their scope to be restricted lest the abuses of the past recur. In anticipation of this criticism, the authors of the race-to-invent theory expressly disclaim this conclusion. Relying on evidence such as that provided by Taylor and Silberston’s classic study,141 where it was shown that the patent system is regarded as essential by firms in only a small number of industries, they state that a reduction in the scope of the patentee’s monopoly will not severely undercut the incentive to invent. Indeed, they argue that the evidence suggests the opposite; that it is the broad patent, that carries with it the most chances of being enmeshed in litigation, that will diminish ‘incentives for others to stay in the invention game’.142 The modifications to scope that they suggest would only apply ‘to the broader claims of a small number of patents, primarily those on pioneering breakthroughs’.143 Put in these terms, it is clear that a model that recommends the narrowing of the scope of pioneer patents is a theory that is aimed at procuring incremental progress over revolution, the contraposition of both the patentinduced theory and Kitch’s prospects. Indeed, considering the potential benefits available to incremental innovators through non-patent measures, such as leadtime, market recognition, and learning curve advantages, not to mention the short lifetime of most incremental inventions, it has been questioned whether a patent system is needed at all under the race-to-invent theory.144 One of the main problems associated with a system of narrow grants is that it may produce excess rent dissipation in the competition to improve upon original, basic patents, especially those that satisfy a tangible social desire.145 This position is magnified in the case of pioneer breakthroughs where Merges and Nelson’s theory can be seen simply to displace the rent seeking behaviour already associated with the patent system. In contrast to Kitch’s theory, the race to win the first patent will be reduced, as the narrow reward will not generate much in terms of rent seeking 139

Oddi,‘Holy Grail’, n 47, above, at 283. Merges & Nelson, n 115, above, at 916. Taylor & Silberston, n 56, above. 142 Merges & Nelson, n 115, above, at 916. 143 Ibid. 144 See Oddi,‘Holy Grail’, n 47, above, at 283. 145 Consideration of the Japanese patent system reveals illustration of this point. Eg, the US General Accounting Office, Intellectual Property Rights: US Companies’ Patent Experiences in Japan, GAO/ GGD-93-126 (Jul 1993), states, at 18, that whenever a patent of value was published, competitors of the patentee will file ‘excessive numbers’ of patents claiming minor variations, a practice known as ‘patent flooding’. See further, ch 8, below. 140 141

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behaviour. However, if we consider Scherer’s topology of patents146 we can see that whilst pioneer inventions are classified as having uncertain cost to benefit ratios, the signalling function of the patent will render subsequent development more predictable. The signalling function of the patent arises because, regardless of which of the justifications of the system we are labouring under, the effect of applying for a grant is standardised. At some point, usually 18 months after application,147 the invention is published, and therefore laid open to public inspection. It is at this time that the patent first teaches the invention to the patentee’s competitors. Therefore, whilst the possibility of the initial gold rush to win the patent is reduced to an acceptable minimum by Merges and Nelson’s theory, its signalling effect is effectively unchanged from Kitch’s prospect grant. Thus, the race for the second generation invention does not face the same intellectual barrier as the first, pioneering, innovation, as some of the path has already been exposed. Whereas Kitch countered this effect by providing the initial innovator with a broad controlling grant, Merges and Nelson’s theory of narrow protection ignores it completely. However, it is this latter race, created by revelation of a seam of inventive potential, to exploit an area of known interest that is therefore the real gold rush. Moreover, and perhaps more importantly, a system that discriminates against pioneer inventions and promotes incremental advancement necessarily promotes secrecy, and thus more rent dissipation through duplicative research.148 It is therefore the interface between trade secrets and the patent system that provides much of the criticism of the race-to-invent theory. As Beckerman-Rodau notes, the decision to patent or keep secret is one that is pertinent to all technology, and is dependent upon a number of factors.149 One of which is the scope that the eventual patent right will enjoy if granted. Scope plays an important role in the decision to patent due, in part, to the educative nature of the specification150. If the patent is very narrow then competitors only need make insubstantial changes to evade its area of protection. In such cases secrecy may be the better option.151 Therefore, regardless of whether the patent system is seen as essential in any given industry, the use that is made of it will still depend on the projected profitability of the protection.152 If the system is not used, then the ‘faster is better’ justification offered by Merges and Nelson is, in fact, redundant. 146

See text accompanying n 49 et seq above. See s16 PA 1977 and r27 of the Patents Rules 1995 (as amended) in the UK, also Art 93 EPC and rr48–50 EPC Rules. In the US see 35 USC §122(b) (2005). 148 It is interesting to note that Japan did not feel the need to have any form of trade secrecy law until 1990, as ‘No employee would think of taking his house’s secrets to another place. Indeed defectors would be treated with suspicion by any subsequent employer, having proven that they could not be trusted’. See Rosen & Usui,‘The Social Structure of Japanese Intellectual Property Law’ (1994) 13 UCLA Pacific Basin Law Journal 32 at 53. 149 See Beckerman-Rodau, n 92, above. 150 As noted in ch 3, above, the quid pro quo of the patent grant is the requirement that it teaches the invention to one skilled in the art. See also s14(3) PA 1977. 151 See Beckerman-Rodau, n 92, above, at 364–96 for further discussion of this point. 152 This statement holds even if the patent is desired for reasons suggested in ch 4, above, that are independent of scope, although then, obviously, the breadth of the grant will be irrelevant. It is clear that any rational justification of the patent system cannot be concerned with patents sought for patents’ sake. 147

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Second, as Kitch notes, a mistake common throughout the economic literature on innovation is that patents are considered in isolation.153 This produces a distorted picture of events because it is very rare, if ever, that the patent is the only piece of intellectual property that attaches to, or is associated with, a particular invention. Therefore, economic factors connected with other IP rights (trade marks in the main) may provide non-patent incentives to innovate in certain areas. When combined with a narrow interpretation of claims, these non-patent incentives may mean that for inventions of low lifespan the system becomes an expensive and unreliable alternative to secrecy once again.154 However, the narrowness of the grant, and consequent incremental nature of technological advance, might eventually make the possibility of independent creation more of a risk than would otherwise be the case. This would therefore render the patent system, which protects against such competitive action, more attractive than secrecy. If this occurred, and patent clusters sprang forth to surround any given innovation, this could then lead to a position in which the technological field would become mired with narrow competing interests. By replacing wasteful broad grants that dissuade others from innovating with clusters of small ones that effectively do the same by weight of numbers, Merges and Nelson’s race-to-invent theory would, theoretically, democratise the patent system. However, the result would be a freefor-all that could seriously harm its operation. Taken by itself, promoting clusters of narrow patents would magnify the defects inherent in the current system, in that the only entities that could gain blanket coverage would be those large enterprises that could afford multiple point protection; a cluster of their own. Whilst the Japanese experience, a system typified by narrow grants, demonstrates that this problem could be lessened, if not avoided, by anti-competitive regulation of the market, cross-licensing and/or other technology transfer practices,155 the problem of patent numbers becomes more important. Therefore single patents yield to clusters, and clusters yield to portfolios, and suddenly the value of any individual grant is marginalised. This, again, erodes Merges and Nelson’s own justifications for their theory in that, whilst technically providing a competitive environment for improvement, narrow patents, when clustered, are just as effective at controlling a sector as broad. The final point that will be made on the issue of narrow patents and secrecy is purely financial. Patents are neither cheap to obtain, nor to enforce, and the rights that are granted are far from certain. Depending on the nature of the invention, the number of people that need to have access to it, and the risk of reverse engineering, 153 Kitch,‘Elementary and Persistent Errors in the Economic Analysis of Intellectual Property’ (2000) 53 Vanderbilt Law Review 1727 (Kitch,‘Persistent Errors’) at 1738 et seq. 154 Brand loyalty, and the problems associated with a new product breaking into any particular market may be the decisive factor in any such decisions. Therefore well-known trade marks have a strong advantage in the marketplace due to the powerful associations that the consuming public has with them. See also Beckerman-Rodau, n 92, above, at 388–91 and 399–400; additionally 402, quoting from Mishawaka Rubber & Woolen Mfg, Co v SS Kresge Co, 316 US 203 (1942, Supreme Ct) at 205; that ‘A trademark is a merchandising short-cut’. 155 See ch 8, below, for more discussion of the Japanese patent system.

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the cost of secrecy can be high or low. If there is perceived to be a benefit to patenting the invention, ie if the costs of the process are outweighed by the benefits that flow from the grant, then it is more likely to be patented than not. The larger the benefit, the more likely public disclosure is to follow. The narrower the interpretation of the grant, the less the potential returns and the further the scales tip away from a decision to patent. The race-to-invent theory’s insistence on narrow protection is therefore both its greatest strength, as it allows deviation from the classical reward and incentive based theories (not to mention Kitch’s radical approach), and its greatest weakness. To rely on justification of the system based on a model that does not actually identify with the majority of decided cases, is also problematic. However, the fundamental problem with Merges and Nelson’s theory is their failure to note that narrow grants can be just as stifling in numbers as can broad protection. Furthermore, the cry that faster is better is all well and good if it can be demonstrated that what one gets faster is what one wants, or needs. The race-to-invent theory fails to take into account the simple fact that a number of innovative activities with uncertain cost to benefit ratios, that may include pharmaceutical inventions as well as Scherer’s pioneering breakthroughs, rely on large rewards to compensate for the large outlays and gambles that are responsible for their creation. For, just as Kitch notes that the patent system cannot be viewed in isolation from other intellectual property rights when considering incentives to innovate,156 the process of investing in R&D cannot be considered on an innovation by innovation basis, as the bill for failures has to be picked up somewhere. Narrow protection, whilst perhaps individually justifiable, does not necessarily work on a wider economic and social basis. Thus, having noted some of the disadvantages of narrow patents arising from the race-to-invent theory, we now turn our attention to the fourth of the post-classical models of the patent system, Grady and Alexander’s Rent Dissipation Theory.

The Rent Dissipation Theory The rent dissipation theory is grounded in the notion that society benefits from innovations, but that this benefit can be dissipated if, for example, there is a wasteful duplication of effort in the race for a patent. It notes that the ‘difference between what society would pay for an innovation and its actual cost of development—the rent—is awarded to the inventor in the form of a monopoly right’.157 However, the current system is defective because: ‘if multiple inventors expend resources in competition for the patent monopoly, the benefit to society of having the invention will be dissipated by the cost of numerous, redundant, development efforts’.158 The 156 157 158

See text accompanying n 153–4, above. Grady & Alexander, n 37, above, at 308. Ibid.

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theory is therefore born out of dissatisfaction with the traditional view of patent protection as a trade-off between offering these incentives to innovate, and encouraging hopeful inventors to squander useful, and valuable, resources in a race to win patent protection. Grady and Alexander also express disquiet with Merges and Nelson’s proposal for narrow patent protection; although never expressly condemning (or even mentioning) the others’ work by name they state that such a system ‘would punish the bold and reward the fussy’.159 Equally, Kitch’s prospect theory comes under fire; in ‘awarding full control to the inventor who is first, the costs of developing dreams that ultimately fail would equal or exceed the benefit to society of those that succeed’.160 An alternative theory upon which to model the patent system is therefore suggested in which ‘the desire to limit rent dissipation explains how actual patent cases are decided’.161 As noted, rent is accrued by calculating the difference between what society would pay for the invention (based on its utility) and the costs of its development. This rent is paid by way of monopoly right;‘otherwise competition by imitators would discourage innovation by making it unprofitable’.162 However, the desire for monopoly power carries with it an inherent disadvantage in that it attracts redundant and wasteful investment in a bid to gain protection for, or to improve upon, the technology. The benefit to society is therefore reduced by what Grady and Alexander term rent dissipation. Three types of rent dissipation are thus identified that occur at different stages in the process of innovation. The first arises in the rush for the original monopoly, for only one can receive the prize.163 The second occurs in the race to improve upon the patented technology where the patent may ‘signal’ the way to improvements and thus create wasteful competition in developing those ‘prospects’.164 Third is the rent dissipated where the inventor invests in protecting the secrecy of an invention—ie where the expected returns from a patent are not sufficiently attractive to persuade the inventor to make their invention public. The system is optimised where these rent dissipations are minimised, so that social benefit is at a maximum. Grady and Alexander remain ‘agnostic about whether patent rewards are a good idea’. Rather, they believe that the courts have ‘found ways of minimizing the problem that patents create’.165 In other words, they contend that ‘the patent system seeks to discourage wasteful activities contributing little or nothing to social welfare’.166 The rent dissipation theory is, therefore, their attempt to understand and 159

Ibid, at 307. Ibid, at 308. 161 Ibid. 162 Ibid. 163 The reader will appreciate that this is a criticism concomitant with the prospect theory, above. 164 ‘Prospect’ is this author’s addition. This second type of rent dissipation is what Kitch’s prospect theory was aimed at preventing. See text accompanying n 84 et seq, above. 165 Grady & Alexander, n 37, above, at 309–10. 166 Merges,‘Rent Control in the Patent District: Observations on the Grady-Alexander Thesis’ (1992) 78 Virginia Law Review 359 (Merges,‘Rent Control in the Patent District’) at 360. 160

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rationalise the glosses and policies that the courts utilise to ‘lead them to good results’.167 It is a ‘positive theory of cases interpreting the patent statute as itexists’ [sic] and therefore is not directly concerned with justifying the system per se. However, they note that by minimising the third kind of rent dissipation (that associated with secrecy), implicit justification may be found as it necessarily removes some of the need to keep the invention secret. The novelty (or as one commentator put it, the genius168) of Grady and Alexander’s approach is the ability to distinguish between ‘(a) rents promised by pioneer inventions, and (b) rents arising from follow-on improvements, signaled by the initial discovery at the time that the discovery is patented’.169 As we shall see, this facet of the theory has significant repercussions for the analysis of patent scope.

Criticisms and Implications for Patent Scope Rent dissipation theory offers a more sophisticated approach to the determination of claim scope than either Kitch’s prospects or Merges and Nelson’s races-to-invent. Grady and Alexander concisely articulate the basic position: ‘Rent dissipation theory predicts that the courts will enforce a patent when the size of the patent rent is proportionate to the rent dissipation that the invention’s technological signal would otherwise induce. In this situation, heating up the race to find new patentable inventions is a good social bargain, because patent enforcement cuts off races to improve. Otherwise broad protection is unwise’.170 Therefore, the key issue is the signalling potential of the invention. In cases where this is high—ie where the invention suggests a multitude of additional avenues of closely related research—then a patent is justified as it will control further activity and therefore minimise rent dissipation. Where there is little, or no, probability of improving upon the invention (eg if the invention is the best solution to the problem that could be devised), the rent dissipation theory would make the unorthodox prediction that a patent should not be granted.171 Further, ‘[a]s the value of the invention increases, the case for patentability [or broad enforcement] weakens because the large monopoly rent conferred on the inventor tends to encourage rent dissipation at the preinvention stage’.172 The most likely candidates for patent protection are therefore those inventions that, ‘although of comparatively small value, nonetheless signal a large potential for improvement’.173 The rent dissipation theory would, therefore, predict narrow scope for pioneer inventions in order to minimise the rent dissipation associated with the race for a 167

Grady & Alexander, n 37, above, at 309–10. See Martin, ‘Reducing Anticipated Rewards from Innovation through Patents: Or Less is More’ (1992) 78 Virginia Law Review 351 at 352. 169 Ibid. 170 Grady & Alexander, n 37, above, at 321. 171 Or if granted, should not be enforced. 172 Grady & Alexander, n 37, above, at 321. 173 Ibid, at 320. 168

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patent. In this respect it is the antithesis of Kitch’s prospect theory. Further, for inventions that provide elegant, unimprovable, solutions to technical problems, the theory would predict even narrower protection. This causes significant problems for, as one commentator notes:‘Applying rent dissipation theory would result in the ultimate disincentive for investing in the creation of elegant (basic/revolutionary/ pioneer) inventions generally considered the most valuable to society’.174 A significant subset of these inventions, ie those where the return to investment in the R&D process is most uncertain, are those that would traditionally be considered to be most in need of patent protection in the first place. The implicit assumption made by Grady and Alexander in connection with the aforementioned criticism is that all rent dissipation is bad. However, as Oddi notes, it is far from clear that this is the case.175 For example, it is often stated that the fear of competition is one of the factors that spurs on innovation in the first place.176 Grady and Alexander’s choice of authority to back up their arguments is also a cause of concern for some. Merges notes that it is only in retrospect that the theory explains the outcomes; indeed, this is all that the authors lay claim to. However, the important point to note is that the doctrine under which the cases were decided has evolved over time and, in addition, slight variation in facts may have led to different outcomes completely independently of the degree of rent dissipation.177 Further, despite claiming that it ‘seems to explain actual patent rulings better than the tests and rules applied by the courts’,178 the rent dissipation theory has been heavily criticised on the basis that application to actual patent cases is difficult. The fact that the technological signalling potential of an invention is the determining factor in their analysis is the major cause of this complaint. Martin, for example, doubts whether it is possible to know when an invention signals improvement and when it does not: ‘What if improvements were signalled but had not yet occurred when an infringement claim is brought?’179 There is no guidance as to the amount of time that is allowed to pass before the signalling assessment is satisfied. If an invention is created that is currently the most elegant solution to a problem and therefore unimprovable, the rent dissipation theory would suggest that no patent should be granted. However, the invention may only begin to be understood as signalling when future technological advances catch-up with it—does this mean that it is less deserving of patent protection now? Grady and Alexander provide no ‘specific criteria and only a few examples’180 to aid in the interpretation of this core provision of their model. Indeed, they themselves state that ‘[t]o some extent, assessing an invention’s technological signal requires guesswork on the part of judges’. However, they stress that ‘[t]he need for 174

Oddi,‘Holy Grail’, n 47, above, at 285. Ibid. 176 It will be recalled that one of the criticisms levelled at the prospect theory was that the grant of a broad patent would encourage the holder to ‘rest on their laurels’. See text accompanying n 115–8, above. 177 See Merges,‘Rent Control in the Patent District’, n 166, above, at 366–7. 178 Grady & Alexander, n 37, above, at 322. 179 Martin, n 168, above, at 356. 180 Ibid. 175

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judicial clairvoyance is . . . reduced by the time that inevitably lapses between Patent Office action and litigation involving the validity of that action’.181 This is far from sound as an explanation of the shortcoming, primarily as it introduces a degree of hindsight into the analysis, which the British courts, especially, are keen to caution against.182 Indeed, it is apparent that Grady and Alexander give very few hard guidelines concerning the application of their theory at all. The balancing act between the benefits and costs associated with granting a patent on a particular invention, for example, remains somewhat of a black art. An unfortunate effect that flows from this is that the theory suffers from a lack of objective reproducibility and capacity for verification. As Oddi cautions, ‘while the same degree of scientific verifiability [as a unified theory in physics] cannot be expected of economic theory, methodological rigor may not be ignored’.183 Rich’s comments on the patent as monopoly arguments, therefore, seem equally apt when considering this theory: You can ‘ “prove” a patent to be what . . . [you] want by selection of the proper “authority.” ’184

Recent Alternatives Despite the failure of Grady and Alexander’s theory to adequately explain or model the patent system, a closely related concept—that the patent system is an effective construct for signalling the successes of innovative endeavour to competitors (and indeed others)—may be seen to be a justification for the grant in its own right. This thread has been taken up recently, in a variety of subtle guises, by a number of academics and would, in many cases, appear to fit the empirical data rather better than those theories hitherto discussed.

Problems with other Theories The problem with the economic theories advanced above, both classical and postclassical, is that whilst sometimes enabling discussion of what a patent system should, or could, look like if we were designing one from scratch, they do not accurately describe or model the system that is currently in place. In other words, ‘there exists a striking misfit between the academic theory of intellectual property and its use in the real world’.185 If the system, for example, is in reality one primarily based 181

Grady & Alexander, n 37, above, at 320. See, eg, the judgment of Mance LJ (in the majority) in Wheatley v Drillsafe Ltd [2001] RPC 133 at para 90. 183 Oddi,‘Holy Grail’, n 47, above, at 326. 184 Rich, n 12, above, at 248. 185 Parchomovsky & Seigleman, ‘Toward an Integrated Theory of Intellectual Property’ (2002) 88 Vanderbilt Law Review 1455, at 1457. 182

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on reward, then some degree of proportionality between inventive effort and remuneration, or economic value, should be expected.186 Yet as Penrose explains,187 the very concept of the value of an invention is paradoxical. If value is defined in terms of price, then it relies on scarcity. When there is no scarcity, the concepts of usefulness to society (social value) and economic value are not, in any way, related. With informational assets (such as inventions) social value is maximised by widespread use. Indeed, it is wasteful to restrict use.188 Yet limitation, the imposition of scarcity, is the raison d’être of the patent system. Therefore price, and hence economic value, is placed upon inventions ‘not because they are scarce but in order to make them scarce to those who want to use them’.189 Neither the merit of the invention, in terms of social good, nor the efforts of the inventor play any part in the assessment; serendipity is treated with the same degree of compassion as hard graft as long as the nebulous concept of an ‘invention’ is forthcoming. Indeed, any system that attempted to increase fairness by assessing the merits of each and every creation would run the risk of introducing unwanted externalities into the process, such as the risk of abuse, that would paradoxically act to tip the balance in the opposite direction, making the process biased and unfair.190 So patents are not primarily rewards. However, evidence would suggest that they are not primarily incentives either. If patents are provided solely to encourage investment in R&D, or possibly to stimulate the inventive process itself, then we would expect to see all grants being exploited in some manner in order to recoup investments made.191 Yet, the empirical evidence, both in chapter four above, and in broader studies,192 suggests that a large number of patents must be gained for other purposes, as they remain unused for their traditional exclusionary role. As Heald notes,‘the incentive story is further undermined by the growing consensus that very few patents confer market power on their owners’.193 As noted, the majority of economic models are based on the traditional discussion of patents outlined in the first part of this chapter. The negatively sloping demand curve indicative of a monopoly is integral to their construction, and yet the patent rarely functions to exclude in this manner. As Merges states, ‘In the end, IPRs may well have an effect on price, entry and the like. But it will not be the simple, straightforward effect of creating a monopoly over a discrete product.194 This is hardly rocket-science; competition from alternative technologies 186 As Carvalho states, ‘for great inventions, great patents; for small inventions, small patents’. Carvalho,‘The Primary Function of Patents’ [2001] Journal of Law, Technology and Policy 25. 187 Penrose, The Economics of the International Patent System, (Baltimore, Johns Hopkins Press, 1951), at 28–9. 188 See the section on Free Goods and Public Goods in ch 3 (text accompanying n 30–2 therein), above. 189 Penrose, n 187, above, at 29. 190 On this point see Carvalho, n 186, above, at 31–2. 191 Whether of time and effort, funds, or a combination of all three. 192 See, eg, Lemley, n 60, above. See also, Taylor & Silberstone, n 56, above, who conclude that the patent system is not seen as essential in all but a very small number of industries. 193 Heald,‘A Transaction Costs Theory of Patent Law’ (2005) 66 Ohio State Law Journal 473, at 474. 194 Merges, ‘Intellectual Property Rights and the New Institutional Economics’ (2000) 53 Vanderbilt Law Review 1857, at 1859.

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(whether products or processes) that do not fall within the patent’s zone of control mean that the system will obviously never be as simple as the apples and pears example given at the beginning of this chapter would suggest. Yet almost the entirety of economic literature in this area is based on apples and pears. In addition, if the patent system actually operated solely on the basis of incentives, it would be logical to conclude that invention and innovation would proceed on the basis of individual cost/benefit analyses. However, the valuation of intellectual assets is a notoriously difficult process, with recent studies concluding that ‘decision makers often do not rely on patents in appropriating returns on anticipated investments’.195 Furthermore, the patent system is only one of an array of regimes that can protect the fruits of technologically creative endeavour, the main alternative being trade secrecy. Therefore, as Long notes, we would expect the rational inventor to only seek patent protection ‘when the expected rents from the patent outweigh the costs of disclosing the information’.196 If this is correct then under the traditional model where information about the invention is traded for protection, there should be no ‘worthless’ (ie securing no rent in the market) or unexploited patents. Yet ‘it is an undeniable fact that, when the value of intellectual property rights is framed purely in terms of exclusivity and rents, worthless patents abound’.197 Moreover, the incentive based theories fail to explain ‘high rates of patenting when the odds of patent conferring market power are . . . very low’.198 This does not mean that the patents for protection argument is entirely redundant, but rather that it is an incomplete explanation of the extant system. There will be occasions, probably a great number, in which the patent’s zone of exclusion is critical to the decision to seek protection. In these instances incentives and rewards will play a large part in the process. However, as we have seen, there are many different motivations for gaining a patent that have little, or nothing, to do with the scope of protection that the grant provides. These appear, under the traditional theories, to be simply patents for patent’s sake. There must, therefore, be some other, incentive/reward-independent, rationale on which to model these decisions that enables us to explain and justify the system as a whole. Clarissa Long’s Patent Signals theory is the start of this process.199

195 Heald, n 193, above. Heald refers to Hall & Ziedonis,‘The Patent Paradox Revisited: An Empirical Study of Patenting in the US Semiconductor Industry, 1979–1995’ (2001) 32 Rand Journal of Economics 101; Cohen, Nelson & Walsh, n 56, above; Allison, et al ‘Valuable Patents’ (July 2003) George Mason University Law & Economics, Research Paper Series, No 03-31, UC Berkeley Public Law Research Paper No. 133. Available at SSRN: http://ssrn.com/abstract=426020. 196 Long,‘Patent Signals’ (2002) 69 University of Chicago Law Review 625, at 626. 197 Ibid. Long refers to Lemley, ‘Rational Ignorance at the Patent Office’ (2001) 95 Northwestern Law Review 1495; Merges ‘As Many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform’ (1999) 14 Berkeley Technology Law Journal 577; Kitch, ‘Property Rights in Inventions, Writings, and Marks’ (1990) 13 Harvard Journal of Law and Public Policy 119, in support of this point. 198 Heald, n 193, above, at 477. 199 See Long, n 196, above.

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Patent Signals In a fundamental departure from preceding theories, Long eschews conventional notions of the patent system as a trade-off. She explains that:‘Rather than focussing on patents as a mechanism for privatizing information, this [theory] . . . instead frames patents as a means of credibly publicizing information. . . . Under some circumstances, the informational function of patents may be more valuable to the rights holder than the substance of the rights’.200 This notion can certainly be seen to have some weight if we consider the comments of the patent attorneys interviewed for chapter four, above. As noted there, the patent must be considered as an item of commerce in its own right. It is sought primarily because there is commercial benefit in doing so, and this may, or may not, have anything to do with traditional notions of the protection that the grant provides. Put simply, a firm will patent the results of innovative endeavours where the benefits of symmetric information as between themselves and the rest of the market outweigh the costs associated with revealing that information. Disclosure, the signalling theory suggests, often carries its own rewards. There are, according to Long, at least two distinct advantages that patenting holds over the alternative, trade secrecy. First, ‘By obtaining a patent, firms can credibly convey information about the invention to observers who otherwise might not be willing to expend the costs necessary to obtain the information’.201 The public nature of the patent register, combined with the requirement that the specification be clear and complete enough to teach the person skilled in the art how to perform the invention,202 provides cheap access to the information required to determine whether the patent is of interest. Under an alternative system, wherein the invention is protected by means of secrecy only, the transaction costs to obtain, or allow others to obtain, the same data could be prohibitive. For whilst ‘[c]ontracts can be written to deter opportunistic behavior by the transferor of a trade secret, . . . entering into protective agreements and policing them raises the cost of the transaction’.203 In addition, determination of the legal status of a trade secret is a difficult process. Clearly the same could be said of the validity of the patent, but secrecy carries additional burdens. Issues of ownership and title, as well as safeguarding post-transfer partition—in other words, ensuring that the same material is not further divulged by the vendor to third parties—are ‘much more complicated than simply checking a state’s online database’.204 However, one of the most important elements of the signalling effect of patents stems from the fact that market actors believe that the number of grants a firm holds, irrespective of their individual quality, bears direct correlation to certain other, favourable, characteristics. The economic literature is thus littered with examples of patent counts being used as a gauge of a firm’s 200 201 202 203 204

Ibid, at 625. Ibid, at 636. See s14(3) PA 1977. Heald, n 193, above, at 481. Ibid, at 480.

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innovative activity and productivity.205 In this sense, the patent is a desirable end in itself. As Lemley explains: ‘Venture capitalists use client patents (or more likely, patent applications) as evidence that the company is well managed, is at a certain stage in development, and has defined and carved out a market niche’.206 The reduction in transaction costs that a patent count therefore provides in enabling valuation of the holding entity is Long’s second advantage. In addition to these benefits, Heald, advancing a theory closely related to Long’s in which patent protection is justified on the basis of transaction costs savings, identifies two additional advantages that the system has over secrecy. The first relates to the reduction in costs associated with the transference of inventions which is facilitated by the registration of title, or as Heald puts it, by ‘establishing a recordation system’207. By enabling the transferee to record their rights, the system protects, or partitions, them from ‘later interference by the transferor, its creditors, heirs, and related entities’.208 Whilst this does not make their right absolute, for it may still be declared invalid, it ‘greatly reduces the cost of identifying the quality of the legal rights the transferor grants and establishes a liability regime that does not require the transferee to enter into a costly array of protective agreements’.209 The second additional benefit that Heald identifies is that ‘patent rules deter opportunistic behavior at a lower cost than trade secrecy and facilitate the creation of mediating hierarchs that can effectively address issues of both opportunism and compensation’.210 In other words, a patent is often less costly than keeping a secret as it avoids the need for implementation of contractual and physical measures designed to prevent misappropriation by members of the team exposed to the secret within the firm. It also enables inter-firm co-operation in the development of joint ventures. Patents are also claimed to offer credibility, not least because the application has to pass through examination by the Patent Office before it matures into a grant.211 Thus, by supplying information in an easily decipherable, credible, manner the value of the firm is less ambiguous than when information is imperfect. The forecasting and valuation benefits that flow from the patenting process are also magnified when we move from single grants to consideration of patent portfolios, as the latter paints a more vivid picture of a firm’s innovative trajectory. Raw numbers, 205 The literature is too extensive to be fully detailed here, however, a short selection includes: Griliches ‘Patent Statistics as Economic Indicators: A Survey’ (1990) 28 Journal of Economic Literature 1661; Kortum, ‘Equilibrium R&D and the Patent-R&D Ratio: US Evidence’ (1993) 83 American Economic Review 450; Ramani & De Looze, ‘Using patent statistics as knowledge base indicators in the biotechnology sectors: An application to France, Germany and the UK’ (2002) 54 Scientometrics 319; Worgan & Nunn, ‘Exploring a Complicated Labyrinth: Some Tips on Using Patent Data to Measure Urban and Regional Innovation’ (2002) 16 Economic Development Quarterly 229. Note also Chartrand, ‘Patents as Economic Indicator’ New York Times, 5 Apr, 2004. 206 Lemley, n 197, above, at 1505–6. 207 Heald, n 193, above, at 507. 208 Ibid, at 482. 209 Ibid. 210 Ibid, at 507. 211 As the Patent Office is a repeat player in the patenting process it would conceivably be damaged if the grant was seen to be anything other than credible. See Long, n 196, above, at 649.

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therefore, give way to trends. Seen in this light, there is added incentive to procure a portfolio of patents, irrespective, perhaps, of the scope of individual grants. However, consideration of patent portfolios highlights one of the fundamental flaws in Long’s theory. For whilst grants may be very valuable in numbers, as they map out the developmental landscape that the firm in question has created, they are significantly less valuable individually, a point that Long herself accepts.212 Therefore, the signalling effect of individual grants must be treated as suspect, as it does not matter how clear and loud any given signal is if no one is taking any notice of it, and ‘why should the market care about information regarding a virtually valueless commodity?’213 Moreover, the appearance of patented technology on the balance sheets of the entity that holds the rights is, in many ways, a by-product of the patenting process, an effect rather than a cause. The patent is simply the conduit through which the invention, which has the real value,214 is viewed.We are therefore faced with a circularity of argument wherein the patent is deemed valuable for the information that it provides to others (it being conceded that the grant may be of little exclusionary value), and yet the value of that information must be dictated by the interest that others will pay to it. As Parchomovsky and Wagner note, the theory would be more robust if Long could show that third parties were able to identify high-value inventions better than the patentee. Yet, ‘there seems to be no a priori reason to assume that third parties have an informational edge over patenting firms that would enable them to better estimate the value of patents’.215 The issue of validity further compounds this problem, for there is clearly no guarantee that the grant will be found to be valid upon challenge.216 If the signal is ambiguous in this manner, then its value must also be suspect. Carvalho, advancing a theory that shares some ground with Long’s (although, it must be said, which is significantly less-developed), rationalises the patent system in the following manner, stating that it ‘exists because it is the only known legal institution that allows inventors to put a price on technology and at the same time permits society to measure, through the competitive interplay of market forces, the adequacy of such a price with relative efficiency’.217 Whilst this is true to a point, it is simultaneously both lacking as a justification of the system whilst also being too complex as an explanation of its existence. 212 Long, n 196, above, at 626 states that ‘worthless patents abound’. It should be noted that such ‘worthlessness’ is limited to cases in which the value of the invention is defined purely in terms of rents and exclusivity, but the simple fact is that a majority of patents will remain unused for their lifespan. 213 Parchomovsky & Wagner, ‘Patent Portfolios’ (2005) 154 University of Pennsylvania Law Review 1 at 21. 214 Even under Long’s theory, the invention itself is the substance that demonstrates the innovative furrow that the firm is excavating. It is therefore at the core of the assessment of value. 215 Parchomovsky & Wagner, n 213, above, at 21. 216 Indeed, it should be noted that recent studies have suggested that there is a direct correlation between the perceived value of a patent and the probability of it being challenged. Lanjouw & Schankerman, Enforcing Intellectual Property Rights (Dec 2001) NBER Working Paper Series, No 8656. Available at http://www.nber.org/papers/w8656.pdf. They also note that the size of the firm holding the patent can be important, with patents owned by small enterprises being more likely to be embroiled in litigation than those owned by larger firms. 217 Carvalho, n 186, above, at 52.

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In its most basic form, the patent system today operates and exists because a custom of providing protection from competition to the creators of new manufactures has done, in one form or another, for approximately 500 years. Reliance has been promoted by widespread and historical use forming a dependency that only the very confident, reckless, or ill-informed will flout. As Machlup concluded in his review of the US Patent system in the 1950s: No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society. . . . If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our current knowledge, to recommend abolishing it.218

The patent system therefore exists primarily because of familiarity and reliance built up over a long period of time; this is, as far as this author can ascertain, the most pragmatic explanation of the system as we experience it. However, whilst this is an explanation of the current state of affairs, it is far from rigorous as a philosophical or economic justification or model of the system. The signalling theory fails on the same ground. It provides adequate description of the behaviour of the patentee ex post, ie after the invention has come into existence, but has almost nothing to do with the creative process per se. Indeed, almost by definition, the invention has to have come into existence before the theory can operate. It therefore does nothing to provide insight into any ex ante justifications for the patent system, although to be fair, this is not really what it promises. The great benefit that it brings, however, is that it expands the horizons of what can be considered to add value to the patent bundle and facilitates explanation of observable, and previously unaccountable, patentee behaviour. In other words, it fills in some of the gaps in the traditional theory. It also provides a platform for further consideration of the inherent value of the patent portfolio as a model for current patenting trends; a model in which strength of numbers can dramatically outweigh a simple aggregation of the value of individual grants.219 However, even this approach to the patent system gets us little further than the point at which we left the classical theories.

Closing Comments None of the traditional or post-classical theories of patent protection detailed above provide us with a definitive model, although to be fair to the authors of these theories very few either tried or claimed to have succeeded in doing this. Even those 218 Machlup, An Economic Review of the Patent System, Study No 15 of the Sub-Committee on Patents, Trademarks and Copyrights of the Committee on the Judiciary, US Senate 85th Congress, 2nd Session, (1958, Washington) at 80–1. 219 See Parchomovsky & Wagner, n 213, above, for further explanation.

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constructs that are not solely concerned with the patents for protection argument, and therefore seem to map more closely with everyday experience of the system, fail to provide a complete picture.All are found wanting in one respect or another when questions of real life applicability are considered. The majority are theoretical without application. Even those that claim to be able to explain certain decisions are opaque when removed from this initial focus of interest. None that may be seen to have a direct link with the scope of the patent right provide any guidance on how a court would, or indeed could, actually utilise the principles that they espouse in its determination of the scope of a patent. Instead they concente on an ex post facto analysis of decided cases in an attempt to divine some sense of order and logic from an essentially human endeavour.220 As Oddi notes, doubt must be cast on any theory that ‘premises itself on a limited number of non-randomly selected cases’.221 Even those newer theories that break free from the ‘patents for monopoly’ mould fail to provide a complete picture, concentrating as they do on filling in the gaps in conventional thinking. Moreover, the nature of the comparisons made between sometimes wildly differing technological fields also brings the theories into question. As Taylor and Silberston concluded in the 1970s, the patent system is seen as more valuable (or more critical) to certain industries than others.222 Furthermore, figures from the European Patent Office easily demonstrate that the use of the system varies wildly between different sectors of technology.223 Either this means that there is inherently less innovative activity occurring in certain industries or that there is something in the system that makes it less attractive. Different sectors may not, therefore, respond equally to the same models and stimuli. Indeed, this is one of the reasons why the interpretation placed upon the claims and the level of generality with which they are viewed must depend on the intended addressee. Therefore, any attempt to provide a general formula of interpretation for all nature of invention is fundamentally flawed from the outset. Further, any theory must be rejected that considers all cases to have been rightly decided,224 as error is an integral part of any human experience. The shifting formulations and evolving doctrines evident in all legal spheres, especially one as fast moving as that linked with high-technology, mean that the courts get the chance to review past decisions, to trim and shape, and move with the times. Historical judgments are important because they tell us what the law is not and reveal the pathways by which the current law came to be made. Mistakes are 220 ie they are too theoretical, without practical application.Although again, to be fair not many of the theories actually claimed that they were anything more than analytical models of the system. 221 Oddi,‘Holy Grail’, n 47, above, at 326. 222 Taylor & Silberston, n 56, above. 223 The top performer in 2005 was, according to the Annual Report of the European Patent Office, electronics and electrical communications technology, which accounted for 11.06% of filings. Agriculture accounted for 0.79% of applications, and mining for 0.32%. Health related inventions made up 6.92%, and 1.30% were in the field of inorganic chemistry. Nucleonics was at the bottom of the table, accounting for only 0.13% of applications. The Annual Report is available at http://annual-report. european-patent-office.org/2005/_pdf/ar2005_chapter4.pdf. 224 See Merges, ‘Rent Control in the Patent District’, n 166, above, at 367; see also Oddi, ‘Holy Grail’, n 47, above, at 326, who states, at n 366, that: ‘Some cases, of course, were never “good law”’.

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possible and bad decisions probable. Times change, and a general theory will always struggle to explain and rationalise something as fickle and situationally dependent as human reasoning. As Oddi sagely states, ‘the outcome of actual patent litigation may be better explained on the attitude (bias) of the court toward patents at the time of decision’ than by any unified theory. To this end, the ‘pro-patent bias of the Court of Appeals for the Federal Circuit [in the US] (CAFC) is palpable and may offer a far better indicator of patent validity and infringement than any of the economic theories’.225 This author agrees, although noting that the CAFC’s favours may now have turned. Economic theories may help to decide what the scope of protection of any given grant should optimally be, but modelling the vagaries of the human mind is outside of any economist’s current understanding. What is clear is that the traditional, incentive and reward based, theories offer incomplete justification for the patent system, or even the decision to patent. Modern views have attempted to remedy the defects in the traditional models, and, from certain perspectives, may be seen to be coming closer to their elusive goal. However, the time is not yet ripe for the determination of the scope of the grant to be subjected to mathematical expression. Therefore, having viewed the arguments and models advanced to justify and explain the provision of patent protection one cannot help being left with the feeling that grant and litigation is ultimately an expensive lottery where the prizes are big, and the chances of winning proportional to the financial status of the interested parties. Thus, in words echoing Machlup’s conclusion in his review of the US Patent system in the 1950s,226 the best justification that we currently have for the patent system is the fact that we currently have a patent system. It has been the purpose of these three chapters on Patents Within the Market Economy to provide insight into the economic and theoretical literature on this topic, and more specifically the determination of patent scope, whist alerting the reader to the fact that certain ‘settled’ issues may not be what they first seem. The issue of monopolyphobia is one that has tainted patent decisions on both sides of the Atlantic, on and off, ever since the inception of the system.227 Despite convincing arguments advanced by Kitch,228 Dam,229 Rich,230 Rose,231 Loughlan,232 etc, that the patent grant cannot accurately be described as producing an economic monopoly, the sentiment can still be found in popular opinion. This public distaste for monopoly finds itself reflected in judicial pronouncements, both in the UK and abroad. The traditional British position in relation to determining patent scope has

225 Oddi,‘Holy Grail’, n 47, above, at 326-7. However, whilst this might have been the case at the time that Oddi was writing, as the reader will see in ch 6, times have changed. 226 Reproduced in text accompanying n 218, above. 227 See Rose, n 21, above. 228 Kitch,‘Elementary and Persistent Errors’ n 153, above. 229 Dam, n 21, above. 230 Rich, n 12, above, at 239. 231 Rose, n 21, above. 232 Loughlan, n 8, above.

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already been discussed,233 however, it is clear that other States’ patent doctrines deal with the problems in different ways to our own, and it is to these differences that we now direct our attention. Three caricatured systems are seen to be in evidence in addition to the UK. The first, America, offers two-tier protection, extending a patent’s scope under the doctrine of equivalents to supplement the literal meaning of the claims. The second, Germany, traditionally offered broad protection for the ‘general inventive idea’ that lies behind the invention, and is often raised as an example of a system diametrically opposed to that in the UK. Finally we look to Japan, where the system is traditionally characterised by very narrow protection giving rise to many small patents. Each system is examined in turn before moving our focus back to the UK in order to reflect upon the current state of affairs in the light of our findings.

233

In ch 1, above.

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6 America Promoting the Useful Arts Congress shall have 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. Article 1, s8, cl8 of the Constitution of the United States of America

Preface There are three systems that were at one time collectively claimed to handle nearly 90 per cent of the world’s total patent traffic.1 The stereotyped approaches to claim interpretation within the three varies wildly, from the traditionally narrow, subliteral, Japanese approach, through the expansive effects of the US doctrine of equivalents, to the German courts’ broad protection of the general inventive idea. In the first of three comparative chapters, we turn our attention to the US and the patent system extant there. The US system in many respects treads a middle path between Germany’s traditionally broad protection and the narrowness of Japanese grants. Full treatment of the jurisdiction could create a work of many times this size, therefore the subject matter of this chapter has been limited, often crudely, to the barebones of the doctrines of equivalents and file-wrapper estoppel, the central pillars of US claim interpretation.

1 Namely the US, European and Japanese systems. See Isayama, ‘Japan’s Views on a Desirable IP System for the Global Economy’ (1999) 2 Journal of World Intellectual Property 679, at 685. More recently, however, the Korean and Chinese patent systems have seen a massive surge in activity. The 5 top-ranking Offices, in terms of numbers of applications, are now (in descending order) the US, Japan, Korea, China, and the EPO. Applications to these Offices accounted for 75% of all patents filed in 2004. See WIPO Patent Report: Statistics on Worldwide Patent Activity (2006), B2 ‘Top 20 offices of filing’ available at: http://www.wipo.int/ipstats/en/statistics/patents/patent_report_2006.html#P104_9303.

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Introduction In the US, as in the United Kingdom, the principle upon which claim drafting is based is that of peripheral definition, with the claims marking the outer boundary of protection. However when it comes to interpretation of these claims, the two systems part company, for in the US patent scope is determined by the application of a two-stage test whereby a literal assessment of the wording used in the claims is augmented by recourse to the doctrine of equivalents. In the UK, on the other hand, the scope of the patent is determined by a single-stage purposive construction of the claims.2 Literal infringement in the US is limited to giving the words of the claims their ordinary and customary meaning;3 Cole explains this as the ‘meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention’4. In order to ascertain this meaning, sources ranging from the remainder of the claims themselves, through the specification and the prosecution history, to external sources such as dictionaries and encyclopaedias may be used. Recently, however, the appellate courts have required that the specification take precedence over dictionary definition in determination of the literal meaning of the claims, noting that:‘extrinsic evidence, which “consists of all evidence external to the patent and prosecution history, including expert and inventor testimony, dictionaries, and learned treatises” ’ is of ‘ “less significan[ce] than the intrinsic record in determining ‘the legally operative meaning of claim language” ’(citations omitted).5 The US approach to literal interpretation focuses on what the words in the claims mean to the skilled addressee, rather than what the skilled person would have understood the patentee to mean by their choice of words, as is the test in the UK.6 The distinction is fine, but it allows US courts to ‘adopt a strict constructionist approach to literal infringement’7, that may not be compatible with the UK’s purposive approach. Assessment under the doctrine of equivalents lies outside of this literal determination of the scope of the claims. Expanding protection in this manner is justified on the basis that it tempers ‘unsparing logic and prevent[s] an infringer from 2 See Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667, discussed further in chs 9 & 10, below. 3 Vitronics Corp v Conceptronic Inc 90 F.3d 1576 (1996, CAFC) at 1582. cf the position under the European Patent Convention (EPC) where, according to Art 69 EPC, it is the terms, or contents, of the claims (depending on the language of the official text used—see n 4 and the accompanying text in ch 7, below) that determines the scope of the patent, suggesting a broader approach than pure literal interpretation. 4 Cole, Fundamentals of Patent Drafting (London, The Chartered Institute of Patent Attorneys, 2006) at 113. See also, Innova/Pure Water Inc v Safari Water Filtration Systems Inc 381 F.3d 1111 (2004, CAFC) at 1116. 5 Phillips v AWH Corp 415 F.3d 1303 (2005, CAFC) at 1317. 6 See Kirin-Amgen, n 2, above. 7 Cole, Fundamentals of Patent Drafting, n 4, above, at 114.

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stealing the benefit of an invention.’8 The boundaries of the doctrine are confined by what is known as file-wrapper estoppel, which ties the patentee to any promises made, or ground conceded, during initial prosecution to secure the grant of the patent. The effect of the two doctrines may be said to combine a reasonable degree of fairness for the patentee, by the expansive effect of equivalents, with a reasonable degree of certainty for third parties, by limitations based on the file-wrapper. The balance between the two is critical to the operation of the system. However, as we shall see, American jurisprudence in this area, especially over the last twenty-five years, has oscillated between expansive and restrictive interpretation of the doctrines, which has damaged any predictability that they may offer. Discussion of the US system is deemed necessary as it offers both informative illustration of the manner in which protection for equivalents can operate, thereby providing insight into the possible operation of a European doctrine,9 and also allows us to appreciate the context from which much of the pressure for expansion of the patent right originates. The chapter therefore begins with brief consideration of the historical development of the American patent system, with particular emphasis on the doctrine of equivalents, from Colonisation to the landmark decision of the Supreme Court in Graver Tank Co v Linde Air Products Inc 10 It then moves on to assess the impact of Graver Tank itself, before consideration of more recent developments in US law, including the infamous Festo11 litigation; a monolith of legal wrangling which at the time of writing has been plaguing District courts, the Court of Appeals for the Federal Circuit (CAFC) and the Supreme Court for more than a decade.12

Early History Today US patent law is centred around the notion that the claims mark the periphery of the invention, and therefore also the boundaries of protection that the grant offers. The requirement that claims be included in the patent was first codified in

8 Per Justice Jackson, delivering the leading judgment in Graver Tank v Linde Air Products, 339 US 605 (1949, Supreme Ct) at 608. 9 As provisioned in the amendments to the EPC agreed at the Munich Diplomatic Conference in Nov 2000, and adopted by the Administrative Council of the European Patent Organisation on 28 Jun, 2001, which introduces the following text as Art 2 of the Protocol on the Interpretation of Art 69 EPC: ‘For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.’ 10 Above, n 8. 11 Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co Ltd, 234 F.3d 558 (2000, CAFC, en banc), 535 US 722 (2002, Supreme Ct), 344 F.3d 1359 (2003, CAFC, en banc). 12 Saris J, opened his judgment in Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co Ltd 75 USPQ.2d 1830 (2005, District Ct: Massachusetts) by describing the litigation in the following manner: ‘Ten years after trial, and following two sojourns to the Supreme Court, this seventeen-year-old suit is back on remand from the Federal Circuit’.

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1836, a full 47 years before the same requirement was made in the UK13 but significantly later than the introduction of a patent custom in the American States. US patent law is grown from a British seed and as such its lineage is traceable (in terms of historical markers, if not defining acts) through the common law of the eighteenth century, the Statute of Monopolies, Elizabethan practice and, ultimately perhaps, to the Statute of Venice.14 As part of the British Empire, the ‘newly discovered’ North America inherited the English law concerning monopolies upon Colonisation. It was transported to the dependency with the first settlers where it evolved into a patent custom initially little changed from its roots. Working along the jurisdictional boundaries of the original thirteen States, patents were granted in America from 1641.15 Such was their utility that the practice continued under the Articles of the Confederation after the Revolution. However, in the new United States, initially little was done to change the boundaries of the existing systems, and by the 1780s problems concerning the limited jurisdiction of the patent grant had led to clear inter-state disputes. The paradigm example of this may be seen in the problems connected with the development of interstate steamboat lines, which was hampered by conflicting patents issued in separate States.16 Partly in response to this territorial problem, and partly due to pressure for furtherance of the Union, the Constitutional Convention of 1789 resolved to make patent protection a right of the United States’ people. Therefore, Article 1, s8, clause 8 of the US Constitution provides Congress with 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’. Thereafter, a nation-wide patent system was created by legislative power in 1790 in the very early days of the first Congress;17 which, as Merges notes, reflects the importance of this matter.18 This early American patent law, like its English cousin, was raw in comparison to its modern incarnation, and it was not for some 45 years, until the Patent Act of 1836,19 that Congress adopted a recognisable modernistic approach to the protection of invention.20 13 s5(5) of the Patents Act 1883 requiring for the first time in the UK that ‘a specification, whether provisional or complete, must commence with the title, and in the case of a complete specification must end with a distinct summary of the invention claimed’. 14 For more information on the history of the British system, see ch 2, above. 15 A patent issued by the State of Massachusetts. See Merges, Intellectual Property in the New Technological Age (New York, Aspen Law & Business, 1997) at 125. 16 Walterscheid, ‘The Early Evolution of the United States Patent Law: Antecedents (5 Part I)’ (1996) 78 JPTOS 615 at 632–7, see also; Walterscheid, ‘The Early Evolution of the United States Patent Law: Antecedents (5 Part II)’ (1996) 78 JPTOS 665 at 673–84; Flexner, Steamboats Come True. American Inventors in Action (New York, Viking Press, 1944); Merges, Patent Law and Policy: Cases and Materials (Charlottesville (VA), Michie, 1997; 2nd Ed) (Merges, Patent Law and Policy) at 8. 17 Patent Act of 1790, ch 7, 1 Stat 109 (10 Apr, 1790). 18 See Merges, Patent Law and Policy, n 16, above, at 9. 19 Patent Act of 1836, ch 357, 5 Stat 117 (4 Jul, 1836). 20 The reader will note that this is still a good 15 years before the archaic and cumbersome patent system evident in the UK at this time was the subject of reform. See discussion in text accompanying n 24 in ch 3, above.

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The 1836 Act is noteworthy for a number of reasons, not least because it extended the possibility of protection to citizens or residents of any country,21 the patent grant formerly being limited to US resident citizens only. Most importantly, however, it established for the first time a formal system of examination. This replaced the simple registration scheme introduced by the 1793 Act;22 a scheme heavily criticised as it gave no power to refuse a patent grant on grounds of a lack of novelty or usefulness.23 Despite providing for the examination of patent applications, the 1836 Act also gave the applicant the right to ‘compel issue of a patent by bill in equity, against an adverse decision of the Commissioner and of the Board of Examiners’,24 this route to grant being equivalent to a judicial review of the application process.Vojácˇek describes this as providing an ‘excellent safeguard of the rights of the inventor’,25 and it is one of the many innovations of the 1836 Act that still remains evident in the modern system. The Act also introduced a requirement that the potential patentee ‘particularly specify and point out the part, improvement, or combination, which he claims as his own invention or discovery’.26 Previous Acts had not mentioned, or in any way required, such elements to be present, asking only that the patentee include a simple description of the invention so as to distinguish it from things already known and used. However, although significant from a legislative point of view, this requirement was simply codification of the existing practice required by the courts and established some 15 years earlier in the case of Evans v Eaton.27 Justice Story, leading the court, stating that the: specification . . . has two objects: one is to make known the manner of constructing the machine . . . so as to enable artizans to make and use it. . . . The other object of the specification is, to put the public in possession of what the party claims as his own invention, so as to ascertain if he claims anything that is in common use, or is already known, and guard against prejudice or injury from the use of an invention which the party may otherwise innocently suppose not to be patented28 21 This is not to say that the playing field was flat for all applicants. There was a significantly raked feescale for US and non-US citizens, which meant that whilst Americans paid $30 for a patent, British inventors were asked to pay $500 and all others $300. See Vojácˇek, A Survey of the Principal National Patent Systems (New York, Prentice Hall, 1936), at 117. 22 Registration was introduced in the Amendment of 1793 (Patent Act of 1793, ch 11, 1 Stat 318 (21 Feb, 1793)) as a replacement for the original procedure whereby the patent application was subjected to the examination of three high-level Government Officials—See Merges, Patent Law and Policy, n 16, above, at 10. 23 Any attack on these grounds had to be conducted in court, giving rise to much unwarranted litigation. See Hantman,‘Doctrine of Equivalents’ (1988) 70 JPTOS 511 at 516. 24 See discussion of this point in Vojácˇek, n 21, above, at 119. 25 Ibid. 26 s6 Patents Act 1836. See Hantman, n 23, above, at 517. See also Takenaka, Interpreting Patent Claims: The United States, Germany and Japan (Munich, Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, 1995) at 6; Jessup,‘The Doctrine of Equivalents’ (1972) 54 JPOS 248. 27 The case reached the Supreme Court in 1818 (16 US 454 (1818, Supreme Ct)), and was the first time that a substantive patent issue had done so. The Court remanded the issue for a new trial and it returned to the Supreme Court in 1822—20 US 356 (1822, Supreme Ct). It is this latter case in which the practice was formally established. 28 20 US 356 at 433.

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Infringement at this time was decided on principles laid down in the case of Odiorne v Winkley, where the Court had proclaimed that ‘[m]ere colorable differences, or slight improvements, cannot shake the right of the original inventor’.29 The question of where the all important border between ‘colorable’and ‘substantial’ difference lay had been settled by the 1817 case of Gray v James. Here Justice Bushrod Washington laid down for the first time the now classic ‘function-wayresult’ or ‘triple identity test’, charging the jury: [W]e think it may safely be laid down as a general rule, that where the machines are substantially the same, and operate in the same manner, to produce the same result, they must be in principle the same. I say substantially, in order to exclude all formal differances; and when I speak of the same result, I must be understood as meaning the same kind of result though it may differ in extent.30

Protection for equivalents had been born.

Central Definition Theory Even after the adoption of a system that required the patentee to distinctly set out and claim their invention, it was some time before the claims took on their current ‘fence-post’ guise. Indeed, despite being made a requirement by the 1836 Act, it was not until almost 35 years later that they came to define the patents’ extent of protection at all. Up until the passage of the Patents Act 1870,31 the scope of protection was determined by reference to the description in the specification and the drawings alone. Therefore, in much the same way as the claims of a German patent were traditionally understood to do little more than describe one form of the invention, so too early American claims functioned simply as guides to draw attention to the invention’s prominent features. Therefore, patentees would often merely use the claims to refer to numbered elements in the drawings and to the specification with the phrase ‘substantially as herein described’ or ‘substantially and for the purpose set forth’. The scope of the patent, however, covered all forms that embraced the principle or mode of operation disclosed in the documentation and which gave the same effect. Therefore, in Winans v Denmead, Justice Curtis, delivering the opinion of the Court, stated: It is generally true, when a patentee describes a machine, and then claims it as described, that he is understood to intend to claim, and does by law actually cover, not only the precise forms he has described, but all other forms which embody his invention.32 (emphasis added)

The scope of protection thus extended to the preferred embodiment (as claimed) and its equivalents. This method of interpretation, wherein the claims stake out a cen29 30 31 32

Per Circuit Justice Story, charging the jury. 18 F.Cas. 581 at 582 (1814, Circuit Ct: Massachusetts). 10 F.Cas. 1015 at 1016 (1817, Circuit Ct: Pennsylvania). Patent Act of 1870, ch 230, 16 Stat 198 (8 Jul, 1870). See Winans v Denmead, 56 US 330 (1853, Supreme Ct) at 342.

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tral position and include only the invention’s prominent features, infringement being determined by comparison between the defendant’s creation and the invention as disclosed in the description and drawings, is widely referred to as central definition theory.33 As already noted, this bears close likeness to traditional German practice.34 In addition to setting out the central approach to claim drafting and determination of scope, Winans v Denmead is also noteworthy in that it is considered by many to be the first case in which the doctrine of equivalents was voiced.35 The litigation involved a patent for a railway car designed to carry coal, the key element of which was that it was described as being shaped in the frustum of a cone. This design was more efficient than those existing at the time as it distributed the weight of the coal in an even manner, eliminating the possibility of deformation, and consequent need for reinforcement, experienced by traditional cars.36 The question that lay before the Court was whether a car in the shape of a tapered hexagonal pyramid infringed the patent. Both designs operated in substantially the same way to achieve the same increased load-bearing benefits. Justice Curtis, adding to the previously quoted passage, stated that the protection offered by a patent extended beyond the precise form portrayed: [I]t being a familiar rule that, to copy the principle or more of operation described, is an infringement, although such copy should be totally unlike the original in form or proportions.37 (sic)

Evidently at this time the doctrine of equivalents was not used to supplement the normal scope of protection, it was the primary tool in such a determination. However, it is generally accepted that it was used to expand beyond the literal scope of the claim language.38 This is eminently clear for so-called pioneer inventions, 33 As opposed to the peripheral definition theory that categorises the current British approach. See further, text accompanying n 1–10 in ch 1, above. Also, Deller, Patent Claims (New York, Lawyers Co-operative Publishing (Bancroft-Whitney), 1971; 2nd Ed), section 9. Takenaka, n 26, above, at 3–12; and Hantman, n 23, above, at 517. 34 See further, the discussion of the German patent system in ch 7, below. 35 See the opinion of the Supreme Court in Graver Tank, n 8, above, at 608; Takenaka, n 26, above, at 9; Adams, ‘The Doctrine of Equivalents: Becoming a Derelict on the Waters of Patent Law’ (2006) 84 Nebraska Law Review 1113, at 1122. However, Hantman, n 23, above, at 518 states that the ‘Winans principle is a restatement of the charge to the jury in . . . Evans v Eaton’. He does, however, concede that it was the first time that the principle appeared in a Supreme Court decision. 36 See the extract from the patent reproduced in Winans v Denmead, n 32, above, at 342. 37 Ibid. 38 See comments to this end in Sarnoff, ‘The Historic and Modern Doctrines of Equivalents and Claiming the Future, Part I (1790–1870)’ (2005) 87 JPTOS 371, at 393. Sarnoff, however, disputes the claim, stating that instead, ‘Winans clearly supports judicial approval of liberal construction of claim language, in order to assure that claims are interpreted so as to provide a meaning consistent with a fair scope of protection’. Hantman, n 23, above, at 527-8 also questions whether the doctrine of equivalents used to expand beyond the claim in this manner. He uses the dictionary definition of a cone, which he concludes covers a conical form without a circular base, and therefore argues that the infringing railway car actually falls within the literal wording of the claims. He fails, however, to note that the test for literal infringement is not, and has never been, whether the accused device falls within the scope of the claims as they might be interpreted. The test is whether the alleged infringement falls within the claims as interpreted by the Court. In Winans ‘cone’ was interpreted as requiring a circular base, therefore it is clear that a tapered hexagonal prism cannot be said to fall within the literal scope of the claim as interpreted.

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understood to mean a new device performing a completely new function, which were given a very broad range of equivalents by the courts at this time.39 Yet when Winans was decided the claims of the patent did not yet define the scope of the invention, they were merely an expression of one form that it might take, and as such did not limit the extent of the monopoly in any way. Seen in this manner, it is easy to explain the expansive doctrine of equivalents as a product of the central definition theory and thereby limited to it. However, by the time the 1870 Act was in place the days of central definition theory were over, replaced by a sterner, more literal, approach to the determination of patent scope.

Peripheral Definition Theory and the 1870 Act A slow but inexorable shift in the importance placed on claim language had been evident throughout the life of the 1836 Act.40 This process was completed by a subtle change in wording in the 1870 Statute; section 26 of which provided that the inventor: shall particularly point out and distinctly claim the part, improvement, or combination which he claims as his invention or discovery 41 (emphasis added).

Subsequent Supreme Court decisions highlighted the importance of the claims as a separate and distinct part of the patent and emphasised the value of clear and concise language in order that the public interest was not impeded.42 The rise of peripheral definition theory had begun. It will be recalled that in contrast to central definition theory, where the scope of the patent is determined by the description in the specification and drawings, under peripheral definition theory the extent of protection is determined by the scope of the claim. The claims are said to mark out the boundary, or periphery, of protection. Only structures falling within their wording could be said to infringe the patent. Thus in Merrill v Yeomans 43 the Supreme Court stated: The act of Congress . . . very wisely requires of the applicant a distinct and specific statement of what he claims to be new, and to be his invention . . . This distinct and formal claim 39 For example the electro-magnetic telegraph patented by Morse in 1840 was considered to be of ‘pioneer’ status and thus was allowed a broad range of equivalents. Although in O’Reiley v Morse, 56 US 62 (1853, Circuit Ct: Kentucky) the court was unwilling to extend the equivalency to all machines performing the same function no matter how far changed from the original. 40 See also, Prager, ‘Trends and Developments in American Patent Law from Jefferson to Clifford (1790–1860)’ (1962) 6 Amercian Journal of Legal History 47; Prager,‘The changing views of Justice Story on the Construction of Patents’ (1960) 4 American Journal of Legal History 14. 41 Patent Act of 1870, ch 230, 16 Stat 198 (8 Jul, 1870). The reader will recall that s6 of the 1836 Act simply required the patentee to ‘particularly specify and point out the part, improvement, or combination, which he claims as his own invention or discovery’. See text accompanying n 26, above. 42 See, eg, Merrill v Yeomans, 94 US 568 (1876, Supreme Ct). In which Justice Miller, giving the opinion of the Court states, at 570, that the language of the claim in the instant cases is: ‘far from possessing that precision and clearness of statement with which one who proposes to secure a monopoly at the expense of the public ought to describe the thing which no one but himself can use or enjoy’. 43 Ibid.

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is . . . of primary importance, in the effort to ascertain precisely what it is that is patented to the appellant in this case.44

Adding that: No [question of construction] . . . could have arisen if appellant had used language which clearly and distinctly points out what it is that he claims in his invention.45

Here the Court refused to find that a patent, which claimed a ‘new manufacture of the deodorized heavy hydrocarbon oils, suitable for lubricating and other purposes’ extensively described in the specification, was infringed by production of the product by other means.Whilst the conclusion that can be drawn from the case, that a process patent is not infringed by production of the end-product by other means, seems rather obvious to a student of the modern patent system, this represented a substantial departure from previous practice at the time. Similarly in Keystone Bridge Co v Phoenix Iron Co, Justice Bradley, giving the opinion of the Court, emphasised that: When the terms of a claim in a patent are clear and distinct (as they always should be), the patentee, in a suit brought upon the patent, is bound by it . . . He can claim nothing beyond it.46

Seen in this manner, early development of US theory clearly defines the claims as fulfilling two distinct purposes. In the first, they formed the consideration for the patent grant and thus gave validity to the applicant’s bargain with the state; and in the second, they notified the public as to the extent of the patentee’s monopoly. It was this latter function that slowly came to dominate. Thus, in White v Dunbar, Justice Bradley famously stated: Some persons seem to suppose that a claim in a patent is like a nose of wax, which may be turned and twisted in any direction, by merely referring to the specification, so as to make it include something more than, or something different from, what its words express. The context may, undoubtedly, be resorted to, and often is resorted to, for the purpose of better understanding the meaning of the claim; but not for the purpose of changing it, and making it different from what it is. The claim is a statutory requirement, prescribed for the very purpose of making the patentee define precisely what his invention is; and it is unjust to the public, as well as an evasion of the law, to construe it in a manner different from the plain import of its terms.47

Increased emphasis on the public notice function of the claims had three main consequences. First, it spurred on acceptance of peripheral definition theory, the advantages of drawing a bright-line in the sand being clear to all. Second, the latitude given to patentees in infringement proceedings was significantly narrowed and protection was denied for mere inventive concept.48 Finally, because claims enabled 44 45 46 47 48

Ibid, at 570. Ibid, at 569. 95 US 274 (1877, Supreme Ct) at 278. White v Dunbar, 119 US 47 (1886, Supreme Ct) at 51–2. ie the general inventive idea.

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applicants to define their inventions more specifically, courts began to require that they did so. Therefore the old ‘substantially as described’ claim format was struck down; the Court in Hobbs v Beach being of the opinion that the phrase added little to the claims: If these words are used, the patentee may still prove infringement in the use of a mechanical equivalent; if they are omitted, he is bound to prove no less. Perhaps it would be sufficient to say that, if a doubt arose upon the question whether the infringing machine was the mechanical equivalent of the patent device, that doubt should be resolved against the patentee where the claims contain the words ‘substantially as described or set forth.’49

Therefore, as time progressed and the claims assumed a core role in defining the boundaries of patent protection, the early liberal attitude to the determination of scope, and the expansive doctrine of equivalents that accompanied this, had been gently, but sternly, phased out. The knock-on effect of increased judicial reliance on claim language was that the patentee, robbed of this former interpretative latitude, took to enlarging the literal scope of their claims as much as possible. It became common practice to include such stock phrases as ‘means for’ or ‘adapted to’ in an attempt to broaden claim language.50 Thus, in a series of cases towards the end of the nineteenth century, which can be said to have reached culmination in Westinghouse v Boyden Power Brake Co,51 the doctrine of equivalents was used to restrict protection by limiting infringement to only some of the structures within the claims’ literal scope. This method of limitation was based on sufficiency of disclosure, its justification being that the patent could only validly cover the subject matter that the inventor actually disclosed and equivalents thereof. Therefore: The patentee may bring the defendant within the letter of his claims, but if the latter has so far changed the principle of the device that the claims of the patent, literally construed, have ceased to represent his actual invention, he is as little subject to be adjudged an infringer as one who has violated the letter of a statute has to be convicted, when he has done nothing in conflict with its spirit and intent.52

Thus, what would now be called a reverse doctrine of equivalents, restricting protection scope to less than that actually claimed, was born. The reader will appreciate that the patent systems of Europe were undergoing a similar age of unrest at this point in time. As discussed in chapter three, above, the mid- to late-nineteenth century marked a period intense dissatisfaction with the notion of a patent system. The arguments of a new breed of political economists had begun to be utilised to question the very foundations and justifications of patent law, and the fear of broad monopoly stifling domestic industry was, once 49

180 US 383 (1901, Supreme Ct) at 400. See Hantman, n 23, above, at 522. For relatively recent illustration of the effect that the phrase ‘means for’ can have on the breadth of protection accorded to a patent in the UK see Warheit v Olympia Tools Ltd [2002] EWCA Civ 1161. Discussed by Dunlop,‘Court of Appeal gets to Grips with the Protocol’ [2003] EIPR 342. 51 170 US 537 (1898, Supreme Ct). 52 Per Justice Brown, giving the opinion of the Court in Westinghouse v Boyden, ibid, at 568. 50

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again, brought to the fore. The Netherlands abolished its system during this period,53 and in the UK the patent grant was the subject of heated debate resulting in significant changes to the law. The period in which inventors and their inventions were romanticised by the populace was coming to an end, replaced by big business and corporate research and development. The idealistic image of the lone heroic inventor was banished to fairytale, apparently taking with it the expansive doctrine of equivalents.

Graver Tank The early-twentieth century marked a period of vacillating protection in the US patent system. A number of strategically important grants in key industries, such as the light-bulb,54 the aeroplane,55 the basic design of the automobile,56 and in the area of wireless telegraphy,57 had established significant market power for the entities that owned them. This domination of the market in several key areas did not go unnoticed by the judiciary and, driven in part by a number of anti-competitive acts committed by large patent controlling companies, the courts became increasingly unwilling to enforce patent rights.58 This trend is amply illustrated by reference to the statistics of Supreme Court decisions in the first 40 years of the twentieth century, see figure 1, below. However, it would appear that the US involvement in World War II may have helped to alter the balance, as it was towards the end of the 1940s that the expansive doctrine of equivalents, which had lain dormant since the critical blow landed by Westinghouse,59 was brought back to life.

The Decision in Graver Tank Graver Tank & Mfg Co v Linde Air Products Co60 has been hailed as one of the most important decisions in the development of US claim interpretation theory.61 It 53 The Netherlands patent law was repealed in Jul 1869. See Machlup & Penrose, ‘The Patent Controversy in the Nineteenth Century’ (1950) 10 Journal of Economic History 1 at 5. 54 US Patent No 223,898, issued Jan 27, 1880, to Thomas A Edison for an incandescent electric lamp, in which the leading wires are secured to a carbon filament by cement carbonised in situ. 55 US Patent No 821,393, issued May 22, 1906, to Orville and Wilbur Wright for a flying machine— notably for a system of steering and stabilisation. 56 US Patent No 549,160 granted Nov 5, 1895, to the George B Selden for an improved road engine. 57 US Patent No 586,193, granted Jul 13, 1897 and reissued Jun 4, 1901 as reissue No 11,913 to Guglielmo Marconi for improvements in transmitting electrical impulses and signals and in apparatus therefore. 58 This trend is mirrored, to a certain degree, by narrow interpretation in the UK courts at this time. See, eg, EMI v Lissen, (1939) 56 RPC 23. 59 Westinghouse v Boyden, n 51, above. 60 Above, n 8. 61 See, eg, Takenaka, n 26, above, at 13.

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Total number of opinions

Patents held valid

Patents held invalid

Patents held not infringed

1900–05 1906–10 1911–15 1916–20 1921–25 1926–30 1931–35 1936–40

9 7 4 16 14 12 14 15

2 3 4 5 3 3 3 0

3 1 0 9 8 5 11 13

4 3 0 2 3 4 0 2

23

50

18

Total

91

Figure 1: Results of Patent Litigation before the Supreme Court of the United States62

stands as a buoy in a sea of anti-monopolistic sentiment, and affirms the survival of the expansive doctrine of equivalents thought by many to be long-dead. The Graver Tank decision involves an action for infringement bought by the owner of a patent for fluxes used in electric welding, and the process of welding using them. The patent in question essentially disclosed and claimed a combination of alkaline earth metal63 silicate and calcium fluoride: the actual flux produced and sold under the patent contained silicates of calcium and magnesium. The allegedly infringing product was similar except that it contained silicates of manganese and calcium, the former not being an alkaline earth metal. In all other respects the two compositions were identical, producing the same kind and quality of weld and operating in the same way. The question that faced the Court was whether the defendant’s substitution of manganese, not an alkaline earth, for magnesium took the allegedly infringing flux out of the scope of the patent’s claims. In answer to this question, the Supreme Court laid down a two-stage test for the determination of infringement. Justice Jackson, in giving the opinion of the majority, began by stressing the importance of the claims in the determination of patent scope, declaring: If accused matter falls clearly within the claim, infringement is made out and that is the end of it.

62 Taken from Fox, Monopolies and Patents: A Study of the History and Future of the Patent Monopoly (Toronto, University of Toronto Press, 1947), at 266. Baum,‘The Federal Courts and Patent Validity: An Analysis of the Record’ (1974) 56 JPOS 758 at 776–7 notes that in the period 1921–73 the Supreme Court held invalid 82% of the patents that it considered. See also, Janicke, ‘To be or not to be: The Long Gestation of the US Court of Appeals for the Federal Circuit’ (2002) 69 Antitrust Law Journal 645, at 646. 63 Those elements found within group II of the periodic table, ie beryllium, magnesium, calcium, strontium, barium and radium.

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However, he continued saying that: [To] permit imitation of a patented invention which does not copy every literal detail would be to convert the protection of the patent grant into a hollow and useless thing. Such a limitation would leave room for—indeed encourage—the unscrupulous copyist to make unimportant and insubstantial changes and substitutions in the patent which, though adding nothing, would be enough . . . [to evade] the reach of the law. . . . [It] would place the inventor at the mercy of verbalism and would be subordinating substance to form. It would deprive him of the benefit of his invention and would foster concealment rather than disclosure of inventions, which is one of the primary purposes of the patent system.64

The doctrine of equivalents, he explained, evolved in response to this experience: ‘To temper unsparing logic and prevent an infringer from stealing the benefit of an invention’,65 its essence being that ‘one may not practice fraud on a patent’.66 Justice Jackson cited with approval the opinion of Justice Sanford in Sanitary Refrigerator Co v Winters 67 stating that the doctrine may be utilised against an alleged infringement if it performs substantially the same function in substantially the same way to obtain substantially the same result. He added to this ‘tripartite test’ by highlighting that any difference between the two devices must represent an insubstantial change and highlighted the importance of ‘known interchangeability’ between the claimed element and its equivalent.68

Criticism of the Decision The Graver Tank Court cited Winans v Denmead 69 as establishing the doctrine of equivalents and, disregarding the changes in claim format that had occurred in the intervening period, maintained that it had been consistently applied by the courts ever since. Whilst it is true that the Supreme Court had never explicitly overruled the expansive doctrine in the years following Winans, the claim to consistent application is a bit far-fetched. Indeed, Hantman goes as far as to argue that Graver Tank is an abomination reviving an anachronistic expansive doctrine that has no place under peripheral definition theory. He states that ‘[i]t was not reasonable for the Court to compare an alleged infringing invention with the claimed invention using a doctrine developed a hundred years earlier to apply to a situation in which the claims were not the measure of the invention’.70 Further, he contests that it goes 64

Graver Tank, n 8, above, at 607. Ibid, at 608 quoting Judge Learned Hand in Royal Typewriter Co v Remington Rand, 168 F.2d 691 (1948, Circuit Court of Appeals, Second Circuit). 66 Graver Tank, n 8, above, at 608. 67 The original passage referred to states that a ‘substantial equivalent of a thing, in the sense of the patent law, is the same as the thing itself; so that if two devices do the same work in substantially the same way, and accomplish substantially the same result, they are the same, even though they differ in name, form, or shape’. 280 US 30 (1929, Supreme Ct) at 42. 68 Graver Tank, n 8, above, at 609. 69 Above, n 32. 70 Hantman, n 23, above, at 543. 65

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against the fundamental principles of the peripheral definition theory, as it introduces unacceptable ambiguity into infringement proceedings. However, Hantman’s argument fails to take account of a number of small, but important, points. First, under central definition theory, the doctrine of equivalents provided the test for infringement, there was no other. Second, the Court in Graver Tank stresses the importance of the claims in the determination of patent scope, stating that they define the invention, and reduces the doctrine of equivalents to a secondary measure supplementing an ‘all elements’ rule so that one-to-one equivalence is required. Third, and possibly most importantly, it recognises that the doctrine may also be used to restrict protection where ‘the device is so far changed in principle from the patented article that it performs the same or a similar function in a substantially different way, but nevertheless falls within the literal words of the claim’.71 It is therefore apparent that, far from resurrecting a long-forgotten principle and unleashing it upon an unsuspecting world, the Court made clear the role of the doctrine under peripheral claim theory. It updated it and applied it to modern practice, rectifying the inconsistent treatment o the past. Therefore, whilst Hantman’s argument would be valid if the Court had simply used the old doctrine of equivalents established under Winans without change, this is not what it did. To argue such a point is simply an exercise in verbalism and avoids the question of whether the doctrine as laid down in Graver Tank is, in substance, the same as that under central definition theory. Quite simply, it is not. The motivation for extending protection on an equivalents basis, namely to secure fair protection for the patentee, is the same under both authorities, but, whereas previously it was subordinate to nothing, under Graver Tank it is a supplemental tool, second string to the ‘all element’, literal infringement rule. Indeed, as Takenaka correctly points out, it can be said that by clarifying the claim language as the primary point of reference in any patent infringement action, and by stressing the importance of a claim referring to an accused device, Graver Tank can actually be seen as the case that established peripheral definition theory.72 Hantman’s second argument, that the decision introduces an unnecessary degree of uncertainty into the patent process and is therefore against the public interest, is powerful in the fight against revival of the doctrine. However, it is apparent that the Court in Graver Tank was adequately aware of this viewpoint, and actually intended such imprecision. It explained: Equivalence, in the patent law, is not the prisoner of a formula and is not an absolute to be considered in a vacuum. It does not require complete identity for every purpose and in every respect. In determining equivalents, things equal to the same thing may not be equal to each other and, by the same token, things for most purposes different may sometimes be equivalents. Consideration must be given to the purpose for which an ingredient is used in a patent, the qualities it has when combined with the other ingredients, and the function which it is intended to perform.73 71 72 73

Graver Tank, n 8, above, at 608–9 Takenaka, n 26, above, at 13. Graver Tank, n 8, above, at 609.

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The Court readily accepted that that one of the primary objects of patent law is ‘to promote the Progress of Science and useful Arts’ by duly rewarding the inventor. It recognised that to permit evasion of penalties for infringement by making insubstantial changes to the invention as claimed, whilst still allowing the wholesale theft of its substance, would soon render the patent useless. Moreover, it acknowledged the fallacy of limiting patent protection to the literal scope of the claims, stating that this would encourage the concealment of invention, therefore going against another tenet of patent law. Thus, Takenaka concludes that without the doctrine of equivalents ‘peripheral definition theory can never function completely and effectively to implement patent policy’.74 Whilst the benefits that the doctrine provides in securing fair protection for the patentee are easily apparent, Takenaka’s comment overstates the issue. It is, for example, not clear that patent policy itself would be impossible to implement without the doctrine, as business practices and expectations could be arranged in order that the goals, as stated, would be realised. As we shall see, this is the situation that occurred in Japan, where traditionally narrow interpretation of claims forming the periphery of protection forced the system, as a whole, to react in order that the underlying policy could be implemented.75 Equally, her comment ignores any alternative method of expanding protection beyond the literal wording that the patentee uses, such as a true purposive construction wherein the perceived desires of the patentee inform the lexicon. Furthermore, situations are conceivable in which the patent attorney, when given sufficient time and resources, could cover all but the yet-to-be-imagined equivalents within the literal scope of the claims as drafted, thus circumventing the need for an expansive doctrine at all. However, whilst the latter situation is a possibility, it is conceded that in practice this would be an improbable, if not impossible, goal to achieve, and that the doctrine of equivalents offers a more cost-effective method of providing for fair protection.

Section 112 Equivalents: an Aside Shortly after the decision in Graver Tank, Congress revised the patent law. Section 112 of the 1952 Patents Act76 includes requirements for the claims and a description of the invention in many ways similar to that of the 1870 Act. However, the section also includes a paragraph for which no precedent existed and which deserves some attention, it reads: An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support

74

Takenaka, n 26, above, at 17. See also, ch 8, below. Although it should be noted that Japan now has, since 1998, its own doctrine of equivalents. 76 Patent Act of 1952, ch 950, 66 Stat 792 (19 Jul, 1952), which enacted patent law at Title 35 of the United States Code (35 USC). 75

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thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.77

Thus, a second type of equivalent, often confused with the judicially created doctrine of equivalents, was introduced into US law. The CAFC went to great lengths to explain the difference between the two in DMI Inc v Deere & Co78 stating: [T]he word ‘equivalent’ in §112 should not be confused . . . with the ‘doctrine of equivalents.’ In applying the doctrine of equivalents, the fact finder must determine the range of equivalents to which the claimed invention is entitled, in light of the prosecution history, the pioneer-non-pioneer status of the invention, and the prior art. It must then be determined whether the entirety of the accused device or process is so ‘substantially the same thing, used in substantially the same way, to achieve substantially the same result’ as to fall within that range. In applying the ‘means plus function’ paragraph of §112, however, the sole question is whether the single means in the accused device which performs the function stated in the claim is the same as or an equivalent of the corresponding structure described in the patentee’s specification as performing that function.79

The rationale behind §112(6) was clearly stated in OI Corp v Tekmar Co,80 where Judge Lourie said that it was ‘intended to permit use of means expressions without recitation of all the possible means that might be used in a claimed apparatus’. However, ‘[t]he price that must be paid for use of that convenience is limitation of the claim to the means specified in the written description and equivalents thereof ’.81 Therefore, ‘[i]f the specification is not clear as to the structure that the patentee intends to correspond to the claimed function, then the patentee has not paid that price but is rather attempting to claim in functional terms unbounded by any reference to structure in the specification. Such is impermissible under the statute’.82 Thus, the court made clear that the doctrine was not to be interpreted as providing expansive protection, rather its application was strictly limited by the disclosure in the specification. As such, it cannot be seen as creating a patch of ‘central definition’ within a statutory framework. Rather, §112 informs the claim meaning for a literal infringement analysis, by restricting the scope of a (potentially broadening) functional claim limitation. The doctrine of equivalents, on the other hand, extends the enforcement of claim terms beyond what is literally described in the event that there is equivalence between elements of the patented article and the alleged infringement.83 Therefore, as the statutory provisions merely assist in the determination of literal infringement, they can only embrace those equivalent structures or acts existing at the time of issuance. After-arising equivalents84 can only infringe, if at all, under the doctrine of equivalents. 77

35 USC §112(6). 755 F.2d 1570 (1985, CAFC). 79 Per Chief Judge Markey, giving the opinion of the court, ibid, at 1575. 80 115 F.3d 1576 (1997, CAFC). 81 Ibid at 1583. 82 Per Judge Clevenger, in Medical Instrumentation and Diagnostics Corp v Elekta AB, 344 F.3d 1205 (2003, CAFC). 83 See Al-Site Corp v VSI International Inc, 174 F.3d 1308 (1999, CAFC). 84 ie those arising after issue of the patent. 78

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Hostility and Instability following Graver Tank The years after the Supreme Court’s acceptance of the expansive doctrine of equivalents in Graver Tank are marked with inconsistency and confusion in the application of the doctrine.85 A certain degree of anti-monopolistic sentiment continued and the result was a line of cases in which the doctrine was interpreted, and applied, very narrowly. Thus, in Feed Service Corp v Kent Feeds Inc,86 a decision of noninfringement was made for a process where reactants were fermented in the reaction vessel rather than being added separately. In Deyerle v Wright Manufacturing Co,87 the use of a pin to fix bone fractures was held not to infringe a patent calling for a ‘fixing nail’. Here the Court stressed that as the invention was not pioneer, but was rather ‘an improvement in a crowded art’, the claims were therefore only entitled to a narrow range of equivalents.88 A similarly narrow interpretation is found in General Dynamics Corp v Whitcomb,89 where a patent calling for a wing body extending ‘just forward’ of the position of maximum panel thickness was not infringed by a similar design in which the body extended four-feet forward this position, even though this was minimal compared with the length of the wing. The court bluntly holding that ‘differences in form and shape may weigh importantly in the balance “where form is of the essence of the invention” ’.90 In addition to the uncertainty and intrinsic subjectivity of the tripartite test,91 additional defects also developed. Litigants began to exploit cracks in the test and to ‘dispute what specific function, way, or result characterized the invention or the accused device, with each side advocating the particular function, way, or result that would cause it to win’.92 The doctrinal instability that ensued was further enhanced by regional variations in judicial hostility in the District Appeal Courts. As Noonan notes, the patentee ‘almost always lost in the Second and Eighth Circuits but almost always won in the Tenth Circuit’.93 One of the consequences of such marked regional prejudice was an 85 See Takenaka, n 26, above, at 17. Also Comment, ‘Peripheral Definition Theory v Central Definition Theory in Patent Claim Interpretation: A Survey of the Federal Circuit’ (1967) 32 George Washington Law Review 609. 86 528 F.2d 756 (1976, United States Court of Appeals, Seventh Circuit). 87 496 F.2d 45 (1974, United States Court of Appeals, Sixth Circuit). 88 Ibid, at 51. 89 443 F.2d 630 (1971, United States Court of Appeals, Fourth Circuit). 90 Ibid, at 633. See also Noonan, ‘Understanding Patent Scope’ (1986) 65 Oregon Law Review 717 at 725–9. 91 ie the test laid down Sanitary Refrigerator Co v Winters and approved in Graver Tank, wherein the court examines the alleged infringement to see if it performs substantially the same function in substantially the same way to obtain substantially the same result as that of the patentee’s invention. See text accompanying n 67–8, above. 92 Weston, ‘A Comparative Analysis of the Doctrine of Equivalents: Can European Approaches solve an American Dilemma?’ (1998) 39 IDEA 35 at 44. 93 Noonan, n 90, above, at 719. See also Baum, n 62, above, at 762, who explains that between 1961 and 1973 the Second Circuit held valid only 18% of patents that it considered. For the Eighth Circuit, the result was even worse with only 11% of patents adjudicated not being invalidated. Statistics for the Tenth Circuit in the same period show 70% of patents were held to be valid.

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increase in forum shopping. This added to the cost of litigation by introducing an oft-lengthy pre-infringement action to decide the trial venue; that is in cases where it did not effectively decide the issue by referring the case to the Eighth Circuit where ‘patents simply were not valid’.94 By the early 1980s the problem of regional inconsistency was dire; House and Senate Judiciary Committee reports both noting that ‘patent law is an area in which the application of the law to the facts often produces different outcomes in different courtrooms in substantially similar cases’.95 Therefore wheels of reform were set in motion and in 1982 the Federal Courts Improvement Act was passed creating the CAFC to which overall jurisdiction in all patent appeals and decisions of the United States Patent and Trademark Office (the USPTO, or PTO for short) was given.

The Court of Appeals for the Federal Circuit The CAFC set to work almost immediately to create a coherent set of rules for the determination of patent infringement and validity proceedings. A palpable effort can be detected in the first few cases that passed through the hands of the newly created court to remove the spectre of monopoly that had dogged many previous decisions. As noted in chapter five, above, Giles Rich, writing extra-judicially, had stated: The tendency is to call a patent ‘monopoly’ when it is to be invalidated or restricted and to say it is not a monopoly when it is held to be valid and infringed.96

This was clearly seen to be the case by the infant court, with Judge Rich leading the charge against misuse of the moniker: The patent system, which antedated the Sherman Act by a century, is not an ‘exception’ to the antitrust laws, and patent rights are not legal monopolies in the antitrust sense of that word. Accordingly, if a patent is held to have been obtained illegally, it is not properly said, ipso facto, that it was all along an illegal monopoly and, thus, that its procurement and attempted enforcement was a per se violation of the antitrust laws. A holding that monopoly analysis should end in favor of liability on a determination of fraud, without more, would signal a fundamental misunderstanding of the substance and purposes of both the patent and the antitrust laws.97

In place of the view of patents as limited monopolies, the CAFC cultivated the patent grant as ‘intangible property, to be maintained free of trespass’.98 94

Noonan, n 90, above, at 720. House of Representatives Report No 97-312 (1981)at 20-21; Senate Report No 97-275 (1981) at 5. See also; Thompson,‘Adrift on a Sea of Uncertainty: Preserving Uniformity in Patent Law Post-Vornado Through Deference to the Federal Circuit’ (2004) 92 Georgetown Law Journal 523 at 531; Moore,‘Forum Shopping in Patent Cases: Does Geographic Choice Affect Innovation’ (2001) 83 JPTOS 558 at 560, fn 5. 96 Rich,‘Are Letters Patent Grants of Monopoly?’ (1993) 15 Western New England Law Review 239 at 240. 97 American Hoist & Derrick Co v Sowa & Sons Inc, 725 F.2d 1350 (1984, CAFC) at 1367. 98 Noonan, n 90, above, at 721, referring to American Hoist, ibid; Schenck v Nortron Corp, 713 F.2d 782 (1983, CAFC); Connell v Sears Roebuck & Co, 722 F.2d 1542 (1983, CAFC). 95

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Expanding the Doctrine of Equivalents: Hughes Aircraft One of the first cases to reach the CAFC concerning the doctrine of equivalents was Hughes Aircraft Co v United States99 in 1983. It concerned an invention for controlling the orientation of a communications satellite in orbit (the Williams patent). The claims required means for sending information to earth concerning the current position of the satellite and for receiving and directly executing a control signal sent back to reorient it. The issue at stake was whether advances in semiconductor technology, which allowed positional calculations to be executed in situ by microprocessors, took the alleged infringement outside of the scope of Williams. In the Court of Claims, the trial judge found no literal infringement because there was no means for two-way communication between the satellite and the ground. The court also refused to find infringement under the doctrine of equivalents since there was no ‘obvious or exact equivalent’100 for either the means of sending, or receiving and executing, signals. The CAFC concluded otherwise, stating that the defendant’s spacecraft: are identical with the Williams satellite, except for the employment of sophisticated, postWilliams equipment (computers) to achieve attitude control in the basic manner taught by Williams. Advanced computers and digital communications techniques developed since Williams permit doing on-board a part of what Williams taught as done on the ground. As one of our predecessor courts, the Court of Claims, has thrice made clear, that partial variation in technique, an embellishment made possible by post-Williams technology, does not allow the accused spacecraft to escape the ‘web of infringement’101

The Court also stressed that the doctrine of equivalents applied to the invention ‘as a whole’. Therefore, rather than being forced to find equivalents for each and every claimed element, Hughes established that infringement could be found under the doctrine if the accused device was substantially similar (in function, way, and result) to the patented article even if it omitted elements of the claimed invention.102 The court further opened up the doctrine by saying that elements may be found to be equivalent even if they were not known to be so at the time that the application was filed.103 The possibility of after-arising equivalents was therefore confirmed and the expansive doctrine further invigorated. The decision in Hughes can be seen as marking the beginning of a period of extreme protectionist policy within the CAFC during which the doctrine of equivalents became ‘one of the most powerful tools of judicial discretion within patent

99

717 F.2d 1351 (1983, CAFC). 215 U.S.P.Q. 787 at 812, (1982, US Court of Claims) per Judge Colaianni. 101 Hughes Aircraft, n 99, above, at 1365. 102 A conclusion that Hantman, n 23, above, describes, at 548, as contradicting all of the Supreme Court’s findings of the previous 200 years. 103 Indeed, at the time of the filing of the Williams patent, the provision of on-board computational power sufficient to calculate orienting data and issue corrective signals to the boosters was a technical impossibility. 100

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law’.104 It would appear that efforts to address the perceived anti-monopolistic stance of the various Appeal Circuits, and to right the injustices of the previous decades, provided momentum to enlarge the doctrine at an unprecedented rate. However, this all came at a price: uncertainty. Revolution in this manner and at this speed may perhaps, therefore, be seen as somewhat rash, as the messages that the court, and thus the patent grant itself, sent out to the market radically changed overnight. Adding to the uncertainties that change, of itself, necessarily engenders, was the additional burden that the ‘as a whole’ doctrine created. No longer was the patentee strictly confined by their choice of claim limitations, and so the definiteness of the grant evaporated. This was not the end of the story, however, as the fledgling CAFC, in its eagerness to atone for its predecessors’ sins, invoked further uncertainty when it saw fit to meddle in another fundamental feature of US patent law: file-wrapper estoppel.

File Wrapper Estoppel: An Introduction Application of the doctrine of equivalents is limited by another, equally important, doctrine, that of file-wrapper, or prosecution history, estoppel. This simply states that the patentee is estopped from using the doctrine of equivalents to reclaim subject-matter surrendered in an attempt to secure the grant. In other words, they are tied to any promises made, or ground conceded, during initial prosecution of the patent. A simple illustration of the application of the doctrine can be found in the Supreme Court’s decision in Exhibit Supply Co v Ace Patents Corp.105 Here the patent concerned a switch that closed an electric circuit on a pinball table when the target pin was hit by a rolling ball, therefore allowing score to be kept. The application, as originally filed, was drafted rather broadly and called for conductor means ‘carried by the table’. This was, however, rejected by the PTO as conflicting with prior art, so the phrase was replaced by ‘embedded in the table’ to secure the grant of the patent. The owner later brought an infringement action against a competitor who produced tables where the conductor means was carried by, but not embedded in, the table. The patentee alleged that the defendant’s modification was equivalent to that claimed by his patent. The Supreme Court decided in favour of the defendant, Chief Justice Stone, giving the opinion of the Court, reasoning that: By the amendment [the patentee] . . . recognized and emphasized the difference between the two phrases and proclaimed his abandonment of all that is embraced in that difference. . . . The difference which he thus disclaimed must be regarded as material, and since the amendment operates as a disclaimer of that difference it must be strictly construed against him. . . . As the question is one of construction of the claim it is immaterial whether the examiner was right or wrong in rejecting the claim as filed.106 104 105 106

See Weston, n 92, above, at 44. 315 US 126 (1942, Supreme Ct). Ibid, at 137.

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This is a thread of argument that resurfaces in the now infamous Festo litigation,107 in which the CAFC made significant efforts to reinvigorate and reinforce the doctrine of file-wrapper estoppel. The Court took the view that this was required in order to curb an apparently runaway doctrine of equivalents that was damaging the notice function of the claims.108 However discussion of Festo at this point is to jump the gun, for at the beginning of its lifetime the CAFC adopted a position far removed from this rigid application of prosecution history estoppel, instead favouring a far more flexible approach.

Formative Years: Further Uncertainties As well as expanding the doctrine of equivalents under the ‘as a whole’ test, the CAFC in Hughes also radically altered the potential consequences that a filewrapper objection could have on equivalents allegedly precluded by amendment before the PTO. By introduction of a ‘flexible bar’ approach, the court enabled argument to be raised as to the gravity of any changes made and the repercussions that should flow from them. Chief Judge Markey commented that: ‘No reason or warrant exists for limiting application of the doctrine of equivalents to those comparatively few claims allowed exactly as originally filed and never amended’.109 The prosecution history was therefore classified as having a limiting effect on the doctrine of equivalents ‘within a spectrum ranging from great to small to zero’.110 Evidence of an earlier amendment or disclaimer did not necessarily preclude the application of equivalents protection to the element in question. Rather, as Atkinson, Rose and Wasleff note: ‘the range of estoppel extended only so far as would have been necessary to distinguish the scope of prior art asserted by the examiner’.111 This was all done in the name of fairness, the doctrine of equivalents being ‘judicially devised to do equity’ and amendment of claims being a ‘common practice in prosecution of patent applications’.112 However, in making this change, the majority in Hughes‘diverged from the long-standing rule of file wrapper estoppel by shifting the focus from the amendment itself and the other legitimate equitable considerations, to the prior art that precipitated the amendment’.113 As Judge Davis, dissenting in part, noted in his opinion, several broad claims had been deleted in prosecution and substituted with claims containing limitations directly relevant to the alleged infringement.114 Yet the majority simply stated that: ‘Williams did not, 107 Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co Ltd, 234 F.3d 558 (2000, CAFC, en banc); 535 US 722 (2002, Supreme Ct); 344 F.3d 1359 (2003, CAFC, en banc). 108 See the opinion of Justice Schall 234 F.3d 558 (2000, CAFC, en banc) at 564 109 Per Chief Judge Markey in Hughes, n 99, above, at 1363. 110 Ibid. 111 Atkinson, Rose & Wasleff,‘Was Festo Really Necessary?’ (2001) 83 JPTOS 111 at 118. 112 Per Chief Judge Markey in Hughes, n 99, above, at 1361, 1363. 113 Beaton, ‘File Wrapper Estoppel and the Federal Circuit’ (1991) 68 Denver University Law Review 283, at 291. 114 Per Judge Davis in Hughes, n 99, above, at 1366.

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of course, surrender subject matter related to employment of an on-board computer to accomplish in a differently timed manner what is accomplished by his disclosed structure’.115 However, as Noonan explains: these ‘new limitations required a means for providing an indication of the satellite’s position to the earth, which was precisely what . . . [the alleged infringement] did not do’.116 The court therefore ‘seemed to adopt the position that a patentee-litigant could take a position [in court] contrary to that which [they] . . . assumed before the PTO. Prosecution history estoppel was determined by examining the scope and content of the prior art, then “second guessing” the examiner to determine if any claim amendments had in fact been necessary to narrow the claim and avoid the prior art’.117 As Beaton argues, the rule laid down in Hughes therefore: ‘implies that not only do amendments to the claims have no effect, but that the claims themselves have no effect’.118 Seen in conjunction with the broad interpretation of its sister doctrine at this point in time, the existing patentee was enjoying the most generous protection imaginable. In the name of equity, the court had expanded the inherent scope of the patent by opening up equivalents ‘as a whole’ and had also restricted the safeguards on its application, allowing the patentee a second bite of the cherry. However, by limiting the consequences of claim amendments in this manner and opening the subject up to further debate before the court, the CAFC not only undermined the credibility of the PTO, but also paradoxically eroded the equity that it was striving to supply. Equity was denied because the uncertainties that the change to prosecution history estoppel created, when combined with the ‘as a whole’ approach to equivalents that had effectively rendered the claims little more than guidelines, robbed the patenting process of the predictability that it had previously enjoyed. Alteration of the rules governing claim interpretation necessarily gives rise to certain difficulties until the scope of the changes has been incorporated into drafting practice as patent law does not allow the redrafting of claims originally created under old principles when those principles change. Seismic shifts in the courts’ interpretation of grants therefore results in a glut of patents drafted with differing purposes in mind being interpreted as though they were consistent. When a similar change is implemented by statute, transitional provisions govern the change. However, this is not the case with paradigm shifts in judicial reasoning. Change therefore, whilst it may make the grant narrower, and therefore more certain, also breeds unpredictability. Individually, it can of course be argued that none of the changes that Hughes introduced was sufficient to render the fatal blow to the equity of what the CAFC was trying to do. However, the combination of the uncertainties that change itself brings, qua change, and the seismic shifts that Hughes engendered in both doctrines may be seen to have pushed things too far. It is therefore perhaps unsurprising that 115 116 117 118

Per Chief Judge Markey in Hughes, n 99, above, at 1362. Noonan, n 90, above, at 733. Noonan, ibid, at 734. Beaton, n 113, above, at 292.

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the following year, in Kinzenbaw v Deere & Co,119 the Appeals Court ‘expressed a commitment to an objective, strict constructionist application of prosecution history estoppel’120, and rejected the ‘speculative inquiry’121 that the Hughes judgment would have allowed. Therefore, whilst the doctrine of equivalents was allowed to progress unabated in its pure form, application of the doctrine was now to be more fiercely limited based on amendments made during prosecution. The central problem with this change of heart was the doctrinal instability that such a volte-face inevitably produced. Instability based on the fact that patents prosecuted in the intervening period would now be penalised for amendments previously considered to be unproblematic, and which was magnified when, after ‘an unbroken string of five strict constructionist cases’122, the CAFC, once again, changed its mind. Thus, a mere sixteen months after the original decision in Hughes had been rejected in Kinzenbaw, the CAFC reinstituted a flexible bar approach in Loctite Corp v Ultraseal Ltd 123 The court confirmed the Hughes approach by restricting the decisions in Kinzenbaw and Prodyne Enterprises Inc v Julie Pomerantz Inc 124 to their facts, reasoning that: The results reached there only highlight that application of prosecution history estoppel to limit the doctrine of equivalents should be performed as a legal matter on a case-by-case basis, guided by equitable and public policy principles underlying the doctrines involved and by the facts of the particular case.125

The preferred approach was that demonstrated in Bayer Aktiengesellschaft v Duphar International Research,126 upholding Hughes, in which the court had described application of the doctrine in the following terms: [W]henever the doctrine of file history estoppel is invoked, a close examination must be made as to, not only what was surrendered, but also the reason for such a surrender. The fact that claims were narrowed does not always mean that the doctrine of file history estoppel completely prohibits a patentee from recapturing some of what was originally claimed.127

The protectionist attitude of the CAFC was therefore reaffirmed, but at what cost? Despite introducing inconsistencies and uncertainties into the law, the decision in Loctite, and those cases that followed which endorsed a narrow view of file-wrapper estoppel, did cement the CAFC as an essentially pro-patent 119

Kinzenbaw v Deere & Co, 741 F.2d 383 (1984, CAFC). Noonan, n 90, above, at 735. 121 Kinzenbaw v Deere & Co, n 119, above, at 389. 122 Noonan, n 90, above, at 741. The cases in question being; Kinzenbaw v Deere & Co, n 119, above; Prodyne Enterprises Inc v Julie Pomerantz Inc 743 F.2d 1581 (1984, CAFC); Seattle Box Co v Industrial Crating and Packaging Inc 731 F.2d 818 (1984, CAFC); Brenner v United States 773 F.2d 306 (1985, CAFC); Stewart-Warner Corp v City of Pontiac, Michigan 767 F.2d 1563 (1985, CAFC). 123 781 F.2d 861 (1985, CAFC). 124 743 F.2d 1581 (1984, CAFC). 125 Loctite Corp v Ultraseal Ltd., n 123, above, at 871, fn 7 therein. 126 738 F.2d 1237 (1984, CAFC). 127 Ibid, at 1243. 120

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court.128 However, the fallout from the case was significant. Strawbridge, McDonald and Moy were damning: ‘No one can predict the outcome of a future case that the court will evaluate under this anti-rule’.129 The court’s statements that it would be led by ‘equitable and public policy principles’ on a ‘case-by-case basis’130 rendered decisions ‘essentially useless as precedent’.131 James’s view was no more favourable, branding it the ‘Federal Circuit’s dive into the precedential void of public policy and equity’.132 Therefore, despite confining file-wrapper estoppel, rejecting the ‘wooden’133 approach of the past, and retaining the expansive ‘as a whole’ construction of the doctrine of equivalents in a quest for fairness, the CAFC paradoxically undermined this very principle. Uncertainty, or, more accurately, unpredictability, dogged judicial construction of the grant.

Narrowing the Doctrine of Equivalents The 1980s were a period of great economic growth in both the US and Europe. Industry flourished and so did the doctrine of equivalents, especially as the limitations imposed upon it by file-wrapper estoppel had been so crippled by inconsistencies within the CAFC’s judgments. To this point in time, the doctrine itself had, however, mostly evaded detailed scrutiny. The Hughes ‘as a whole’ test was used, seemingly without question, and protection was broad. By mid-decade, the doctrine really did deserve being branded ‘one of the most powerful tools of judicial discretion in patent law’.134 However, just as the economy was to crash at the end of the 1980s, so the ‘as a whole test’ used in the application of the doctrine of equivalents was also to meet an untimely end.

Pennwalt Corp v Durand-Wayland Inc Despite beginning the decade riding on the crest of a pro-patentee wave of policy, by the end of the 1980s the doctrine of equivalents was a shadow of its former self, and it appeared that it may be phased out in the interests of certainty. The key 128 A view that endures, see, eg, Henry & Turner, ‘The Court of Appeals for the Federal Circuit’s Impact on Patent Litigation’ (2006) 35 Journal of Legal Studies 85, at 87: ‘Not surprisingly, the CAFC has earned a reputation as a pro-patent court’. Although it can be forcibly argued that this is no longer the case following the now infamous Festo litigation. 129 Strawbridge, McDonald & Moy ‘Patent Law Developments in the United States Court of Appeals for the Federal Circuit During 1986’ (1987) 36 American University Law Review 861, at 888. 130 Loctite Corp v Ultraseal Ltd, n 123, above, at 871, fn 7. 131 Strawbridge, McDonald & Moy, n 129, above, at 888. 132 James,‘Patent Claims and Prosecution History Estoppel in the Federal Circuit’ (1988) 53 Missouri Law Review 497, at 512. 133 As Chief Judge Markey described the application of the expansive doctrine of file-wrapper estoppel. See also Hughes, n 99, above, at 1362. 134 Weston, n 92, above, at 44.

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challenge came in 1987 when the sporadic liberalism of the CAFC’s early years, evidenced by decisions such as Hughes and Loctite, was once again besieged from within. However, rather than constraining application of the doctrine of equivalents by strict enforcement of file-wrapper estoppel, this time the attack, in the en banc135 decision of Pennwalt Corp v Durand-Wayland Inc,136 was direct. The patent in question concerned an apparatus for sorting fruit by weight, colour, or both. It contained claims in which each element of the invention was represented as a means for performing a particular function. The alleged infringements embodied most, but not all, of the functions of the patented article. Specifically, the accused devices were found to have neither ‘ “indicating means” to determine positions of the items to be sorted’137 nor their functional equivalent,138 as a microprocessor stored weight and colour data, not the positions of the items themselves. This therefore negated any chance of finding literal infringement. The court moved on to the question of infringement under the doctrine of equivalents reminding the parties that: [T]he doctrine of equivalents is designed to do equity, and to relieve an inventor from a semantic strait jacket when equity requires, it is not designed to permit wholesale redrafting of a claim to cover non-equivalent devices, i.e., to permit a claim expansion that would encompass more than an insubstantial change.139

Having dispensed this advice, the majority proceeded to find the patent not infringed. In coming to this conclusion they did not consider whether the claimed invention and the accused devices were equivalent ‘as a whole’, as had been previous practice, but instead introduced a new test for determining equivalency. It used an ‘all elements’, or ‘element-by-element’, analysis requiring one-to-one equivalency of claim integers such that if even one element of the claim was missing in an accused device there could be no finding of infringement: In sum, the term ‘equivalents’ in the ‘doctrine of equivalents’ refers to ‘equivalents’ of the elements of the claim, not ‘equivalents’ of the claimed invention. While a device found to be an infringement under the doctrine of equivalents is, in a sense, ‘equivalent’ to the claimed invention, that conclusion follows from application of the doctrine. It is not the equivalency determination to which the doctrine is directed, but the result thereof. To speak of a device as being an ‘equivalent’of the patented invention muddles the analysis.140

The dissent was strong and to the point. Senior Circuit Judge Bennett declaring that:

135 ie judged by the full bench, a session whereby the entire membership of the Court (currently 12 judges in the Federal Circuit) participates in the decision rather than the regular quorum. 136 833 F.2d 931 (1987, CAFC). 137 Ibid, at 935. 138 Due to the fact that the claims of the patent were drafted in ‘means-plus-function’ format recourse to §112(6) was necessary to determine literal infringement. 139 833 F.2d 931 at 935, quoting from Perkin-Elmer Corp v Westinghouse Elec Corp, 822 F.2d 1528 (1987, CAFC) at 1352. 140 833 F.2d 931 at 953.

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[T]he majority has made shortsighted policy choices. The majority has contrived an analytical framework for the doctrine of equivalents that is little more than a redundant literal infringement inquiry, which renders the doctrine of equivalents so unduly restrictive and inflexible as to end its usefulness as judicial doctrine.141

He continued: [I]n practical effect, the majority has eviscerated the underlying rationale of the Graver Tank test by requiring, under the doctrine of equivalents, an exact equivalent for each element of the claimed invention. The majority in fact commends . . . [a test that] was never the extent of the doctrine of equivalents analysis under our here-ignored precedents which also required that the analysis be undertaken in light of the entirety of the accused device and entirety of the patent-in-suit.142

By applying the ‘element-by-element’ test, the majority took a strict peripheral view of the claims, thereby narrowing the effect of the doctrine. Takenaka suggests that the reason for this restriction lay in confusion with §112(6) equivalents, the ‘allelements’ test being intrinsic to the statutory approach.143 She asserts that an examination on an ‘element-by-element’ basis is ‘not a proper means of evaluating the modification because the patent is granted for an entire combination of elements, not for each individual element’.144 Irrespective of whether Takenaka’s assertion is in fact correct, Pennwalt’s out-ofthe-blue reduction of the patent’s scope of protection may be criticised within a bigger picture as failing to support patent policy on two fronts.145 First, whilst the court justified confinement of the doctrine of equivalents in this manner in the name of certainty, radical alteration of accepted interpretative practices, as already noted, introduces its own uncertainties, unacknowledged by the majority in the case. The insecurity that such changes produce can, in the short-term at least, outweigh any gains that the new position may provide. Given the almost continual state of flux that the CAFC’s policies found themselves subject to in the formative years of the court, short-term is all that could be considered. Ironically, however, the frequent changes in direction that the court had demonstrated when considering the doctrine of file-wrapper estoppel can be seen to have muted the problems that Pennwalt could have caused. The doctrinal unrest inherent in the court’s mixed judgments of this period would have made it unwise, at the very least, to be reliant upon equivalency’s inherently expansive nature when designing a patent’s claims. Therefore issues of the unpredictability of change were less than could otherwise have been. However, as we shall see, the Pennwalt decision was not without effect and still may be said to fail patent policy by introducing added uncertainty into the 141

833 F.2d 931, at 939–40. Ibid, at 940. The ‘here-ignored precedents’ being Martin v Barber, 755 F.2d 1564 (1985, CAFC); Carman Industries Inc. v Wahl, 724 F.2d 932 (1983, CAFC); and Hughes, n 99, above. 143 Takenaka, n 26, above, at 20. 144 Ibid, at 21. 145 Policy in this case may be broader than simply scope dependent policy, outlined in ch 5, above. Even scope independent policy such as Long’s signalling theory of patent protection (see Long, ‘Patent Signals’ (2002) 69 University of Chicago Law Review 625, discussed in text accompanying n 199–219 in ch 5, above) will be affected by the mixed signals of the courts. 142

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grant. In addition, curtailing the scope of protection in this manner provides further failure on grounds of fairness to the patentee by the overnight theft of a degree of their ‘accepted’ zone of protection. The fallout from the decision was significant.

After Pennwalt : Corning Glass Pennwalt ignited a bitter argument created by the obvious tensions between fair protection and public notice. The strong dissent by four of the panel found reflection in wildly divergent opinions in the lower courts, some applying the elementby-element rule so strictly that there was little to differentiate it from a test of literal infringement.146 The confusion surrounding application of the doctrine of equivalents was further enhanced by the fact that the next case decided by the CAFC opened it up once more. Utilising similar reasoning to the majority in Pennwalt, the Court in Corning Glass147 relaxed the application of the all element rule by clarifying, some would say redefining,148 what is meant by an element in a claim. The defendant in the case argued that their device was not equivalent to the patentee’s as it lacked an element found in the claim, thereby advocating an equivalency of component approach consistent with the reasoning in Pennwalt. The court rejected this argument, stating: ‘Element’may be used to mean a single limitation, but it has also been used to mean a series of limitations which, taken together, make up a component of the claimed invention. In the All Elements rule, ‘element’ is used in the sense of a limitation of a claim . . . [The defendant’s] analysis is faulty in that it would require equivalency in components, that is, the substitution of something in the core for the absent dopant. However, the determination of equivalency is not subject to such a rigid formula. An equivalent must be found for every limitation of the claim somewhere in an accused device, but not necessarily in a corresponding component, although that is generally the case.149

The combined effect of Pennwalt and Corning Glass was inconsistent application of the two differing standards. However, another seven years of instability within the CAFC and lower courts were to pass before the Supreme Court was finally called to settle the issue and address the problem of equivalents. Therefore in 1997, 45 years after Graver Tank had reignited an expansive application of the doctrine, and following 15 years of instability in the CAFC, the Supreme court issued its judgment in Warner-Jenkinson v Hilton Davis.150

146 See, eg, Safe Flight Instrument Corp v Sunstrand Data Control Inc, 706 F.Supp. 1146 (1989, United States District Court, Delaware). See also, Takenaka, n 26, above, at 21–2 147 Corning Glass Works v Sumitomo Electric, 868 F.2d 1251 (1989, CAFC). 148 See, eg, Player, ‘Elemental Equivalence: Interpreting ‘Substantially the Same Way’ under Pennwalt—Taken in Light of Corning Glass’ [1989] EIPR 421. 149 Corning Glass, n 147, above, at 1259. 150 Warner-Jenkinson Co, Inc v Hilton Davis Chemical Co, 520 US 17 (1997, Supreme Ct).

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Warner-Jenkinson: The Supreme Court Revisits Equivalents Warner-Jenkinson was the first case concerning the doctrine of equivalents to come before the Supreme Court since the landmark decision of Graver Tank. As such, it was of great significance. The scope of the court’s deliberations was purposefully broad. It took time to consider whether to limit, or even delete, the doctrine and also, assuming its survival, discussed how the test for equivalents should be phrased so as to avoid some of the uncertainty and distrust of the previous decade.

Death of a Doctrine? Justice Thomas, delivering the opinion of a unanimous court, addressed calls for the doctrine’s death directly: Nearly 50 years ago, this Court in [Graver Tank] . . . set out the modern contours of what is known in patent law as the ‘doctrine of equivalents.’ . . . [The] Petitioner, which was found to have infringed upon respondent’s patent under the doctrine of equivalents, invites us to speak the death of that doctrine. We decline that invitation.151

This point of policy made, the court continued, lamenting the confusion that had arisen over operation of the doctrine and stating that it would endeavour to clarify its scope: [T]he doctrine of equivalents, as it has come to be applied since Graver Tank, has taken on a life of its own, unbounded by the patent claims. There can be no denying that the doctrine of equivalents, when applied broadly, conflicts with the definitional and publicnotice functions of the statutory claiming requirement.152 (emphasis added)

It quoted the dissenting opinion of Judge Nies in the CAFC’s judgment on the case, stating that one means of avoiding the conflict could be found if a distinction was drawn, which was not too esoteric, between: substitution of an equivalent for a component in an invention and enlarging the metes and bounds of the invention beyond what is claimed . . . Where a claim to an invention is expressed as a combination of elements, as here,‘equivalents’ in the sobriquet ‘Doctrine of Equivalents’ refers to the equivalency of an element or part of the invention with one that is substituted in the accused product or process . . . This view that the accused device or process must be more than ‘equivalent’ overall reconciles the Supreme Court’s position on infringement by equivalents with its concurrent statements that ‘the courts have no right 151 Warner-Jenkinson Co, Inc v Hilton Davis Chemical Co, 520 US 17 (1997, Supreme Ct), at 21. It is significant that none of the 21 judges in the Supreme Court and CAFC who ruled on the matter disputed the existence of the doctrine. Further, at 28, the Court considered that ‘Congress can legislate the doctrine of equivalents out of existence any time it chooses. The various policy arguments [concerning its abolition] made by both sides are thus best addressed to Congress, not this Court’. 152 Ibid, at 28–9.

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to enlarge a patent beyond the scope of its claims as allowed by the Patent Office.’ [Citations omitted] The ‘scope’ is not enlarged if courts do not go beyond the substitution of equivalent elements.153

And continued: We concur with this apt reconciliation of our two lines of precedent. Each element contained in a patent claim is deemed material to defining the scope of the patented invention, and thus the doctrine of equivalents must be applied to individual elements of the claim, not to the invention as a whole. It is important to ensure that the application of the doctrine, even as to an individual element, is not allowed such broad play as to effectively eliminate that element in its entirety.154

Thus the Supreme Court confirmed the ‘all element rule’ as governing the application of the doctrine of equivalents, thereby firmly promoting the notice function of the claims within a peripheral definition construct. As we shall see in chapter seven, below, the alternative formulation, following the CAFC’s decision in the case and adopting a Hughes approach to interpretation applying the ‘as a whole’ test, is startlingly similar to the traditional German practice of determining scope by reference to the general inventive idea. Given that US practice is firmly founded in peripheral definition theory, and has been since the Act of 1870, it is hardly surprising that the court refused to go down this latter route. Nevertheless, Rose raised criticism over the Supreme Court not fully embracing the CAFC’s ‘broad view of the doctrine’, instead rendering an opinion focussing on the tension that existed between expanding protection to cover equivalents and the notice function of the claims.155 The court did not, however, stop at merely confirming the existence of the doctrine and cementing the ‘all element rule’. True to its word, it continued to consider how equivalents could be limited so as to conform with the notice function of the statutory claiming requirement. In this capacity, it turned its attention to the doctrine of file-wrapper estoppel.

On File-Wrapper Estoppel On the matter of file-wrapper estoppel, the court was equally forthright. It rejected the petitioner’s argument that the mere fact that an amendment had been made should preclude use of the doctrine of equivalents. It explained that prior cases had consistently applied file-wrapper estoppel only where the claims had been amended for a limited set of reasons, and that it could see no basis to require a more rigid rule which did away with the right of the patentee to explain the change made. However:

153

Ibid, at 29. Quoting from 62 F.3d 1512, at 1573–4 (1995, CAFC) Nies, J, dissenting. Warner-Jenkinson (Supreme Ct), n 150, above, at 29. 155 See Rose,‘Patent “Monopolyphobia”: A Means of Extinguishing the Fountainhead’(1999) 49 Case Western Reserve Law Review 509, at 543–4. 154

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Where the patent holder is unable to establish such a purpose, a court should presume that the purpose behind the required amendment is such that prosecution history estoppel would apply.156

Therefore, where the change was unrelated to patentability, ie it was not made for the purpose of overcoming a novelty, non-obviousness, etc, objection raised by the PTO, estoppel could be avoided. However, the explanatory burden was placed on the shoulders of the patentee, and in the absence of any good reason the presumption was that the Patent Office had substantial grounds related to patentability for including the limiting element added by amendment. In such circumstances, the court considered that prosecution history estoppel would apply.157 Yet, critically, it was silent as to the effect of its application, therefore leaving it open for future litigants to dispute the consequences of a file-wrapper exception following the Hughes court’s pronouncement that it could be within ‘a spectrum ranging from great to small to zero’.158 Whilst in some ways confirming the flexible approach akin to that adopted in Hughes and Loctite, the court’s insistence on the patentee bearing the explanatory burden represents a sensible middle-ground between the wildly divergent opinions that had come to characterise appellate decisions of the previous decade. Moreover, by adopting this position, the Supreme Court implicitly acknowledged the primacy of the PTO in developing the intrinsic scope of the patent as granted. The unpredictability within the context of litigation of allowing the patentee a second chance at trial to recapture ground already seemingly lost during prosecution was thus placed within sensible limits. Where the file-wrapper recorded the reasons for an amendment that were not related to the standard for patentability, the patentee was able to argue that the doctrine of equivalents should be unlimited. There is, after all, no reason to believe that amended claims would be any more perfect than their unamended brethren. However, where the file-wrapper was silent on the matter, and the patentee could provide no sound explanation as to the reason for limitation, estoppel prevented them from recapturing ground that had been sacrificed . . . probably. The reason for this caveat, and indeed the major problem with the Warner-Jenkinson decision, was the court’s failure to comment on the effects of finding that prosecution history estoppel actually applied; the overall consequence of such a conclusion still being ripe for argument. This left the door wide open for a different kind of unpredictability, independent of the courtroom, to flow from the fact of amendment per se. Because the ‘triggering event requiring . . . a rebuttal [is] . . . an infringement suit’,159 a prospect that most rational market players seek to avoid, and the new practice placed increased significance on recording the reasons for any modification in claim language, the instigation of a presumptive requirement resulted in both parties to infringement being in a shaky position. The patent 156

Warner-Jenkinson n 150, above, at 41. Ibid. 158 Per Chief Judge Markey in Hughes, n 99, above, at 1363. 159 Noe, ‘Paradise Lost but Recaptured: Prosecution History Estoppel Weakened in WarnerJenkinson Co v Hilton Davis Chemical Co’ (1998) 73 Chicago Kent Law Review 1393 at 1412. 157

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holder could have to provide reasons for an amendment made many years previously, possibly before they even owned the patent, in order to rebut the presumption that it was made for reasons related to patentability. The Supreme Court acknowledged this possibility; Justice Ginsburg, concurring with the majority, was of the opinion that: ‘The new presumption, if applied woodenly, might in some instances unfairly discount the expectations of a patentee who had no notice at the time of patent prosecution that such a presumption would apply’.160 The alleged infringer, on the other hand, was not mentioned, and yet was caught in similar position of uncertainty wherein the patentee may be able to argue ex post that the altered claim language was, in fact, made for a reason unrelated to patentability, especially where the file was unclear. Furthermore, even if an estoppel was raised, the Supreme Court’s silence on its effect rendered things even more uncertain. Noe suggests that commercial pressures, particularly for small firms given their relatively limited resources, would dictate that most of the patentee’s competitors would simply assume that estoppel would not apply, as to prove otherwise would require a trip to court.161 This is clearly unsatisfactory; however it is clear that the situation was no better for the patentee planning infringement litigation. This end result is therefore a bitter pill to swallow, especially in the light of the court’s own statements about the ‘definitional and public-notice functions of the statutory claiming requirement’,162 as anything that demands a more detailed consideration of the file-wrapper to discover the reasons for an amendment (if given), arguably fights against these functions.

Intent of the Defendant Warner-Jenkinson is also significant in confirming that it is not permissible to consider the intention of the defendant when deciding on the questions of infringement. The defendant had argued that the seeming reliance on the absence of independent experimentation in Graver Tank created an equitable defence where such experimentation had, in fact, taken place. The CAFC, when hearing the issues in Warner-Jenkinson, had endorsed the proposition, explaining that the alleged infringers’ behaviour was an indirect reflection of the substantiality of differences between the patented invention and the accused device or process: [A] person aiming to copy or aiming to avoid a patent is imagined to be at least marginally skilled at copying or avoidance, and thus intentional copying raises an inference— rebuttable by proof of independent development—of having only insubstantial differences, and intentionally designing around a patent claim raises an inference of substantial differences.163

160 161 162 163

Warner-Jenkinson, n 150, above, at 41. See Noe, n 159, above, at 1413. Warner-Jenkinson, n 150, above, at 29. Ibid, at 35, referring to the CAFC decision in the case. See n 153, above.

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This was not an opinion that the Supreme Court shared: At a minimum, one wonders how ever to distinguish between the intentional copyist making minor changes to lower the risk of legal action, and the incremental innovator designing around the claims, yet seeking to capture as much as is permissible of the patented advance.164

The references to independent research in Graver Tank therefore merely assisted the discussion of known interchangeability between the chemical compound claimed in the patent and the compound substituted by the alleged infringer. The court reasoned that a positive response to the question of independent experimentation: would not always reflect upon the objective question whether a person skilled in the art would have known of the interchangeability between two elements, but in many cases it would likely be probative of such knowledge.165

It therefore concluded that although Graver Tank left room for the inclusion of intent based elements in the doctrine of equivalents, it could not be read as requiring them: The better view, and the one consistent with Graver Tank’s predecessors and the objective approach to infringement, is that intent plays no role in the application of the doctrine of equivalents.166

A view that, in terms of predictability at least, must be applauded, as it removes from the defendant a route of manoeuvre that has little or nothing to do with the determination of equivalency itself.

After-Arising Equivalents? The petitioner had also argued that, in order to be consistent with the notice function of patent claims and to minimise any conflict that may arise, the doctrine of equivalents should be limited, at the very least, to equivalents known at the time of issue, and more realistically to equivalents actually disclosed in the patent. The court declined to accept this approach, stating that knowledge of interchangeability was not relevant for its own sake, but rather for what it tells the fact finder about the similarities between elements. It reasoned that: [T]he perspective of a skilled practitioner provides content to, and limits on, the concept of ‘equivalence’ and that the proper time for assessing the known interchangeability of elements was at the time of infringement, and not before.167

Thus, the court refused to restrict the patent’s effect to the state of the art at the time of filing, or even grant, reasoning that the objective nature of the test required 164 165 166 167

Warner-Jenkinson, n 150, above, at 35. Ibid, at 36. Ibid. Ibid.

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the assessment to be made in the light of what was known at the time of infringement. In other words, it enabled the patentee’s contribution to be linked to the scope of their rights, and drew together elements of disclosure and teaching with the zone of exclusion that the grant was to enjoy. The court married the scope of the patent to the standard for patentability and provided reward related to the patentee’s extension of the art. This, in itself, is significant as it provides the final piece of the jigsaw created by the expansive doctrine of equivalents and the patentability standard, allowing justification for expanding protection beyond the literal wording of the claims. Whilst the literal scope of the patent provides protection for the core of the invention, the doctrine of equivalents may be seen to augment this by acknowledging that the grant continues to have an instructive effect even after filing. The teaching continues and, as society and technology progress, so the interpretation that may be placed upon a patent will progress with it. The standard has the additional benefit of avoiding the need for an artificial investigation into what the court believes the skilled addressee would have considered the scope of the claims to have been at the date that the patent was filed. Whilst the literal scope of the patent is tied to this moment in time, there is nothing to be gained from entering into a speculative enquiry of what equivalents the patentee had in their contemplation at the point of drafting, as logic would dictate that if an equivalent was considered it would have been covered by the literal wording used.168 It also acknowledges that hindsight determination of the patent’s effective scope of protection is practically unavoidable. By recognising this factor and embracing it, rather than simply pretending that the patentee’s foresight definition of the invention is all that informs the court, predictability is enhanced.Whereas the doctrine of equivalents may, in itself, be alleged to introduce uncertainties into the interpretative procedure, by removing the need to consider what would have been understood to be equivalent at some specified point in time perhaps fifteen years, or more, before the acts of infringement, the Supreme Court confines the grant to an easily understandable and eminently predictable set of equivalents. The pertinent question when considering research and development is no longer to ask would have been equivalent when the patent was drafted/published/granted, it is now to enquire what the relevant person would consider to be obviously equivalent today. Inventive extensions of the prior art would therefore still fall outside of the scope of the patent’s protection. To adopt an alternative view, and to consider the matter from the perspective of the historical claim (necessarily seen in court from a position of hindsight, as the alleged infringement has been committed, but insisting that this is not the case), ignores the reality of technological development and the fact that the patent’s teaching continues to evolve with the grant. Moreover, in no other 168 It should also be noted that a ‘public dedication’ rule operates wherein subject matter that is disclosed in the description but remains unclaimed is deemed to have been dedicated to the public. See Maxwell v Baker, 86 F.3d. 1098 (1996, CAFC). This principle was confirmed in Johnson & Johnston Associates Inc v R E Service Co, 285 F.3d 1046 (2002, CAFC, en banc), at 1054, when the CAFC held that such matter could additionally not be recaptured through operation of the doctrine of equivalents as this would ‘conflict with the primacy of the claims in defining the scope of the patentee’s exclusive right’.

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aspect is the claim limited to what the court thought someone else believed it to mean at the time it was drafted. If this were the case then it would be but a small step to argue that there is an inalienable right to the patented technology for the duration of the grant, as the Patent Office and the patentee must have believed at the point of issue that what they were dealing with was valid. There can be no such presumption. Acceptance of after-arising equivalents also gives justification to the ‘reverse’ or ‘narrowing’ doctrine of equivalents, which was first advanced in Westinghouse v Boyden.169 The doctrine had been confirmed some years prior to Warner-Jenkinson by the CAFC in Texas Instruments Inc v United States International Trade Commission.170 The court in the latter case, whilst agreeing that the claim in question could be read onto the allegedly infringing devices, considered that they were in fact so far improved from the claimed invention that: [T]he total of the technological changes beyond what the inventors disclosed transcends the equitable limits illustrated, for example, in Graver Tank, . . . [etc.,] and propels the accused devices beyond a just scope of the . . . claims.171

Therefore, defendant’s device was considered to be so far changed ‘in principle from the patented article that it perform[ed] the same or a similar function in a substantially different way’.172 Such a doctrine clearly provides protection for third parties that advance technology in a manner that departs substantially, and inventively, from existing grants but which nonetheless falls within the scope of a broad literally interpreted claim. It also dovetails perfectly with the court’s consideration of equivalents, as an assessment of the obviousness of a substitution, performed at the date of infringement, provides a limitation on inventive after-arising technology being considered as falling within the scope of the patent.

A Test for Equivalence? Finally, the court addressed the debate concerning the linguistic framework under which equivalence is determined. It noted the accepted problems of the triple identity test in analysing products or processes that are not mechanical in nature. Further, it acknowledged that an insubstantial difference test offers ‘little additional guidance as to what might render any given difference “insubstantial” ’,173 The Supreme Court therefore concluded that the particular linguistic framework used was less important than whether the test was probative of the essential enquiry: Does the accused product or process contain elements identical or equivalent to each claimed element of the patented invention?174 169 Westinghouse v Boyden Power Brake Co 170 US 537 (1898, Supreme Ct). Discussed in text accompanying n 51, above. 170 805 F.2d 1558 (1986, CAFC). 171 Ibid, at 1571. 172 Graver Tank, n 8, above, at 608–9 173 Warner-Jenkinson, n 150, above, at 40. 174 Ibid.

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In answer to this question, the court suggested that different linguistic frameworks would suit different factual situations and that a focus on the role played by individual elements in the context of a specific claim will inform the inquiry. However, it refrained from going further ‘and micro managing the Federal Circuit’s particular word choice for analyzing equivalence’. Preferring instead to leave the CAFC free to ‘refine the formulation of the test for equivalence in the orderly course of case-by-case determinations’.175 Given the problems evident with applying a single linguistic framework to all types of invention and technology, elucidation of the underlying rationale in this manner was an eminently sensible step for the court to take. Maintaining a firm association between the claims and the extent of protection under the doctrine must also be seen as a positive attempt to confirm the predictability of the grant, going some way to assuage cries that it was inherently incompatible with the definitional and public notice functions of the claiming requirement. However, it was apparent that significant parties thought that the Supreme Court had not gone far enough. Heading this list was a very significant party indeed: the CAFC.

Mani-Festo for the Future? At the time that the Supreme Court was considering the appeal in WarnerJenkinson, another case was rumbling in the background which would eventually come to overshadow the entire affair. The Festo litigation had already been bounding around the lower courts for a number of years,176 but in 1997 the Supreme Court remanded it for reconsideration177 in light of its (then) most recent decision, Warner-Jenkinson. By 2000, the litigation had reached the CAFC for the second time, which, due to the importance of the issues at stake, had vacated their earlier decision and granted the defendant’s request for rehearing en banc. The en banc decision of the Court was delivered on 29 November, 2000, and was set to rock the patent community to its very foundations. Indeed, such was the effect of the judgment that it caused one commentator to proclaim ‘the doctrine of equivalents is dead, dead, dead’.178 Furthermore, Wegner, in a recent article, brands Festo a ‘patent law nightmare’ that has caused damage to the ‘fabric of infringement law’.179 Others, whilst not being quite so melodramatic, reflect the gravity of the situation 175

Ibid. The first hearing being in the US District Court for the District of Massachusetts before Special Master Schwartz, judgment delivered on 27 Apr, 1993. Not reported in F.Supp. The decision is available on Westlaw under reference 1993 WL 1510657 and on LexisNexis under reference 1993 U.S. Dist. LEXIS 21434. 177 Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd, 520 US 1111 (1997, Supreme Court). 178 Hosteny,‘Does Festo Change Patent Prosecution?’ [2001] (May) IP Today 44 at 44. 179 Wegner, ‘Festering Questions After Festo’ (2003) 13 Fordham Intellectual Property, Media and Entertainment Law Journal 891, at 891, 907. 176

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nonetheless, stating that ‘the Festo decision may have transformed prosecution history estoppel into an exception that swallows the rule’.180

The Problem Identified The Festo litigation concerns two patents for magnetic rodless cylinders composed of three basic parts: a piston, a cylinder, and a sleeve. They were the US counterparts of German applications. Circuit Judge Schall, giving judgment in the CAFC en banc rehearing, described the basic operation of the invention in the following terms: [T]he piston is on the inside of the cylinder, and is moved by fluid under pressure. The sleeve is on the outside of the cylinder, and is magnetically coupled to the piston. The magnetic attraction between the sleeve and the piston causes the sleeve to follow the piston when it moves along the inside of the cylinder. The sleeve is used to move objects on a conveying system.181

The allegedly infringing articles differed from the patent in a number of areas. Specifically, where the patent claimed a device with a pair of sealing rings, the defendant’s products contained only a single resilient two-way sealing ring.182 In addition, the defendant’s piston sleeve was made of aluminium, whereas the patent called for one made from magnetizable material (aluminium being notably nonmagnetizable). Therefore, the articles did not fall within the literal scope of the claims. However infringement was found under the doctrine of equivalents applying the all elements test laid down in Warner-Jenkinson. Such is not controversial. The central issue in the case, however, revolves around certain amendments made during prosecution before the USPTO, which gave rise to prosecution history estoppel. The en banc court requested briefs on five questions for the rehearing, all of which concerned the operation of the file-wrapper bar to application of the doctrine of equivalents. In particular, the court wished to clarify the exact nature of the flexible test adopted by the Warner-Jenkinson court. Circuit Judge Schall summarised the questions that it had asked the parties to brief as follows: 1. For the purposes of determining whether an amendment to a claim creates prosecution history estoppel, is ‘a substantial reason related to patentability,’ [citation omitted] . . . [as required by Warner-Jenkinson] limited to those amendments made to overcome prior art under §102 and §103 [novelty and inventive step], or does ‘patentability’mean any reason affecting the issuance of a patent? 2. Under Warner-Jenkinson, should a ‘voluntary’claim amendment—one not required by the examiner or made in response to a rejection by an examiner for a stated reason— create prosecution history estoppel? 180

Atkinson, Rose & Wasleff, n 111, above, at 111. 234 F.3d 558 (2000, CAFC, en banc) at 579. 182 The Court explains the difference between the two in the following manner: ‘A sealing ring has a lip on only one side of the ring that seals against fluid flow on that side. By contrast, a two-way sealing ring has a lip on both sides of the ring that allows each side to seal against fluid flow’. Ibid. at 582. 181

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3. If a claim amendment creates prosecution history estoppel, under Warner-Jenkinson what range of equivalents, if any, is available under the doctrine of equivalents for the claim element so amended? 4. When ‘no explanation [for a claim amendment] is established,’ [citation omitted] . . . thus invoking the presumption of prosecution history estoppel under WarnerJenkinson, what range of equivalents, if any, is available under the doctrine of equivalents for the claim element so amended? 5. Would a judgment of infringement in this case violate Warner-Jenkinson’s requirement that the application of the doctrine of equivalents ‘is not allowed such broad play as to eliminate [an] element in its entirety,’ [citation omitted]. In other words, would such a judgment of infringement, post Warner-Jenkinson, violate the ‘all elements’ rule?183

The majority answers were stark.

Judgment en Banc The court began by examining the function of the doctrine of equivalents in patent law, retracing the steps of the Supreme Court in Warner-Jenkinson. Referring to Graver Tank, Circuit Judge Schall, giving the opinion of the court, stated that the doctrine operates to prevent the: accused infringer from avoiding liability for infringement by changing only minor or insubstantial details of a claimed invention while retaining the invention’s essential identity.184

In undertaking this task, however, he noted that a balance must be struck between ensuring that patentee enjoys their just reward and ensuring that the claims give ‘fair notice’ to third parties of the patent’s scope. This balance could be easily upset because, in the words of the Supreme Court in Warner-Jenkinson: [T]he doctrine of equivalents, when applied broadly, conflicts with the definitional and public-notice functions of the statutory claiming requirement.185

He continued: Prosecution history estoppel is one tool that prevents the doctrine of equivalents from vitiating the notice function of claims . . . [It] precludes a patentee from obtaining under the doctrine of equivalents coverage of subject matter that has been relinquished during the prosecution of its patent application . . . Therefore,‘[t]he doctrine of equivalents is subservient to . . . [prosecution history] estoppel.’186 [citations omitted]

With these points in mind, the court then proceeded to consider the answers to the five specific questions posed. In respect of the first, it held that ‘a substantial reason related to patentability’ was not limited to the avoidance of prior art, but also included any other reason related to the statutory requirements for patentability: 183 184 185 186

Ibid. at 563. Ibid, at 564. Referring to Graver Tank, n 8, above, at 608. 234 F.3d 558 at 564. Referring to Warner-Jenkinson, n 150, above, at 29. 234 F.3d 558 at 564.

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Therefore, an amendment that narrows the scope of a claim for any reason related to the statutory requirements for a patent will give rise to prosecution history estoppel with respect to the amended claim element.187

In answer to the second question, the court considered that voluntary amendments should be treated in the same manner as any other amendments: [T]herefore, any voluntary amendment that narrows the scope of a claim for a reason related to the statutory requirements for a patent will give rise to prosecution history estoppel with respect to the amended claim element . . . [As b]oth voluntary amendments and amendments required by the Patent Office signal to the public that subject matter has been surrendered.188

The court therefore clearly views the doctrine of equivalents as an exceptional rule of interpretation, to be strictly controlled. This conclusion is further highlighted by reference to the court’s answer to the third en banc question. When a claim amendment creates prosecution history estoppel with regard to a claim element, there is no range of equivalents available for the amended claim element. Application of the doctrine of equivalents to the claim element is completely barred (a ‘complete bar’).189

The answer to the third question has been described as the ‘heart of the Festo opinion’190 as the flexible-bar approach of the past191 was swept aside in favour of the far more restrictive complete-bar to the application of the doctrine of equivalents. The court explained the reason for adopting this standard in the following manner: Our decision to reject the flexible bar approach adopted in [Hughes] . . . comes after nearly twenty years of experience in performing our role as the sole court of appeals for patent matters. In those years, the notice function of patent claims has become paramount, and the need for certainty as to the scope of patent protection has been emphasized. A problem with the flexible bar approach is that it is virtually impossible to predict before the decision on appeal where the line of surrender is drawn. . . . After our long experience with the flexible bar approach, we conclude that its ‘workability’ is flawed.192 (emphasis added)

Circuit Judge Schall continued, extolling the virtues of the complete bar approach in lending certainty to the process of determining the scope of protection conferred by a patent: 187

234 F.3d 558, at 566. Ibid, at 568. 189 Ibid, at 569. 190 By Wharton, ‘Festo and the Complete Bar: What’s left of the Doctrine of Equivalents?’ (2001) 20 Saint Louis University Public Law Review 281 at 287. 191 It will be recalled that the court in Hughes, had classified the file-wrapper as having a limiting effect on the doctrine of equivalents ‘within a spectrum ranging from great to small to zero’, per Chief Judge Markey, in Hughes, n 99, above, at 1363. 192 234 F.3d 558, at 574–5. 188

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With a complete bar, both the public and the patentee know that once an element of a claim is narrowed by amendment for a reason related to patentability, that element’s scope of coverage will not extend beyond its literal terms. There is no speculation or uncertainty as to the exact range of equivalents that might be available. This certainty aids both the public and the patentee in ascertaining the true scope and value of the patent without having to resort to litigation to obtain a case by case analysis of what subject matter the claims can cover. With a complete bar, neither the public nor the patentee is required to pay the transaction costs of litigation in order to determine the exact scope of subject matter the patentee abandoned when the patentee amended the claim.193

Furthermore, in answer to the fourth question, the court stated that no range of equivalents would be available where no explanation for a claim amendment was established.194 The court therefore adopted the contraposition to the Hughes court’s narrow interpretation of the effects of the doctrine of file-wrapper estoppel and further extended the complete bar rule. Due to its answers to the preceding questions, the court found no need to reach a decision in relation to the fifth question.

Fallout By answering the en banc questions in this manner, the CAFC caused uproar in patent circles. The primary criticism came from the establishment of the complete bar approach whereby any amendment related to patentability would automatically preclude application of the doctrine of equivalents to that element.As noted in chapter four, above, the standard practice of those drafting patent claims is to begin broad and amend as, and when, necessary to narrow the scope of protection during prosecution. This approach is a product of many factors, including the stage in the innovative process at which the patent application is made and the position of known prior art in relation to the invention. Therefore, those patents that were drafted prior to the decision in Festo almost invariably suffered from amendments of some kind, whether related to patentability or not, due simply to the nature of the drafting process. Before the decision, before the importance of rationalising and recording the exact reason for the amendment was made clear, there was, however, no incentive or requirement to explain the claim’s modification in any way. Yet, subsequently the bright line standard adopted by the CAFC created a need for the owner to have specified the reasons for any modification of claim language, or else to risk equivalents being precluded; such was the requirement of certainty. In making its statement on the complete nature of the bar, the court failed to consider the penalties that this ‘certainty’ would impose upon those patents in force at the time of the judgment. This, in itself, is somewhat ironic as this very situation was discussed by members of the Supreme Court in Warner-Jenkinson. Justice Ginsburg, with whom Justice Kennedy concurred, joining the opinion of the court but writing separately ‘to add a cautionary note on the rebuttable presumption [it] 193 194

Ibid, at 577. Ibid, at 578.

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. . . announces regarding prosecution history estoppel’.195 The note is succinct and to the point, and clearly pre-empts the CAFC’s decision in Festo: I address in particular the application of the presumption in this case and others in which patent prosecution has already been completed. The new presumption, if applied woodenly, might in some instances unfairly discount the expectations of a patentee who had no notice at the time of patent prosecution that such a presumption would apply. Such a patentee would have had little incentive to insist that the reasons for all modifications be memorialized in the file wrapper as they were made. Years after the fact, the patentee may find it difficult to establish an evidentiary basis that would overcome the new presumption. The Court’s opinion is sensitive to this problem, noting that ‘the PTO may have relied upon a flexible rule of estoppel when deciding whether to ask for a change’ during patent prosecution.196

The CAFC’s decision in Festo may therefore be criticised on the basis that it is wholly inconsistent with this warning. Significant problems arise due to the effects that prior rules had on the system surrounding the interpretation of patent documents. The interpretation that will be placed on the claims of a patent is but one of a number of factors that govern the effective scope of protection. Institutional practices augmenting the court’s approach to the determination of patent scope rely on consistency for their operation. Patents are drafted in the expectation that they will be interpreted in a certain way, or at least will not be prejudiced in the future for compliance with the law of the present. Therefore, criticism of the Festo decision need not be criticism directed to the future effects on drafting, but rather to the seismic shift in the status quo that renders past inventive effort devoid of reward. The effect of the CAFC’s decision was to provide a patentee’s competitors with a charter to infringe.All that they need do was order a copy of the patent and the prosecution history, isolate those areas in which amendment had been made and substitute functional equivalents for those elements. The apparent policy justifications for patent protection were changed overnight as a warped caricature of the ‘public notice’ function gained prominence. Therefore, patents drafted with all due care and diligence based on the court’s previous practice found themselves, after Festo, robbed of the scope that they would once have enjoyed. The decision could not be allowed to stand.

Festo In The Supreme Court Little more than thirteen months after the CAFC had delivered its en banc opinion in Festo, the case was being heard before the Supreme Court on appeal. Almost five months later it delivered its unanimous judgment; stark in criticism of the lower court’s approach, its tone clear:

195 196

Warner Jenkinson, n 150, above, at 41. Ibid, at 41–2.

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The patent laws ‘promote the Progress of Science and useful Arts’ by rewarding innovation with a temporary monopoly . . . [T]he nature of language makes it impossible to capture the essence of a thing in a patent application. The inventor who chooses to patent an invention and disclose it to the public, rather than exploit it in secret, bears the risk that others will devote their efforts toward exploiting the limits of the patent’s language . . . The language in the patent claims may not capture every nuance of the invention or describe with complete precision the range of its novelty. If patents were always interpreted by their literal terms, their value would be greatly diminished.197 (emphasis added)

The court explained that the doctrine of equivalents had evolved to combat the devaluation caused by simple acts of copying where unimportant and insubstantial substitutes for claimed elements had been made. Uncertainty was described as the ‘the price of ensuring the appropriate incentives for innovation’, a price that the Supreme Court had always been willing to pay, consistently ‘affirm[ing] the doctrine over dissents that urged a more certain rule’.198 Yet it was clear that the doctrine of equivalents could not progress unbounded. For this reason its sister doctrine, file-wrapper estoppel, had been created. Just as equivalents protection preserves equity in enabling the patentee to capture insubstantial changes that had evaded the literal draft, so prosecution history estoppel preserves the same in binding the patentee to their concession that the invention as patented does not extend as far as the original claim: Prosecution history estoppel ensures that the doctrine of equivalents remains tied to its underlying purpose. Where the original application once embraced the purported equivalent but the patentee narrowed his claims to obtain the patent or to protect its validity, the patentee cannot assert that he lacked the words to describe the subject matter in question. The doctrine of equivalents is premised on language’s inability to capture the essence of innovation, but a prior application describing the precise element at issue undercuts that premise. In that instance the prosecution history has established that the inventor turned his attention to the subject matter in question, knew the words for both the broader and narrower claim, and affirmatively chose the latter.199

The court therefore confirmed that an estoppel would arise where the amendments made to a claim in order to secure the patent resulted in a narrowing of its scope. However, it rejected the complete bar rule suggested by the CAFC, stating that this approach was: inconsistent with the purpose of applying the estoppel in the first place—to hold the inventor to the representations made during the application process and to the inferences that may reasonably be drawn from the amendment. By amending the application, the inventor is deemed to concede that the patent does not extend as far as the original claim. It does not follow, however, that the amended claim becomes so perfect in its description that no one could devise an equivalent. After amendment, as before, language remains an imperfect fit for invention. The narrowing amendment may demonstrate what the claim is not; but it may still fail to capture precisely what the claim is.200 197 198 199 200

535 US 722 (2002, Supreme Ct) at 731. Ibid, at 732. Ibid, at 734–5. Ibid, at 737–8.

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Thus, there was considered to be no good reason why any narrowing amendment would result in a claim that was any more perfect than one in its original, unaltered, state. Moreover, if equivalents were unforeseeable at the time of the amendment, then it could not even be concluded that the patentee had in any way surrendered these by the changes to their claims. As such there was no logical reason why the strict bar on the application of the doctrine of equivalents should apply to amended claims any more than there was such a reason for ‘abolishing the doctrine of equivalents altogether and holding every patentee to the literal terms of the patent’.201 The Supreme Court therefore took a middle path between the CAFC’s absolute bar and the flexible approach of the past, adopting instead a foreseeable standard in line with that advocated by the US government in its amicus brief.202 As Cole notes, this ‘foreseeable bar was said to avoid each “parade of horribles” put forward by respective opponents of the flexible bar and the absolute bar, while simultaneously giving effect to the policy considerations advanced by their respective advocates’.203 To have adopted the CAFC’s position and insisted upon a bright-line complete bar would, in the words of the court, be to resort to the ‘very literalism the equivalents rule is designed to overcome’.204 Both the doctrine of equivalents and prosecution history estoppel were, therefore,‘settled law’ and: The responsibility for changing them rests with Congress . . . Fundamental alterations in these rules risk destroying the legitimate expectations of inventors in their property.205 (emphasis added)

Comment The Supreme Court’s judgment in Festo is clearly focused on the predictability of the grant. By stating that ‘fundamental alterations’ in the rules governing claim interpretation risks ‘destroying the legitimate expectations of inventors’, the court unambiguously reasserted Justice Ginsburg’s comments in Warner-Jenkinson and rebuked the lower court for ignoring this guidance. In providing judgment, therefore, it recognised the problems associated with expansion of the grant via equivalents, but also demonstrated appreciation that there is no magic solution to the inherent problem of defining the invention in a web of words. All approaches will, in one manner or another, be insufficient and will introduce uncertainties or prejudice equity. The key, therefore is to appreciate this factor and to work on the basis that perfection is not a possible, or even plausible, standard to attain. Rejection of a complete bar standard demonstrates the Supreme Court’s view that the balance cannot be achieved by ignoring the realities of the system and pre201

535 US 722 (2002, Supreme Ct), at 738. See Brief for the United States as Amicus Curiae Supporting Vacatur and Remand, at 10. Available on Westlaw: 2001 WL 1025650. This position was also adopted by the Institute of Electrical and Electronics Engineers in their Amicus Brief, 2001 WL 1025309, particularly at 19–29. 203 Cole, n 4, above, at 124. 204 535 US 722 at 738. 205 Ibid, at 739. 202

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tending that claims could ever be perfect. As noted in chapter four, above, the possibility of making mistakes, of missing the elusive piece of prior art, or of failing to convince the examiner that a claim should be allowed in an unamended form, is inversely proportional to the amount of time (and money) spent on drafting and searching. Additionally, the degree of familiarity that the patentee has with the patenting process is significant in securing a solid claim. It is therefore telling to note that the parties in favour of the absolute bar tended to be large, blue-chip, institutions such as IBM, Kodak, Ford, and Du Pont.206 Clearly all have the experience and financial muscle to conduct extensive searches and make good of a narrow protection situation, all would ultimately benefit from being able to design around a competitor’s invention, and all could probably afford to lose a proportion of their patents to achieve this bright-line standard. On the other side, arguing for a flexiblebar, lay the American Intellectual Property Law Association, an independent association consisting mainly of intellectual property law practitioners207 and who have a good chance of working for the ‘little guy’. By rejecting the position advocated by IBM, et al, the Supreme Court demonstrated that it was acutely aware of the effect that such a shift in the legitimate expectations of both patentee and their competitors would have on the process of innovation already instigated under the patent system. It is clear that the assessment and determination of the patent’s zone of protection cannot be isolated from those grants already in existence, which have had their intrinsic scope (ie the scope of the patent as drafted) determined by the legitimate expectations of their drafters. The importance of the doctrine of equivalents in the US is thus primarily related to the effect that it has on patents in operation, rather than the prospective effect that it may have on patents in the future. The American experience therefore highlights one of the paradoxes inherent in ‘designing’ a better, or optimal, patent regime. The act of change, in itself, is incompatible with many of the aims of, and justifications for, the system.As Machlup stated in his review of the US Patent system in the 1950s: If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our current knowledge, to recommend abolishing it.208 206 See the Brief of International Business Machines Corporation, Eastman Kodak Company, Ford Motor Company, EI Du Pont De Nemours and Company, Agere Systems Incorporated and the Financial Services Roundtable as Amici Curiae in Support of Respondents. Available on Westlaw: 2001 WL 1397747. 207 Their website, http://www.aipla.org, states: ‘The American Intellectual Property Law Association (AIPLA) is a national bar association constituted primarily of lawyers in private and corporate practice, in government service, and in the academic community, with more than 16,000 members. The AIPLA represents a wide and diverse spectrum of individuals, companies and institutions involved directly or indirectly in the practice of patent, trademark, copyright, and unfair competition law, as well as other fields of law affecting intellectual property. Our members represent both owners and users of intellectual property’. 208 Machlup, An Economic Review of the Patent System, Study No 15 of the Sub-Committee on Patents, Trademarks and Copyrights of the Committee on the Judiciary, US Senate 85th Congress, 2nd Session (1958; Washington) at 80–1.

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The same can be said instituting the sort of ad hoc amendments to current practice that the CAFC did in Festo. The quest for certainty (under the guise of predictability) undertaken by the court is admirable, however, given the status quo before Festo, the CAFC’s approach was reckless. Predictability means more than simply having patents whose scope is confined to a literal and therefore ‘certain’ interpretation, in common law jurisdictions it also means predictable litigation based firmly on precedent. The Federal Circuit’s decision in Festo not only evinces a change of favour for patents, withdrawing fully from the court’s early pro-patent policy, but also flies in the face of clear precedent. Such was the outcry over the ruling that it is not at all surprising that the Supreme Court acted as it did in condemning the junior court’s actions. However, the story does not end here for towards the end of 2003 an en banc CAFC issued judgment in Festo for the second time.209

Postscript: The CAFC Revisits Festo The Supreme Court had remanded the Festo litigation back to the CAFC for adjudication as to whether prosecution history estoppel barred the claimant from relying on the doctrine of equivalents. Despite having their previous judgment vacated by the senior court, Judge Lourie, giving the opinion of the CAFC, began his discussion by reinstating ‘those holdings of Festo VI that were not disturbed’.210 He therefore stated that any ‘narrowing amendment made to comply with any provision of the Patent Act . . . may invoke an estoppel’.211 This was to include voluntary, as well as requested, amendments. In addition, he ‘clarified’ that: [T]he Supreme Court’s Warner-Jenkinson presumption, which treats a narrowing amendment as having been made for a ‘substantial reason related to patentability’ when the record does not reveal the reason for the amendment . . . remains intact.212

He conceded, however, that the ‘consequences of failing to overcome that presumption have been altered’.213 The test to be applied was stated to comprise three distinct stages. First, does the amendment narrow the literal scope of the claim? If it does then the second question may be asked; if not, prosecution history estoppel does not apply. The second question concerns the motivation for the amendment; was it carried out for a substantial reason relating to patentability? The presumption, following the decision in Warner-Jenkinson, is that, in the absence of any evidence to the contrary being

209 210 211 212 213

344 F.3d 1359 (2003, CAFC, en banc). Ibid, at 1366. Festo VI refers to the first en banc judgment of the CAFC in the case, n 181, above. 344 F.3d 1359 at 1366. Ibid. Ibid.

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found on the prosecution file, it was.214 As noted above, this raises certain problems in relation to unclear file-wrappers; however, as a simple continuation of established practice, the standard is unobjectionable. If the amendment is considered to have been required for reasons relating to patentability the next step in the analysis, considering the scope of the subject matter surrendered by the narrowing amendment, may be addressed. The presumption connected with this third-stage, the socalled ‘Festo presumption’,215 is that the patentee has surrendered all of the territory between the original claim and the amended claim. Once again, this is subject to rebuttal; however, the grounds for doing so are significantly limited, leading one commentator to observe that ‘amendments will virtually never fall into these “escape hatches” ’.216

Rebutting the Festo Presumption The Supreme Court had previously provided examples of when it thought that filewrapper estoppel ‘cannot reasonably be viewed as surrendering a particular equivalent’.217 These included situations where: an equivalent was unforeseeable at the time of the application; the rationale underlying the amendment bore no more than a tangential relation to the equivalent in question; and finally, where ‘some other reason’ suggested that the patentee could not reasonably have been expected to describe the insubstantial substitute in question.218 The presence and interpretation of these examples were seized upon by the CAFC’s majority as being questions of law, the Supreme Court’s Warner-Jenkinson opinion being used directly as justification of this approach. Judge Newman, in dissent, was highly critical of this decision, especially in relation to the ‘factual criteria’ of ‘tangentialness’ and ‘other reasons’. She argued that, by adopting a purely legal analysis, the majority advocated ‘decid[ing] these questions of first impression without development and without evidence . . . [thereby depriving] Festo . . . of both trial and appeal’.219 Moreover, the majority’s guidance on how the rebuttal criteria should be applied relegated them to little more than complete bars on the application of the doctrine of equivalents as the tests laid down were ‘unlikely ever to be met’.220

214

See text accompanying n 156–62, above. See, eg, Van Thomme, ‘Prosecution History Estoppel After Festo: Can an Equivalent Ever break through the File Wrapper?’ (2005) 53 Drake Law Review 1099 at 1116. 216 Ibid, at 1119. 217 535 US 722, at 740. 218 Ibid, at 740–1. 219 344 F.3d 1359, at 1383. 220 Ibid, at 1384. 215

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The Rebuttal Criteria The CAFC referred to the Supreme Court’s own explanation of the first criterion, noting that it would be satisfied where the patentee showed that the alleged equivalent would have been unforeseeable at the time of the amendment, and ‘thus beyond a fair interpretation of what was surrendered’.221 It explained that this is an objective test that requires the court to ask ‘whether the alleged equivalent would have been unforeseeable to one of ordinary skill in the art at the time of the amendment’.222 The court clarified this by noting that equivalents will usually be unforeseeable if they represent ‘later-developed technology . . . or technology that was not known in the relevant art’.223 Old technology, whilst not always so, will be more likely to have been foreseeable. Moreover, if the equivalent was known in the prior art of the field in question then it ‘should have been foreseeable’ according to the court. Given that the equivalents in question would have been surrendered in the amendment itself, this appears to be a sensible restriction. If they were, or should have been, within the patentee’s contemplation when narrowing the claim then there is little to suggest that they should be allowed to be recaptured via the back door. Indeed, Judge Newman, so critical of the majority’s treatment of the other criteria, concurs fully with their discussion of this element of the test, although noting that actual decision on this point appears to have been pre-judged by the court, a practice that she warns against.224 The second of these rebuttal criteria ‘requires a patentee to demonstrate that “the rationale underlying the narrowing amendment [bore] no more than a tangential relation to the equivalent in question” ’225 When determining the meaning of ‘tangential’, the court made reference to the dictionary definition of the word,226 before continuing: [M]uch like the inquiry into whether a patentee can rebut the Warner-Jenkinson presumption that a narrowing amendment was made for a reason of patentability, the inquiry into whether a patentee can rebut the Festo presumption under the ‘tangential’ criterion focuses on the patentee’s objectively apparent reason for the narrowing amendment.

In other words, it seeks to rely upon representations made and recorded in the file-wrapper as to why a claim was amended. As Judge Newman explains, the problem with this approach is that the issue of tangentialness will often ‘require consideration of how the reasons for an amendment affected the patentee’s view that 221

344 F.3d 1359, at 1369, referring to 535 US 722 at 738. 344 F.3d 1359, at 1369. 223 Ibid. 224 Ibid, at 1383–4. 225 Ibid, at 1369, quoting from 535 US 722 at 740. 226 Stating: ‘The American Heritage College Dictionary 1385 (3d ed 1997) (defining “tangential” as “[m]erely touching or slightly connected” or “[o]nly superficially relevant; divergent”); 2 The New Shorter Oxford English Dictionary 3215–16 (1993) (defining “tangential” as “merely touch[ing] a subject or matter; peripheral”)’. 344 F.3d 1359, at 1369. 222

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certain technology was extraneous’.227 This information will rarely, if ever, be found in the prosecution history. Furthermore, as Van Thomme suggests: ‘It seems unlikely . . . that an equivalent that is related closely enough to potentially give rise to infringement under the doctrine of equivalents could ever be only “tangentially related”to the amendment in question’.228 The majority therefore provide a test that is narrowed to the point of absurdity. The third, and final, criterion ‘clarified’ by the court requires that the patentee establish ‘some other reason’ to explain why they could ‘not reasonably be expected to have described the insubstantial substitute in question.’229 Judge Lourie, giving the opinion of the majority, stressed that: This category, while vague, must be a narrow one; it is available in order not to totally foreclose a patentee from relying on reasons, other than unforeseeability and tangentialness, to show that it did not surrender the alleged equivalent. Thus, the third criterion may be satisfied when there was some reason, such as the shortcomings of language, why the patentee was prevented from describing the alleged equivalent when it narrowed the claim.230

However, as Judge Newman once again comments, the possibility of such a reason being contained in the prosecution history, as it would need to be following the majority’s judgment, is low: ‘a virtual impossibility’.231 Whilst the majority’s discussion of the rebuttal criteria is limiting, it is their final pronouncement that: ‘if the patentee fails to rebut the Festo presumption, then prosecution history estoppel bars the patentee from relying on the doctrine of equivalents for the accused element’,232 that is the cause for most concern. Given the narrow interpretation of the possibility of rebuttal, this statement effectively reintroduces the complete bar via the operation of a series of presumptions that expand the surrendered territory. Once again, the patentee’s competitors have their courtsanctioned charter to infringe.

Conclusion The effect of the CAFC’s ‘clarification’ of the presumptions and guidance on applying the rebuttal criteria is to return to a position wherein the complete bar is applied under a different name. The applicant is still at a serious disadvantage if their claims have been the subject of amendment, whatever the reason, at some point during the application process. As Judge Rader, in a concurring opinion, notes: 227 228 229 230 231 232

344 F.3d 1359 at 1384. Van Thomme, n 215, above, 1121. 344 F.3d 1359, at 1370, quoting from 535 US 722 at 741. 344 F.3d 1359, at 1370. Ibid, at 1385. 344 F.3d 1359 at 1367.

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[A]t the pace of these changes in fundamental patent law, the noble objective of bringing more certainty to the doctrine of equivalents nonetheless exacts a price in unintended consequences . . . [T]he Supreme Court’s stringent estoppel presumptions also entail considerable unanticipated arbitrariness because examiners differ. Some examiners aggressively seek to narrow and define claims. Others demand far fewer amendments. Thus the application of the forfeiture presumption often depends on the luck of the examiner draw. In any event, the new certainty rules for equivalents (a rebuttable presumption that narrowing amendments erect a complete bar), at least for a period of time, may disrupt as much certainty as they provide. In particular, these new rules are likely to influence both the patent acquisition and enforcement processes in unpredictable ways.233

According to Judge Rader, the CAFC is therefore in it for the long-haul; creating a clearer and better patent system for the future even if it results in uncertainty today. This is admirable, but fails to appreciate that this is exactly what Judge Rich and his fellows were attempting to do by shaping the court as pro-patent at the beginning of its lifetime. Within little more than 20 years, we have seen a volte-face in the court’s affections, first favouring the patentee and then the public, in each case proclaiming this to be in the greater interests of society and invention. The Supreme Court, on the other hand, appears more pragmatic; the doctrine of equivalents is a given within US patent law and uncertainty is the price that one pays in order that the underlying policies of this law, as dictated by the Constitution, are satisfied. Uncertainty of this type is something that patentees have lived with since the seminal decision in Graver Tank, and probably before, and they have coped. As Bassinger correctly points out, it is ‘Not only . . . the content of the layered presumptions’ in the CAFC’s treatment of Festo that cause uncertainty, but also ‘the context of the changes embodied by the rapid erosion of established precedent’.234 The patent system as a whole, including the procedure of issue, the technique of drafting, and the interpretation of claims, is internally slow to respond to external changes imposed upon it by decisions such as Festo. When the goalposts are moved in this manner, and once routine practices are suddenly made to negatively impact the scope of protection, the aims, justifications and objectives of the patent system are undermined. Therefore, paradoxically, the quest for certainty that is being undertaken by the CAFC in the case is, in itself, responsible for ‘disrupting the fundamental principle of certainty in the scope of patent claims’.235 Furthermore, by placing essentially insurmountable obstacles in the way of patentees asserting the doctrine of equivalents where they have amended their claims, the court risks turning the patent right into the ‘hollow and useless thing’ that the Supreme Court in Graver Tank was so concerned to avoid.236 Bassinger’s words are, again, apt: ‘The doctrine of equivalents was developed over nearly two-hundred years of slow and steady decisions. In the past five years, this precedent has been largely dismantled’.237 233

Ibid, at 1375–6. Bassinger, ‘Unsettled Expectations in Patent Law: Festo and the Moving Target of Claim Equivalence’ (2005) 48 Howard Law Journal 685 at 734. 235 Per Judge Rader, 344 F.3d 1359, at 1376. 236 Graver Tank, n 8, above, at 607. See also Van Thomme, n 215, above, at 1124 for a similar point. 237 Bassinger, n 234, above, at 734. 234

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Changes of the magnitude and type seen in Festo provide for an uncertain and punitive view of the patent system that provides inventors with less incentive to make their inventions known. Secrecy, especially in those fast-moving, and not widely understood, realms of technology at the forefront of innovation (what may be referred to as immature or pioneer arts) may well become more important than patent protection. If this is the case, then society at large will be the one to lose out. The perceived attitude of the courts (in the US especially the CAFC), is a far more accurate measure of the scope that will be given to a litigated patent than any of the economic or theoretical ‘justifications’ or models of the system considered above. The response of society as a whole will, eventually, remedy any changes in interpretative standards, as business practices adapt to maintain their own status quo, maximising the protection that is available.238 However, with doctrinal shifts of the size and type displayed by the CAFC from its formation to the judgments in Festo, the patenting business has essentially been a lottery for a little over two decades. There are big prizes for the winners, but equally big risks too. Predictability, the very element that the CAFC and the Supreme Court are apparently seeking, has been damaged by confused notions of what the balance of protection should be. Whilst the advances made in recent years may be claimed to be beneficial from some viewpoints,239 this is dwarfed by the uncertainties that have been engendered in the wider context. The CAFC appears to have forgotten that they are not designing the patent system from scratch, and that contemplation of existing interests, including the settled interests of patentee’s already in the system, must have a bearing on the outcome. In this context, the patent grant in the US is actually in a worse place than it was during what Merges describes as the ‘bad old days of the Douglas-Black antipatent jihad’,240 because at least then the patentee knew what was coming. Therefore, with this in mind, we now turn our attention to consider a position lying at the other end of the spectrum from the restrictive Festo doctrine, as we look at the German patent system, traditionally characterised as offering broad protection to the general inventive idea.

238 Indeed, in the aftermath of the CAFC’s original en banc decision in Festo, articles such as Hosteny, n 178, above, sprang up giving advice on avoiding the Festo pitfalls. 239 Note, ‘Estopping the Madness at the PTO: Improving Patent Administration Through Prosecution History Estoppel’ (2003) 116 Harvard Law Review 2164, arguing at 2174-9 that a complete bar approach in relation to file-wrapper estoppel ‘scares’ the patentee into submitting better patents, therefore driving down the cost of administration of the application. 240 Merges, ‘Back to the Shadows, or Onward and Upward? Current Trends in Patent Law’. Available online at Patently-O: http://www.patentlyo.com/patent/2007/01/merges_back_to_.html. The jihad he refers to is exemplified by Justice Douglas’ comments in the Great Atlantic & Pacific Tea Co case. See n 13 & 22, above.

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7 Germany A Tradition Of Expansive Interpretation

Opinions on the German system of determining the scope of protection of patents are divided. Some believe that the system is too far-reaching and are concerned about the legal uncertainty caused by vast differences between a patentee’s characterization of his invention and the scope of protection granted. Others recommend the system as a model. Bruchhausen,‘The Scope of Patent Protection in Different European Countries— An Outline of Recent Case Law’ (1973) 4 IIC 306 at 307

Preface Europe has one patent system, a supposedly homogenised grant and opposition process for the 32 States1 that contract to the European Patent Convention (the EPC). In addition, the EPC also boldly legislates for the scope that these grants are to enjoy once created.2 Yet without a common appeal court to act as final arbiter in matters relating to the determination of the breadth of protection, a history of wildly differing interpretative styles has rendered any harmonisation on this latter ground incomplete. We have already seen the United Kingdom’s traditional approach to claim interpretation, and now in the second of three chapters on comparative aspects of patent scope we turn our attention to one of the UK’s closest, and yet in this arena most distant, neighbours: Germany. The traditional view of the German patent system is that it lies in diametric opposition to that of the United Kingdom. In almost any text one cares to mention that discusses the interpretation of British patents, the reader will be referred to decisions of the German courts (most notably, indeed notoriously, the Epilady 3 litigation) as a demonstration of European disharmony on the determination of the 1 As of Apr 2007. The States in question are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hellenic Republic, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom. 2 By virtue of Art 69 EPC and the Protocol on the Interpretation thereof. 3 Improver v Remington [1990] FSR 181 (English proceedings); (1993) 24 IIC 838 (Germany).

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grant’s scope of protection. This comparison is encouraged, perhaps even engendered to a degree, by the wording of the statutory provisions that guide interpretation of any patent granted by a signatory country of the EPC; Article 69 and the Protocol on its interpretation.

Article 69 and the Protocol: A Brief History Article 69 of the (unamended) EPC states that ‘the extent of protection conferred by a European patent . . . shall be determined by the terms4 of the claims. Nevertheless, the description and drawings shall be used to interpret the claims’. This provision is based on Article 8 of the Strasbourg Convention on the harmonisation of substantive patent law, and had proved to be one of the most difficult provisions to gain agreement over when being drafted in the Council of Europe.5 The problem stemmed from the wildly differing roles played by the claims of a patent in the Member States at the time, particularly the weight that their wording was given in the determination of the scope of protection. In countries like the UK and Switzerland, the claims formed the periphery of the monopoly.6 Their interpretation was the key to both the definition of the invention and the extent of protection. In countries like Germany and the Netherlands, however, the claims served only to define the invention, the scope of protection was determined by generalisation of the inventive concept, unhindered by the exact words used in any claim limitation.7 The drafters of the Convention therefore took what has been described as a ‘big step’8 by opting to follow peripheral claim theory rather than central definition theory,9 and using the claims to mark the boundaries of the patent. 4 The corresponding word in the German version of the official text is ‘inhalt’ which roughly translates as ‘contents’. It will be noted that this is not entirely coincident with the standard meaning of ‘terms’ in the UK version. Indeed, as Cornish notes,‘the other [non English] versions . . . may well convey a looser idea to those likely to use [them]’. See Cornish, Intellectual Property: Patents Copyright, Trade Marks and Allied Rights (London, Sweet & Maxwell, 1981) at 191. However, both texts are considered authoritative. It should be noted that the EPC has recently undergone amendment in consequence of a diplomatic conference held in Munich in Nov 2000. In the new text of Art 69 reference to the ‘terms’ of the claims has been removed, the provision now simply states that the extent of protection is determined by the claims. The new text will enter into force on 13 Dec, 2007, at the latest. See further, text accompanying n 28–34 in ch 10, below. 5 See Armitage, ‘Interpretation of European Patents (Art 69 EPC and the Protocol on the Interpretation)’ (1983) 14 IIC 811, (Armitage,‘Interpretation of European Patents’) at 813. 6 Hence the term peripheral definition theory has been applied to the role of the claims in these jurisdictions. See generally, Takenaka, Interpreting Patent Claims: The United States, Germany and Japan (Munich, Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, 1995) (Takenaka, Interpreting Claims). 7 Thus, giving rise to the term central definition theory—whereby the claims define the core of the invention and the scope of protection is determined by extrapolation from this central position. See Takenaka, Interpreting Claims, ibid. 8 See Armitage,‘Interpretation of European Patents’, n 5, above, at 813. 9 Discussed in chs 1 & 6, above.

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By adopting a formulation whereby the ‘extent of protection conferred by a . . . patent . . . shall be determined by the terms of the claims’10 (emphasis added). rather than, for example, the words of the claims, the Council of Europe consciously chose a position somewhat broader than that of pure literal interpretation.11 This policy decision is made manifest in the records of the drafting Committee, where it is stated that this wording ‘seeks to lay down a principle for interpreting claims which is somewhere between the system in which claims may be interpreted strictly according to the letter and that in which they do not play a decisive part in defining the limits of protection’.12 The position taken by the Strasbourg Convention was adopted in unchanged form in Article 69 EPC. However, by this time the number of official languages had risen from two to three, the original English and French of Strasbourg being supplemented by German; and the German version of Article 69 was causing some problems. In this incarnation the word ‘terms’ had been replaced with ‘inhalt’, which roughly translates as ‘contents’ and is therefore potentially of wider ambit than the other official language versions. No agreement could be reached over either narrowing the German version or broadening the English and French versions of the official text so as to achieve uniformity, and eventually the varying translations were adopted on the basis that no single text had dominance over the others; all were official. However, due in part to fears over the disharmony that the different wordings may have produced, and also to guard against ‘extreme interpretation of any one text’,13 a Protocol on the Interpretation of Article 69 EPC (the Protocol) was adopted to give guidance to the national court. The wording of the Protocol is a striking match for the comments of the Committee of the Council of Europe charged with drafting Article 8 of the Strasbourg Convention. It reads: Article 69 should not be interpreted in the sense that the extent of the protection conferred by a European patent is to be understood as that defined by the strict, literal meaning of the wording used in the claims, the description and drawings being employed only for the purpose of resolving an ambiguity found in the claims. Neither should it be interpreted in the sense that the claims serve only as a guideline and that the actual protection conferred may extend to what, from a consideration of the description and drawings by a person skilled in the art, the patentee has contemplated. On the contrary, it is to be interpreted as

10

The French version refers to ‘teneur des revendications’. The reader will appreciate that the concept of literal interpretation forms one part of the test for infringement in the US and that, as noted in ch 6, above, the assessment under this banner limits protection to that provided by giving the words of the claims their ordinary and customary meaning: Vitronics Corp v Conceptronic Inc 90 F.3d 1576 (1996, CAFC) at 1582. See also text accompanying n 3–7 in ch 6, above. 12 Quoted from Armitage,‘Interpretation of European Patents’, n 5, above, at 814. See also Armitage, ‘Origins of Relevant Provisions of the Munich and Luxembourg Conventions’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983) (Armitage, ‘Origins’) at 7–15. It will be noted that these comments correspond almost exactly to the sentiment of the Protocol on the Interpretation of Art 69 EPC. 13 Armitage,‘Interpretation of European Patents’, n 5, above, at 814. 11

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defining a position between these extremes which combines a fair protection for the patentee with a reasonable degree of certainty for third parties.14

Thus, it parodies the traditional British approach to claim interpretation— taking the literal meaning of the words utilised in the claims and limiting the protection accordingly—and the traditional German approach—where the court is unburdened by the claims when considering the scope of protection—and suggests a middle ground, balancing the dual virtues of fairness and certainty. The German patent system has therefore been chosen as a comparison in this work as it traditionally occupies a position that is poles apart from the UK in terms of interpretative style. It represents stark contrast to the principle of protection of the public that defined early English practice, embodying a rather more pro-patentee reward-based philosophy for justification of the grant. The modern German approach to determination of patent scope is now substantially harmonised to a pan-European standard by the operation of Article 69 EPC and the Protocol.15 However, as will be seen, the old practices of the courts in this jurisdiction regarding the interpretation of the claims, most notably their insignificance in determination of the breadth of the grant, provides vivid illustration of an alternative formulation to the UK’s accepted norm of purposive construction, and thus aids in its understanding. Furthermore, examination of the efforts of the German courts in bringing their system into line with that proscribed by the EPC, and of the erstwhile practice of providing broad protection for the general inventive idea, enable further development of the concept of predictability and its differentiation from the notion of certainty per se.

Germany: The Historical Perspective The current practice of the German courts marks what can be seen as the fourth distinct period in claim interpretation practice. Takenaka summarises the first three as follows: [T]he first period [was one] in which claim scope was interpreted to correspond to the scope of patent protection; [in] the second period . . . the scope of patent protection was 14 Jacob, writing in the late 1970s dismissed this last part as a ‘politicians sentence’. See Jacob, ‘Interpretation of Claims and Infringement’, in Vitoria (ed) Patents Act 1977 (London, Sweet & Maxwell, 1978), at 67. 15 Although it should be noted that the degree of harmonisation that has lately been achieved in Europe may be said to have more to do with the personal efforts of a number of high-ranking judges than the wording of the Protocol itself. See, eg, the proposals relating to the European Patent Litigation Agreement, discussed by Pagenberg, ‘The First Instance European Patent Court—A Tribunal without Judges and Attorneys?’ (2000) 31 IIC 481; see also Pagenberg, ‘Industry, Legal Profession and Patent Judges Press for Adoption of the European Patent Litigation Agreement (EPLA)’ (2006) 37 IIC 46. A list of ELPA’s supporters is given in this latter article at 48, and includes a large number of very influential judicial figures from across Europe including the UK’s own Lord Hoffmann and Lord Justice Jacob.

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completely liberated from claim language; and [in] the third period . . . the scope of the patent protection is expansively interpreted based on the claim language.16

The Fourth Period is characterised by increased reliance on the wording of the claims and a consummate narrowing of claim scope compared to that seen in the Second and Third periods. Although prompted by broader EPC harmonisation measures,17 this current trend can clearly be seen to parallel a similar push towards a more clearly defined patent standard, and the consequent containment of the scope of protection, observed recently in the US. As noted in chapter five, above, the pronouncements of the Court of Appeals for the Federal Circuit (CAFC) in the Festo litigation18 offer clear illustration of a more restrictive attitude being adopted by this erstwhile manifestly pro-patentee court.19 However, whilst the position envisaged by the Protocol, that a middle ground should be trodden between using the claims merely as a guideline and interpreting them literally, now appears to be producing a more harmonised approach in Europe, certain historical tensions may still be seen to colour understanding of the area. In order that this perception of tension can be clearly understood,20 it is necessary to establish a picture of the doctrinal and historical pressures that fuel the view of this Anglo-Germanic interpretative conflict. Therefore, we turn our attention to the establishment and growth of patent protection in Germany, and explore some of the theories that underpin its existence.

Towards Protection As noted in chapter three, above, the lack of a patent system in the German Zollverein21 provided one of the main bones of contention for the critics of the British system in the anti-patent debate of the mid-nineteenth century. It will be recalled that both sides in the argument utilised the absence of protection as illustration that their own view was correct. The abolitionists called for an end to the 16 Takenaka, Interpreting Claims, n 6, above, at 26. A similar discussion can be found in Winkler,‘The Scope of Patent Protection: Past, Present and Future’ (1979) 10 IIC 296. 17 Not to be confused with EU harmonisation measures, as the EPC is not a product of the EU, its precursors or affiliated bodies. 18 Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co Ltd, 234 F.3d 558 (2000, CAFC, en banc), and 344 F.3d 1359 (2003, CAFC, en banc). 19 This statement remains true despite the US Supreme Court’s interference in the case; see the discussion in text accompanying n 209–32 in ch 6, above. 20 The author leaves open for the present the issue of whether this perception is, in fact, a reality. 21 ie the German Customs Union; established in the 1830s. Various individual member states of the German Reich had already adopted patent protection—Vojácˇek, A Survey of the Principal National Patent Systems (New York, Prentice Hall, 1936) provides a short list at 144, noting that there had ‘been patent laws in Prussia since 1815, in Bavaria since 1825, in Würtemberg since 1828, in Baden since 1845, in Saxony since 1853, in Hessen since 1820, in Hanover since 1847, etc’. However, these were the exception rather than the rule, the political disunity of Germany making uniform patent legislation impossible until the 1870s. See also, Machlup & Penrose, ‘The Patent Controversy in the Nineteenth Century’ (1950) 10 Journal of Economic History 1 at 3–6; Penrose, The Economics of the International Patent System (Baltimore, The John Hopkins Press, 1951) at 14–5.

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idiocy that enabled the free movement of inventive information on the Continent whilst in Britain growth and technological freedom was hampered by ‘pernicious patents’. The pro-patent lobby, on the other hand, cited famous examples of German ‘defectors’ who moved to the UK ostensibly because of the protection that their inventions would receive there.22 By the end of the century, however, resistance to patents had crumbled and the British system was saved from abolition. The changing face of invention and innovation, particularly the rise of large research-intensive firms, had emphasised the need for some degree of incentive/reward to enable the recovery of costs sunk in the name of R&D. Therefore, rather than abolishing a system that was accepted in principle, but unpopular in practice, the Government ceded to reform. In Germany the same pressures, especially the growth of large chemical and dyestuff companies like Bayer, Hoechst and BASF, and the political harmony that flowed from the creation of the Second Reich in 1871, meant that those opposing the introduction of a patent system suffered the same fate as their British counterparts. Therefore, in 1877 a uniform patent law for the entire Reich was adopted by the German legislature.

The First Period Perhaps taking their lead from the established systems of the time, ie predominantly the British and US, the patent’s claims occupied a fundamental position in the determination of the scope of protection offered by the grant in the First Period. ‘The question of how far legal protection should extend was decided, in case of doubt, on the basis of the expressed intent of both parties’23, ie the Patent Office and the applicant. The claims were considered concrete declarations of this intent to be construed under private law.24 Thus, the prosecution history, the discourse between the Patent Office and the patentee, was of vital importance in the determination of the scope of protection at this time. However, it soon became obvious that the agreed declaration of what the patentee thought they had invented and their actual contribution to the art were often not coincidental. Therefore, in order to provide proper reward to the patentee, ie to protect the ‘true’ invention, the courts initially resorted to ‘the fiction of a presumptive intent’25 on behalf of the parties when determining patent scope.26 The creation of this fiction of intent represents a significant shift in the underlying theory of patent protection in the German republic. By moving towards a formulation whereby the expressed intention of the parties could be manipulated in this way, the courts began to divorce the determination of scope from the actual 22

See, eg, the discussion in text accompanying n 105–107 in ch 3, above. Winkler, n 16, above, at 297. This can be seen in decisions such as that of the Reichsgericht (the German Supreme Court of the time) of 15 Dec, 1890. Cited in Takenaka, Interpreting Claims, n 6, above, at 28. 25 Winkler, n 16, above, at 297. 26 Illustrated by the judgment of the Reichsgericht of 4 May, 1889. Cited in Takenaka, Interpreting Claims, n 6, above, at 28, and Winkler, n 16, above, at 297. 23 24

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language of the claims. Therefore, as Takenaka notes, ‘the significance of claim language . . . and that of disclosure . . . were reversed’.27 Whereas previously the claims had defined the scope of protection, functioning as evidence of an agreement between the Patent Office and the patentee, the courts now took the view that this agreement must have been intended to cover all possible embodiments disclosed by the patent unless there was clear evidence to the contrary.28 Where the prosecution history clearly dictated that a wide view could not be taken, the courts were obliged to limit the scope to a point corresponding to a literal (or even sub-literal) interpretation of the claims. However, clear adoption of the reward theory of patent protection meant that the predominant trend was towards an expansion from literal interpretation.29 The development of protection theory along reward justification lines was aided by the fact that the German model adopted a strict separation of jurisdiction between the Patent Office and the courts. The technical scope of the invention was defined by the Patent Office. This had exclusive jurisdiction over the grant and validity of the patent and required the claims to be drafted in a prescribed form.30 The courts, on the other hand, determined the ambit of protection, which now moved towards recognition of the essence of the invention and its contribution to the state of the art. Therefore, the scope of a patent was extended to cover all of the embodiments of which the patentee could possibly have conceived, including subcombinations of claimed elements where the sub-combination itself did not lie in the state of the art.31

The Second Period In 1910, this move towards detachment of the scope of protection from the wording of the claims was made complete by a judgment of the Reichsgericht 32 in which it 27

Takenaka, Interpreting Claims, n 6, above, at 28. ie evidence from the prosecution history limiting the scope. It is interesting to note that the contrary position is currently adopted in the US. The rule laid down in Maxwell v J Baker Inc, 86 F.3d. 1098 (1996, CAFC) and confirmed in Johnson & Johnston Associates Inc v R E Service Co Inc., 285 F.3d 1046 (2002, CAFC, en banc) being that subject-matter that is disclosed but unclaimed must be deemed to have been dedicated to the public. 29 It should be noted that the Japanese courts also adopted a similar approach to determining patent scope, unhampered by the wording of the claims, however, whereas in German practice the courts expanded protection, in Japan the converse was true. The courts utilised the description to limit the scope of the patent to the disclosed embodiments rather than expanding it to cover the inventive contribution to the art. See further the discussion in ch 8, below. 30 See further, text accompanying n 57, below. cf the liberal approach of the British Patent Office at this time regarding the form and content of the claims. 31 See Takenaka, Interpreting Claims, n 6, above, at 29. This mindset can be seen to be influenced by theories relating to Interessenjurisprudenz, whereby it was argued that the interpretation of documents should be carried out with the interests of the parties in mind, here the patentee. See also, Bredimas, Methods of Interpretation and Community Law (New York, Elsevier North-Holland, 1978). 32 Judgment of the Reichsgericht of 9/10 Feb 1910 (Takenaka, Interpreting Claims, n 6, above cites the 9th, whereas Winkler, n 16, above, cites the 10th). 80 Reichgerichtsentscheidunger in Zivilsachen (RGZ) 54. 28

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concluded that the intentions of the Patent Office and the patentee should be disregarded completely when determining the scope of the patent.33 Rather, the extent of protection should be determined exclusively by the invention’s contribution, objectively judged, to the state of the art. As Vojácˇ ek comments, ‘The theory was developed that the patent office, in fixing patent claims, states only the object of the patent . . ., but that law courts alone decide upon the scope of protection’.34 By adopting this approach to the assessment of patent scope, the court answered the emerging problem of adequately rewarding the patentee for their inventive efforts. Therefore, whereas the US courts had adopted peripheral definition theory and the doctrine of equivalents to protect the inventor’s interests, the German courts moved fully to central definition theory. This divorce of patent scope from the claims heralded the beginning of the Second, most expansive/least certain,35 period in German case law. In order to justify the courts’ growing tendency to divert from the clear and unambiguous wording of the claims that was had been evident since the end of the First Period, German legal philosophers had put forward hypotheses based on the separation of jurisdiction between the courts and the Patent Office.36 One of the leading theorists was Isay,37 who was of the opinion that, as the Patent Office defines the subject matter and decides on the patentability of the invention, and the courts independently decide on the scope of protection, the former’s interpretation of the state of the art in the context of examining the invention during prosecution is irrelevant once that grant is made. Indeed, given that the Patent Office only considers the invention as a whole, and never any modification or sub-combination of its elements, and given the impossibility of being able to consider all of the prior art before grant, the role of the Office must be limited to consideration of patentability only. Therefore, given the separation of jurisdiction, and given the different purposes of the investigations by the two bodies, the intention of the Patent Office in making the grant and the interpretation that it places on the state of the art could not be binding on the court’s determination of the scope of protection.38 This approach has the benefit of avoiding the need to simultaneously view the prior art retrospectively in order to determine the subject of the invention and prospectively to determine future solutions of an identical or similar type when determining the scope of protection of the patent. It therefore left the Patent Office free to concentrate on the simpler task—a task that Häusser notes is ‘from its very preconditions, appropriate to the Patent 33

See Winkler, n 16, above, at 297. Vojácˇek, n 21, above, at 150. 35 And therefore most/least favourable period depending on which side of the fence (patentee or competitor) you happened to be sitting. 36 Vojácˇek, n 21, above, describes this process (at 149), stating that: ‘With typical German thoroughness the basis conceptions of patent law are dissected and followed up almost to a transcendental plane’. 37 Put forward in Isay, ‘Wesen und Auslegung des Patentanspruchs’ [1909] Mitteilungen der Deutchschen Patentanwälte 138. Cited in Häusser, ‘Claim Wording, Inventiveness and Scope of Protection Under German Patent Law’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983) at 89. 38 This generalisation of Isay’s argument is paraphrased from Takenaka, Interpreting Claims, n 6, above, at 30, and Häusser, ibid, at 89–90. 34

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Office—of assessing the subject of an invention by a retrospective comparison with the prior art at the date of filing’.39 It was this theory that the German Supreme Court adopted in its 1910 decision.40 The wholesale adoption of a reward-based justification for the patent grant established another key principle in German claim interpretation at this point, namely the idea that a broader scope of protection should be given to so-called ‘pioneer inventions’41 than should granted to minor advances.42 Therefore, the scope of protection provided by the patent, although not encumbered by the wording used in the claims, was still limited in certain ways by the prior art. If the patent did not add to the prior teaching in any appreciable manner then it was not deserving of reward and would receive a narrow interpretation, if it was pioneer, or revolutionary, on the other hand then the converse would be true. Heavy reliance on the state of the art as a limiting factor on the protection granted by a patent rendered this conclusion apposite, as pioneer inventions, by their very nature, are unencumbered by prior teaching.43 Such expansive, indeed potentially limitless, deviation from the wording of the claims attracted widespread criticism, most notably on grounds of the uncertainty that it injected into the process of innovation and patenting.44 Whilst theoretically beneficial to the patentee, as protection was provided that was commensurate to the inventive merit of their creation, third parties were at disproportionate disadvantage. This was because one could no longer rely on the patent documentation to determine the scope of the invention. The patent revealed the invention, but the scope was determined by looking at this disclosure through the veil of prior art that surrounded it. In other words, by promoting the reward theory above all other classical justifications of the grant, the German practice in the Second Period had undermined the value of the patent as an information tool.45 One important 39 Häusser, ibid. As might be imagined from this quote, Häusser is very defensive of the virtues of this particular approach. He continues, stating that ‘A satisfactorily wide scope of protection necessarily demands correspondingly high standards of inventiveness as a precondition of patentability . . . This effect on the requirements qua inventiveness must essentially be regarded as advantageous’. Ibid, at 90. 40 See n 32, above. 41 ie inventions that that may be defined as producing ‘a genuine revolution in consumption or production’. This definition is given in Oddi, ‘Un-Unified Economic Theories of Patents—The NotQuite-Holy Grail’ (1996) 71 Notre Dame Law Review 267 at 278. Scherer, when presenting the topology of inventions upon which Oddi’s definition is based, simply states that these are inventions that provide ‘spectacular technical contribution’, Scherer, Industrial Market Structure and Economic Performance (Boston, Houghton Mifflin, 1980; 2nd Ed) at 448. Such inventions may also be called ‘revolutionary’. 42 See the decision of the Reichsgericht of 2 Mar, 1912. Cited in Takenaka, Interpreting Claims, n 6, above, at 31. 43 The reader will note the relative difficulty that commentators have had explaining a similar expansive approach to pioneer inventions in the US where protection is based on peripheral definition and the reward theory gains little support. See also, ch 5, above. 44 Eg, Vojácˇek, not usually notable for anything other than gushing enthusiasm, describes the German approach as ‘somewhat ambiguous’, as no one could estimate the scope of protection accorded by a patent until a judgment was delivered in infringement proceedings, n 21, above, at 150. 45 For more discussion of the information function of patents see text accompanying n 130 et seq in ch 3, above; see also Beier & Straus, ‘The Patent System and its Information Function—Yesterday and Today’ (1977) 8 IIC 387.

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element of the signalling potential of the patent was therefore removed from the equation: unpredictability had entered the fray. This defect in the system therefore also provided disadvantage to the patentee, as they could not foresee the boundaries of their rights clearly enough to be able to stake money on defending them effectively. This had important repercussions for the rational patentee’s decision to litigate. Therefore the adoption of a model wherein the scope of protection was essentially unconstrained other than by vague notions of what the court perceived the invention to be served no one well.

The Third Period Disquiet amongst practitioners and industry alike concerning the uncertainty of the patent grant eventually galvanised the Supreme Court into action to temper the now runaway expansive doctrine of the Second Period. The high water mark46 had come in 1942, in a decision of the Reichsgericht in which the Court held that ‘a patent protects all techniques taught by the patent specification to those skilled in the art, irrespective of the wording of the claim.’47 Subsequent cases marked a retreat from this position, a retreat that was completed by a ruling of the Federal Supreme Court (the Bundesgerichtshof )48 of 11 May, 1954. Previous decisions had established the existence of a three-part doctrine for the determination of the scope of protection of a German patent. Under this new theory, the claims once more became the basis for determining the scope of the grant. The three part doctrine was so-called because it stated that there were three areas of protection that could be distinguished when determining patent scope. The first corresponded to the literal scope of the claims, or the ‘direct subject of the invention.’49 The second encompassed evident equivalents, i.e. those equivalents immediately apparent to the person skilled in the art on the basis of their expert knowledge at the priority date; and the third covered non-evident equivalents, also known as the ‘general inventive idea’. The Supreme Court’s decision of 11 May, 1954, completed the basic test by stating that the general inventive idea must be deducible from the patent claim. Thus the claim became the central basis for patent protection once more.50 46 According to Bruchhausen,‘The Scope of Patent Protection in Different European Countries—An Outline of Recent Case Law’ (1973) 4 IIC 306 at 322. Takenaka is uncharacteristically vague in her discussion of the retreat from the expansive interpretations of the Second Period. She states that opposition to such broad interpretation had mounted by the late 1930s and marks the Third Period from 1940 onwards, but offers a Supreme Court decision of 23 Oct, 1952, as authority for the adoption of the threepart doctrine. See Takenaka, Interpreting Claims, n 6, above, at 33. Ostensibly taking Winkler’s vague assertion that attempts had been made to temper the ‘legal uncertainty’ caused by broad interpretation since ‘about the end of the 1930s’ as gospel. See Winkler, n 16, above, at 297. Bruchhausen’s account is therefore preferred. 47 Decision of 10 Nov, 1942. Quoted from Bruchhausen, ibid. 48 The Reichsgericht has ceased to be with the collapse of the Third Reich. 49 See, eg, Sijp,‘The Scope of Protection Afforded by a European Patent’ (1979) 10 IIC 433 at 436; also Takenaka, Interpreting Claims, n 6, above, at 33. 50 This is not to say that the literal claim language binds the courts, merely that the claims must be used as the starting point in the determination of the scope of protection.

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Whilst it is clear that the scope accorded to patents in the Third Period was considerably narrower that that of the Second, the German system was still criticised as providing uncertain protection.51 Indeed, concerns over the breadth of the general inventive idea contributed to the decision to insert the Protocol into the EPC.52 Therefore, in order to aid fuller understanding of the middle road along which this provision is intended to steer we now turn our attention to consider the three-part doctrine in more detail.

The Three-Part Doctrine As already noted, the three-part doctrine was adopted in order to reduce the uncertainty that surrounded the determination of patent scope at the end of the Second Period of claim interpretation. In essence, it stated that there were three zones of protection provided by the patent. The first, core category, was that of the direct subject matter of the invention, or the literal scope of the claims.

The ‘Direct Subject Matter’ of the Invention This was the kernel of the patent, the element that existed in deference to the fact that the Patent Office had seen fit to make the grant, and which survived even if the subject matter of the invention was anticipated by the prior art.53 It was considered to be the minimum degree of protection available to the patentee, to be meted out only in cases where the invention was in fact nil. The purpose of this construction was intended to ‘spare competitors, if possible, the necessity of bringing a nullity suit’.54 The prospect of resorting to a literal interpretation of the claims only in cases where the patent is in fact objectively invalid seems very strange when looked at from the British point of view. However, the reasons for the differences in practice are two-fold. First, the reader will appreciate that in the UK the courts have jurisdiction over both infringement and validity proceedings, and are therefore able to strike down claims, or even remove entire patents from the register, where they are anticipated by the prior art.55 The strict jurisdictional separation evident in Germany makes this process impossible for, as previously noted, ordinary German courts deal exclusively with matters of infringement and the Patent Office has exclusive jurisdiction to determine validity. Therefore, it was only after a 51 See, eg Sijp’s comments that ‘It does not, however, seem desirable that the scope of protection should be determined for all patents by abstract guidelines’. Sijp, n 49, above, at 448. Also Bruchhausen, n 46, above, at 325, noting that such a split examination system may additionally be open to abuse. 52 See Armitage,‘Origins’, n 12, above, at 10. 53 See, eg, Schienenschalter II [1972] GRUR 597. Cited in Sijp, n 49, above, at 436. 54 Winkler, n 16, above, at 298. 55 This power being dictated by the combined effects of ss74 and 72 of the Patents Act 1977.

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successful application for revocation that the literal wording of the claims ceased to be a problem for the alleged infringer.56 Second, in addition to these differences in practice, there was also disparity in claim style itself during this pre-harmonisation period, which renders direct comparison of the two states’ patent regimes impossible. Whereas in Britain the principle for many years had been that the patentee was free to draft their claim in any manner that they chose, in Germany the Patent Office had rapidly adopted a prescribed pattern of claim shortly after the inception of protection.57 Häusser gives succinct summary of the practice thus: [T]he generic category to which the invention was most closely subordinate was first stated, followed by the essential features of the invention; this was done by separating the two parts by the words ‘in which’ or ‘characterised in that’.

He continues, stating that: [T]he need to differentiate the novel features of an invention from previously known features led to a corresponding grouping of features. Accordingly all previously known features were to be found before the phrase ‘characterised in that’, in the so-called generic clause or pre-characterising clause, whilst the novel features were put into the characterising clause. This, even at a very early stage, led to the adoption of a wording of the claims which subsequently was prescribed as essential, and is in use to this day.58

Therefore, given the strict requirements of the Patent Office relating to the formulation of the claims, the fact that the courts habitually determined the scope of protection based on equivalents analysis, and the fact that central definition was used, a literal interpretation of the claims of a German patent was correspondingly narrower than its British counterpart.59

The ‘Subject Matter’ of the Invention The subject matter, or technical teaching, of the patent formed the second level of protection around the invention. As already noted, in the central definition theory of claim interpretation the claims form the core of the monopoly, but protection is determined by extrapolation from this central point based on what the patent actually teaches the skilled addressee.60 Therefore protection extended to cover any substitution by elements that were clearly equivalent to those in the patented invention, 56

See Sijp, n 49, above, at 436. See Vojácˇek, n 21, above, at 149–50, who states that ‘Germany was the first to evolve in the eighties of the last century a special type of claims, neatly divided into a preamble indicating the object of the invention and the known features thereof, and the characteristic definition of the new features for which protection is claimed’. 58 Häusser, n 37, above, at 88. This day referred to was the date of the Benescience Foundation Conference on Claim Drafting and Interpretation held in May 1981. 59 See also Vossius,‘Claims Drafting and the Supporting Description under the EPC and the German Patent Law’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983), at 68–72. See also Armitage,‘Interpretation of European Patents’, n 5, above, at 813–4. 60 See also the text accompanying n 31–9 in ch 6, above. 57

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providing, however, they had the same technical function and retained the same effect regarding the inventive idea. The subject matter of the invention was found by adopting a problem and solution analysis; examining the problem that the patented invention set out to solve and the solution that it provided. Such an examination was designed to expose the technical teaching, which lay in a combination of elements. Given that the entire specification would be utilised for the purpose of defining the elements of which the invention consisted, it was immaterial whether the individual components were separately claimed (or even whether they were mentioned in the claims at all). The important factor was that the skilled person would have understood the invention to compose of these elements at the priority date, without knowledge of the alleged infringement. As Sijp notes, it was only in a borderline case that ‘the technical teaching may coincide with the literal wording of the claims’,61 in most other cases this level of generalisation of the invention supplemented the literal scope. Once the subject matter of the invention had been determined, the alleged infringement then underwent a similar elemental analysis. The two were then compared, and the obviousness of any substitutions, omissions or additions to the patent formula was considered. It is important to note that the German practice under this head of protection did not require one-to-one substitutability of elements. Therefore infringement could not be avoided if an element was omitted provided that its omission did not change the manner in which the accused embodiment solved the technical problem. The technical teaching of the invention can thus be seen as similar to the essential elements of the invention under an equivalents analysis. As long as the alleged infringement had the same function and operated in the same way to produce the same result then a finding of infringement would be forthcoming.62 However, it is clear that whereas the ‘function, way, result’ formulation utilised in US decisions such as Graver Tank 63 required the elements to be identified in the claims themselves, the German tradition of the Third Period made no such demands. The focus here was on what the specification taught the skilled addressee, and only modifications, variants, substitutions, additions or omissions that were immediately evident to the average person skilled in the art were included within the scope of protection. Therefore, this level of abstraction from the specification of the patent was relatively uncontentious, as the requirement that any variation be immediately apparent arguably placed no undue burden on the patentee’s competitors as it closely paralleled the practice that the Patent Office would undertake when considering patentability. Additionally, as already noted, expansion of the scope of protection beyond the literal wording of the claims was only available where the technical teaching was itself novel. If it was not then protection was limited to the direct subject matter of the invention.

61 62 63

Sijp, n 49, above, at 436. See Molliped [1974] GRUR 460 for an example of the application of this test. Cited in Sijp, ibid. Graver Tank & Mfg Co v Linde Air Products Co, 339 US 605 (1949, Supreme Ct).

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The ‘General Inventive Idea’ Finally, extending out from the previous zones of influence lay what was known as the general inventive idea. Justification for this layer of protection derived from the premise that the inventor should be able to reap reward to the extent that their invention enriched the art.64 The patentee’s monopoly therefore extended, subject to certain criteria, to cover equivalents that were not immediately evident from the claims but which were nevertheless deducible by the average person skilled in the art. This level of generalisation came to characterise the German practice, and formed the subject of most criticism directed towards the system. The main problem lay in the association that this layer had with highly expansive, far-reaching and uncertain protection; all characteristic features of the much maligned Second Period. In order to dispel some of the concerns surrounding the adoption of this third leg of the three-stage test, Chief Justice Lindenmaier of the German Supreme Court set out to provide firm theoretical justification for extending protection in this way.65 In doing so he gave credence, if it was needed, to Vojácˇek’s earlier assertion that ‘With typical German thoroughness the basic conceptions of patent law are dissected and followed up almost to a transcendental plane’.66 Lindenmaier’s explanation of the need for protection outside of the subject matter of the invention focussed mainly on the separation of jurisdiction between the courts and the Patent Office, and in many ways resembled similar justifications put forward in an attempt to legitimise the practice of the Second Period. However, the main legacy of his discussion was a list of three criteria that must be satisfied before infringement can be found under the general inventive idea. Provision of this test, the so-called Lindenmaier criteria,67 helped to quell some of the fears concerning the potential uncertainty that the concept engendered. Sijp summarises these criteria as follows: 1). The general inventive idea must be deducible by the average person skilled in the art from the claims of the alleged infringement, using the knowledge available on the filing or priority date. 2). Deduction of the general inventive idea must not entail any inventive effort. 3). The general inventive idea must satisfy all requirements for patentability; it will be for the Court to examine, in an infringement case, whether it in fact does so.68

Therefore, the difference between this category of protection and that available under the subject matter of the invention lay in the degree of consideration that the 64

See Sijp, n 49, above, at 437, citing Spengler, [1967] GRUR 390. Lindenmaier, ‘Der Schutzumfang des Patents nach der Neureren Rechtsprechung’ [1944] GRUR 49. Cited in Takenaka, Interpreting Claims, n 6, above, at 34. 66 Vojácˇek, n 21, above, at 149. 67 Sometimes referred to as ‘Lindenmaier’s provisos’. See Sijp, n 49, above, at 437. Also Beton & Heimbach,‘Claim Drafting and Significance—An Anglo-German Industrial View’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983) at 44. 68 Sijp, n 49, above, at 437. 65

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skilled addressee must devote to the subject of equivalence. Under the technical teaching any equivalents had to be immediately evident, if they were then the assessment stopped and liability (subject to any defences) was established. If, on the other hand, the alleged infringement fell outside of the subject matter of the invention, the court would then consider the general inventive idea. This involved an examination of whether, after special and detailed consideration, the average person skilled in the art would have realised, at the priority date and without exercising inventive effort, that they could have replaced elements of the patentee’s invention with elements of the alleged infringement and still have solved the technical problem in the same way. Thus the difference between the second and third stages of the three-part theory lay in the degree of consideration that must be directed towards assessing the substitutability of the elements. By limiting the application of the general inventive idea to cases where this substitution did not require the exercise of inventive effort, the courts could be seen to be putting important restrictions on the scope of the doctrine whilst simultaneously promoting innovative practice by safeguarding the rights of competitors to invent around the patent.

The Defence of ‘State of the Art’ In addition to being able to restrict protection to the literal scope of the claims where the patent was clearly anticipated, and limiting the application of the general inventive idea to non-inventive equivalents, certain other safeguards grew up alongside the three-part test that served to mitigate the harsh results that the separation of jurisdiction may have caused. One of the most powerful of these was the defence of the state of the art. Here, despite the fact that the courts did not have the power to examine the validity of a patent in infringement proceedings, it was possible to circumvent liability by consideration of the patentability of the accused embodiment. If the allegedly infringing product or process clearly lay within prior teaching then the court could legitimately avoid enforcing the patent without trespassing on the exclusive territory of the Patent Office.69

The Object of Criticism However, despite the safeguards that the defence of state of the art (and resorting to literal interpretation of the claims when the patent was clearly anticipated) may have placed on an expansive interpretation of the scope of protection, significant problems concerning the perceived uncertainty of the grant remained. Difficulties inherent in the three-part doctrine, such as the problem of distinguishing between 69 The reader will note the similarity of this test to the Gillette defence in the UK where the defendant argues that their alleged infringement is not novel in the light of the prior art, thus placing the claimant on the ‘horns of a dilemma’. See Gillette Safety Razor Co v Anglo American Trading Co Ltd (1913) 30 RPC 465. For further information on the Infringement/Validity mirror see Wepner, ‘The Patent Invalidity/Infringement Parallel: Symmetry or Semantics?’ (1988) 93 Dickinson Law Review 67.

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evident and non-evident equivalents, attracted widespread criticism.70 Even the courts considered that the distinction should be abandoned and that the latter category should be included in the subject matter of the invention.71 Moreover, as Winkler notes, adopting an objective standard for assessment of the general inventive idea does not actually provide any real degree of certainty. Such a standard is, after all, tainted with both the possibility of hindsight and the impossibility of saying with any degree of precision ‘how the average person skilled in the art, a purely fictitious person, would have acted’.72 It is accepted that this is also a problem implicit in the determination of inventive step, however, whereas uncertainty regarding the grant of a patent is undoubtedly important for the prospective patentee, it has far less practical impact on the field in question than uncertainty relating to the scope of that patent once granted. In addition to this, the problems connected with predicting the outcome of an infringement action were increased in the case of pioneer inventions by the court’s extension of the scope of protection to cover embodiments utilising the underlying ideas, regardless of whether the person skilled in the art would have conceived of them.73 The inconvenience caused by the ‘fair’ and yet uncertain grant was alleged to be considerable and prompted many commentators to call for narrower protection. Sijp, for example, concludes after much consideration that:‘A narrow interpretation is . . . preferable by reason of its social consequences’,74 among them the lower chance of lost investment through unwitting infringement. This sentiment was carried through under the new law (discussed more fully below) and resulted in the jettison of the general inventive idea with the 1986 decision of the German Supreme Court in Re Formstein.75 However, during the Third Period these problems associated with assessment of the general inventive idea were effectively absorbed within the system as a whole, and were seen by many as a small price to pay for adequate protection of the patentee’s interests. Häusser, for example, expressed considerable fears over the move away from the three-part doctrine towards the harmonised standard called for by the EPC. He stated that a perceived narrowing of scope might cause claims to be broadly drafted in order to set down every conceivable embodiment to preserve the widest possible protection. This, he claimed, would lead to uncertainty.76 Häusser’s comments obviously reveal a fear of the unknown, but in addition to this they also expose a fundamental issue in our discussion. Comparisons with external systems, in this case the revisions imposed by the EPC, often led to mis70

See, eg, Winkler, n 16, above. Also Sijp, n 49, above. See judgment of the Bundesgerichtshof, 15 Mar, 1960, [1960] GRUR 474. Cited in Takenaka, Interpreting Claims, n 6, above, at 36. 72 Winkler, n 16, above, at 304. It is somewhat ironic, given very different interpretative traditions, that this question is so similar to the inquiry that the courts currently adopt in the UK when considering the scope of protection that a patent is to enjoy. See chs 9 & 10, below. 73 See, eg, judgment of the Bundesgerichtshof, 15 Apr, 1975 [1975] GRUR 484, cited in Takenaka, Interpreting Claims, n 6, above, at 35. 74 Sijp, n 49, above, at 449. 75 Reported at (1987) 18 IIC 795 with comments by Geissler. Also reported at [1991] RPC 597. 76 See Häusser, n 37, above, at 96–102. 71

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contextualised reactions concerning perceived limitations and benefits without consideration of the broader picture. This balancing of factors ignores the fundamental observation that the process of change in itself engenders uncertainty; uncertainty that is only dispelled when the point in time is reached at which ‘new’ becomes ‘normal’. Therefore, rather than drawing incomplete comparisons with external systems in the quest for something ‘better’, the focus should first be directed inwards. Thus, by externalising the standard by which protection was assessed, and by providing strict control of the intrinsic scope77 of the patent, the German system in the Third Period undertook the monumental task of reining in the runaway doctrine of the Second, and therefore provided certainty, or more accurately, predictability, relative to it. The factor of change is fundamental to this assessment, as the system cannot be isolated from the administrative and social context in which it exists. Moreover, concepts of fairness, certainty, and predictability upon which any comparison is based, only gain meaning once their definition has been fixed by revelation of what is unfair, uncertain, and unpredictable. Therefore a comparison between Second and Third Periods is more apposite than a comparison with foreign systems, as within the former the scope of protection is the only variable, everything else (the patentee, the grant and the drafting style of the patent) remained constant.78 The same cannot be said of a raw, unqualified, comparison with the British approach to claim interpretation, especially if one takes the view (as is almost invariably the case) that one or other offers a ‘better’, or even ‘correct’, level of protection. In other words, such a comparison is rendered devoid of meaning unless appreciation of the wider administrative and social context of the grant is undertaken, including the expectations of the patentee and the public. For a British patentee faced with a Third Period interpretation of a British grant the protection provided would have been relatively uncertain compared to that they could expect at home. Yet when viewed from the position of a Second Period patentee, the converse is true. However, this assessment fails to take into account the fact that the British patent would not have been drafted in the British way at the hands of a German patent attorney for protection in Germany. The prescriptive style required by the German Patent Office has to be seen as part of the equation, and whilst protection was not certain, in the sense of being spelt-out by the claims, it was still eminently predictable—providing, that is, that the system was understood and the correct questions were asked. Therefore any blind, acontextual, comparison at this level, other than for the purpose of illustrating that alternative approaches are available, is meaningless and simply serves to divert attention from the real question of whether protection is too uncertain to achieve the purposes of providing that protection in the first place—ie whether the system works. 77

Defined as the scope with which the patent is drafted. See also, ch 4, above. Of course, the German political and cultural context was in a period of flux at this point in time, however, whilst this may provide clues as to the motivation of the courts in making the change from the Second to Third Periods, it does nothing affect the validity of the comparison, per se. 78

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At the core of any patent system, separate from the various theories that can be utilised to justify the grant, lies a common purpose—what the drafters of the US Constitution succinctly defined as promoting of the progress of science and the useful arts.79 The key element is the assumption that technological progress is beneficial, and regardless of whether it is justified on the basis of natural right, reward, prospect, incentive, race, or whatever, that the patent system has links with this concept. This purpose is not achieved by any one, single, element but by the system as a whole, by the complex interrelation of components. It is perceived failure in this core that prompts internal change. Thus, the body of opinion turned against the system of the Second Period and gave rise to the Third. The German system in the Third Period worked. It was criticised, it was exalted, supported and denounced, but one key fact is undeniable; German industry did not falter and grind to a halt under its influence, the inventive landscape was not choked with unwieldy broad grants. It served its purpose. Indeed, such was the support for this method of interpretation that no agreement could be found over narrowing the wording of the Official German version of Article 69 EPC (which refers to the ‘contents’80 of the claims) to match the Official English and French versions (referring to ‘terms’).81 Change, when it came, was externally imposed and highlights another key point. It is only when a national patent system becomes international that a divergence in claim style and interpretation becomes important, and then primarily to foreign patentees used to one form of drafting. To assume that all other countries will interpret claims in a manner akin to that of the home courts is both arrogant and unfair, yet this is the predominant principle that underlies any harmonisation measure. Implicit also is the assumption that the harmonised product is superior to the original. Whilst this may be the case as regards the ease of transfer between nations, it is not necessarily so across the board.82 Indeed, as demonstrated by the growth of both the US and UK systems, it is apparent that different standards may be appropriate at different moments in a country’s technological evolution due to the variation in incentives that broad or narrow protection provides to the inventive pool.83 Concerns over traditions of divergent interpretation in Europe led to the adoption of the Protocol once the decision to harmonise had been made. Whatever the subsequent successes or failures of this measure, it is noteworthy in that it achieved a diplomatic compromise that secured speedy enactment of the EPC.84 It is therefore to this post-Protocol period of interpretation that we now turn in order to see how the institutional and operational traditions of the past have been adapted to 79

Art 1, s8, cl8. Inhalt. See further, Armitage,‘Interpretation of European Patents’, n 5, above, at 813–4, discussing the history of Art 69 EPC and the Protocol on the Interpretation thereof. 82 Insight into the Japanese system, discussed in ch 8, below, provides graphic illustration of this point. 83 Eg, it is often said that broad protection encourages so-called pioneer invention whereas narrow protection encourages more in the way of follow on innovation. See also the discussion of the economics of the patent system in ch 5, above. 84 Sherman, ‘Patent Claim Interpretation: The Impact of the Protocol on Interpretation’ (1991) 54 MLR 499, notes this (at 509) as one of the Protocol’s main, and often overlooked, successes. 80 81

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meet these new requirements. In doing so we shall see a characteristic evolutionary lag in case law reflections of the new regime, as the system slowly reacts to the imposed standards of interpretation.

The Fourth Period The German Patent Act of 1981 was promulgated in order to satisfy Germany’s obligations under the EPC. It included a provision (section 14) corresponding to Article 69 and the Protocol on its interpretation.85 It will be recalled that the latter expressly rejects the expansive protection created by the central definition theory where the claims serve simply as guidelines in the determination of the scope of protection. Therefore Germany’s hand was forced; practice had to be modified to a position whereby the claims occupied a position more central to the grant.86 It is widely accepted that the position adopted by the courts in the Third Period was ‘never as woolly as assumed by the Protocol.87 However, the presumption underlying the protection of the general inventive idea—that the patentee is entitled to reward to the full extent of their contribution to the art—is most significant, and can be seen to have coloured many decisions under the 1981 Act. Most important here is the Epilady litigation88 in which parallel actions89 were commenced in several jurisdictions, including Germany and the UK, with wildly differing outcomes, and where no common reasoning on the issue of claim interpretation could be found. However, before examining the position taken by the German courts in this case, time must be taken to explore a decision of the Bundesgerichtshof (Federal Supreme Court) that represented the leading authority at the time, and has even been (indirectly) utilised by the English Court of Appeal as providing a test preferable to the established Catnic approach to claim interpretation:90 Formstein (Moulded Curbstone).91

85 s14 of the 1981 Act therefore provides that ‘The extent of protection conferred by a patent or patent application shall be determined by the contents of the claims. Nevertheless, the description and drawings shall be used to interpret the claims’. 86 This is not to say adopting a position of central definition, merely that the claims could not be passed over in consideration of the scope of protection. 87 Jacob, n 14, above, at 67. 88 In the UK principally Improver v Remington [1990] FSR 181. For the German decision see Improver v Remington (1993) 24 IIC 838. 89 Dealing with national, but for practical purposes identical, patents. 90 The Formstein decision was relied upon in the quartet of German cases cited in PLG Research v Ardon International [1995] RPC 287, discussed in text accompanying n 137-68 in ch 9, below. However, it must be noted that this rally in Formstein’s favour was very short-lived; Aldous J refused to follow the ‘new’ approach, declaring it obiter in Assidoman Multipack v The Mead Corporation [1995] RPC 321, less than two weeks after the decision in PLG. 91 Reported at (1987) 18 IIC 795 with comments by Geissler. Also [1991] RPC 597. All quotes are taken from Geissler’s translation in IIC.

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Formstein Any change in the legal standards concerning the interpretation of patent documentation necessarily takes time to filter through the system.92 Confusion over the scope of the ‘new’ grant was therefore considerable in the early 1980s as patentees, practitioners and the lower courts considered the impact of the revisions.93 Relief came in the Re Formstein decision. The patent in question claimed the following: 1. Integral or cross-sectionally multi-part moulded stone with a longitudinal trough for dewatering lines at the side of the road, characterised by the fact that it comprises at least one cross channel branching off form the longitudinal trough and opening into the side of the stone facing away from the street centre. 2. Moulded stone in accordance with claim 1, characterised by the fact that the cross channel has a small inclination.94

In other words, a sloping curb-stone with channels to guide water and debris away from the street, thus facilitating drainage. The defendant was a city that had laid a street with conventional paving stones setting gravel-filled gaps between them to channel the water. The patentee brought an action for infringement. At first instance the court found the patent infringed, issued an injunction and awarded damages. On appeal the decision was reversed. The Supreme Court was therefore provided with a perfect opportunity to review the revisions to the patent law and to comment on their interpretation. In an uncompromising decision, it did just this. The Bundesgerichtshof explained that the effect of Article 69 EPC and the Protocol on its Interpretation was that ‘[i]n contrast to the legal situation until 1978, patent claims are now not merely the starting point but rather the essential basis for the determination of scope’95 (emphasis added). In making this statement, the court clearly anchored the claims at the core of the grant, however, such was the magnitude of change brought about by the revisions, and such was the firmness of the court’s resolve to ensure their proper implementation that it continued: In terms of Sec. 14(2) of the Patent Act of 1981, the contents of the claim have to be determined by interpretation, taking the specifications and drawings into consideration. As the 92 An application for a patent takes an average of 44 months to progress to grant under the EPC. See http://www.european-patent-office.org/epo/obtain.htm. Additionally, s14 of the new German law only applied to patent applications made after 1 Jan, 1978—see Häusser, n 37, above, at 94–5. Therefore, it is to be expected that there would be a lag of at least 44 months post-1978 for cases to enter the courts. Appeal adds more time to this equation, so interpretations of the provisions of the new law in the Higher Courts would be expected some 7-8 years after the first applications—ie approximately 1985. 93 See, eg, the discussions in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983). 94 Reproduced in the judgment itself. See Geissler’s translation of the judgment, n 91, above, at 795. In the report reproduced at [1991] RPC 597 the reproduction of the claims is at 600. 95 Judgment of the Supreme Court s5(b), first para. See (1987) 18 IIC 795 at 798.

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protocol on the interpretation of Art. 69(1) EPC (corresponding to Sec. 14 of the Patent Act of 1981) shows [citation omitted], the interpretation does not only serve the purpose of correcting uncertainties in claims but also of clarifying the technical terms used in the claims as well as the limits and bounds of the invention described therein . . . Under the Protocol on the Interpretation of Art. 69 EPC, the scope of a patent encompasses not only what follows from the precise wording of the claims. This opens the way for a determination of the scope of protection beyond the wording of the claims to encompass modifications of the invention circumscribed in the claims . . . The scope of protection of a patent filed after January 1, 1978, is determined as regards the use of the invention by equivalents, by the contents of the claims to be determined by interpretation. The significance of the invention as recognized by person skilled in the art has to be considered. The question is whether a person skilled in the art based on the invention protected by the claims, is able to clear up the problem solved by the invention with equally effective means, i.e. to achieve the desired success with other means which also lead to the same result. Solutions which the average person skilled in the art can determine due to his professional knowledge as being equally effective based on considerations oriented to the inventions paraphrased . . . in the claims will generally fall within the scope of protection of the patent. This is required by the goal of adequate remuneration for the inventor under consideration of the aspect of legal certainty.96 (emphasis added)

Abandoning the uncertainty of the principle of the invention as a determinant of the scope of protection, the court clearly considered that the new law marked a firm departure from the principles of old. However, the way in which it structured the new test, and in particular the statement that the invention is ‘paraphrased in the claims’,97 belies the legacy of expansive interpretation and leads to a perverse, indeed in the light of its previous comments, paradoxical, state of affairs.As Geissler notes, ‘The Court in this case . . . while holding that there is a new law, in fact provides a potential scope of protection, which, at least in this case, does not seem to be different from, and is in particular not less than that which was usual in Germany’.98 Indeed, Turner, writing in the early 1990s, uses the decision to illustrate that ‘[t]he stance of the English and German courts in implementing the Protocol has . . . been relatively uncompromising’.99 Whilst the wording and construction of the test had changed (the basic question now being whether the person skilled in the art was able, on the basis of their specialist knowledge, to arrive at the allegedly infringing embodiment using the specification and the claims), the scope was startlingly familiar. Thus, a street of the defendant’s construction could, using the court’s test, potentially infringe a claim directed to a moulded stone. The possible inequity that could flow from such an expansive interpretation of the claims seems to have been apparent to the court, as in addition to its discussion of infringement it also strengthened the defence of the state of the art. Therefore, 96

Ibid, at 798–9. It should be noted that the report at [1992] RPC 597 does not use the word ‘paraphrased’, preferring ‘described’ instead. However, despite the change in wording, the effect is the same. 98 Geissler,‘Comment on Formstein’ (1987) 18 IIC 795 at 802. 99 Turner,‘The German Formstein Case: An Alternative Harmony’ [1992] EIPR 181 at 181. 97

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whereas previously the defendant could have escaped liability where the alleged infringement was ‘known’ from prior teaching,100 the Supreme Court now expanded the defence to include occasions where it was obvious in view of the prior art. This, it explained, ‘does not limit the justified reward for the inventor in return for the disclosure of his patentable invention, but rather secures the freedom of others to continue with non-inventive development of the prior art.101 Therefore, once again, the mantle of the skilled addressee provided the key to assessing the patent’s scope of protection. The adoption of this standard in Formstein clearly demonstrates the difficulty of breaking with the old traditions of expansive interpretation and coming to terms with a new, externally imposed regime. The intention of the court to depart from the practices of the Second and Third Periods is clear, and the message given in the judgment to this effect is robust and uncompromising. However, the subtext pervading the case is littered with remnants of past practice; the references to the object of the law being to reward the patentee and the statement that the invention is paraphrased in the claims being the most notable examples of this. Moreover, the Supreme Court’s comments clearly demonstrate that infringement by equivalence was considered to be as much within the scope of the claim as those elements literally covered by the wording. This point is significant as, contrary to the position in the US where the demarcation between literal infringement and infringement by equivalents is tightly policed, the lack of boundary in Germany allowed broad protection to remain, as there was no question of recourse to the doctrine being seen as offering supplementary protection. Accordingly, the German approach at this time could still be said to embrace central definition theory as the claims functioned as the post from which protection was anchored, but did not ‘provide a framework for clarifying which features in the accused device are beyond the literal meaning of the claim language’.102 However, whilst criticism of the scope of protection post-Formstein can be made, any comparison to ‘preferred’ standards of protection must, as already noted, take into account the wider institutional and administrative context of the grant and the practices that grew up around it. Recourse to the standard of the skilled addressee was made more certain by ‘constant collaboration with experts appointed by the courts in the most widely varying technical fields, for determining the subject matter of the patent in revocation and infringement proceedings’.103 Thus, the system as a whole reacted to the court’s own style of interpretation in order to provide sufficient predictability for efficient operation without compromising the aim of rewarding the patentee. Cognisance of this factor helps to explain the seemingly paradoxical effect of the Supreme Court’s decision in Formstein, for the trauma of creating a continental shift in the established practices of interpretation would have 100

ie had been previously disclosed. See (1987) 18 IIC 795 at 800–1; s6(a), second para of the judgment. 102 Takenaka, Interpreting Claims, n 6, above, at 157. 103 Bruchhausen, ‘Determining Patent Subject-matter in Grant, Infringement and Revocation Proceedings’ (1989) 20 IIC 341 at 344. 101

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caused more uncertainty than it aimed to prevent.104 Therefore, rather than actually altering the interpretative status quo, the Court can be seen to be paying lip service to the new regime on interpretation and effecting transfer by other, more subtle, means; namely expansion of the defence of state of the art.

Post-Formstein Solidification of Approach Decisions following on from that in Formstein show a renewed vigour in the Supreme Court’s handling of the issue of claim interpretation. Indeed, the sheer number of cases to reach the court’s doors is, in itself, revealing of the seriousness with which the issue was treated. Therefore, in disputes such as Ion Analysis,105 Heavy-Metal Oxidation Catalysts 106 and particularly Handle Cord for Battery,107 the Court of Appeal’s continued recourse to the content of the description, giving it precedence over the wording of the claims and allowing redefinition of the invention, attracted strong criticism from the senior court. Thus, in Handle Cord for Battery, in a powerfully worded judgment, the Bundesgerichtshof reiterated its opinion that where the ‘embodiment to be judged deviates from the meaning of the content of the patent claims’, infringement may be only be found in specified circumstances. In order for such a decision to be made, the skilled addressee must, on the basis of their technical expertise, be able to identify ‘the modified means employed in the challenged embodiment as being equally effective in the solution of the problem underlying the invention’.108 The court continued, stating that ‘[t]he determination of the scope of protection of a patent under the new Act requires that the meaning of the content of the patent claims, to be determined by interpretation, constitutes not only a point of departure but the decisive basis for the determination the scope of protection. This must be based on the patent claims’.109 The Court of Appeal had erred by judging the question of equivalent use primarily by reference to the description, and had therefore ‘lost sight of the partial feature of Claim 1, which typifies the invention’.110 This pronouncement is significant, as it is clear evidence of the Supreme Court striking down past practice and reiterating its more claim-centric approach to the determination of the scope of protection. Furthermore, the Court of Appeal’s 104 Much as the seismic shifts in protection caused by the Festo litigation (Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co Ltd, 234 F.3d 558 (2000, CAFC, en banc), 535 US 722 (2002, Supreme Ct), 344 F.3d 1359 (2003, CAFC, en banc)) have been argued to cause in the US. See the discussion of Festo in text accompanying n 176 et seq in ch 6, above. 105 Ionenanalyse (1991) 22 IIC 249. 106 Schwermetalloxidationskatalysator [1989] GRUR 205. 107 Batteriekastenschnur (1991) 22 IIC 104. All three of these cases are discussed by Millett LJ in PLG Research v Ardon International [1995] RPC 287 at 308; although the report in the RPC incorrectly references the Ionenanalyse decision as being reported in the 1989 volume of IIC. 108 Ibid, at 107. 109 Ibid. 110 Ibid, at 107.

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continued reliance upon ‘old’ principles demonstrates just how difficult the transition from the Third Period was proving to be. The Supreme Court’s resolve is, however, unambiguous, and the statement in Handle Cord for Battery that the requirement of legal certainty is to be given ‘the same consideration as providing equal reward for the inventor’111 reinforces this approach. This said, reward was still the fundamental justification for the grant of patent protection at this time, and this simple fact can be seen to have directly contributed to a broader scope of protection than might otherwise have been the case. Such is clear from the oft-quoted Epilady litigation.112

Epilady The multi-jurisdictional litigation between Improver and Remington has provided commentators with much fodder in their discussion of claim interpretation.113 Parallel actions were brought in the courts of various countries, in Europe and beyond. All dealt with substantially identical claims, specifications, and allegedly infringing embodiments, but came to wildly differing conclusions on the matter of infringement. The decisions are therefore often used as clear illustrations of divergent approaches to claim interpretation under the EPC. We shall return to consider the validity of this viewpoint in chapter nine when examining the British instalment in the litigation; however, for the present it is sufficient to consider the German approach in isolation. The patent in question concerned a depilatory device (Improver Corp’s ‘Epilady’) that operated by means of a revolving bent helical spring. The windings of the spring, when moved rotationally, opened and closed, trapping hairs that were then plucked out by the motion of the device. The defendant’s product did not contain a spring, but achieved the same result by substitution with a slotted rubber rod. When bent and revolved, the slits in the rod opened and closed in the same manner as the windings of the spring, thereby facilitating hair removal in the same, painfulsounding, manner as the patented device.

111

Batteriekastenschnur (1991) 22 IIC, at 108. Improver Corp v Remington Consumer Products Ltd: the German proceedings are reported at (1993) 24 IIC 838. 113 See, eg, articles by Sherman, n 84, above; Pagenberg, ‘Twenty-Five Years of Patent Law in IIC’ (1995) 26 IIC 752; Norman, ‘Determining the Scope of the Patentee’s Monopoly: Purposive Construction Revisited’ [1998] Anglo-American Law Review 221; Bannerman & Hamer, ‘Different Approaches to the “Doctrine of Equivalents”in Germany, UK, US and Japan’ (2000) 25 AIPPI Journal 82, to name but a few (and not to mention the various appearances that the decisions make in text books on Intellectual Property Law). 112

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The Decision The Düsseldorf Court of Appeals (Oberlandesgericht) first considered the patent claims and concluded that the accused device could not be said to fall within their literal scope since the disputed embodiment ‘uncontestedly does not feature a helical spring’.114 It then proceeded to examine whether the ‘slotted rubber rod’ could be said to be a helical spring in equivalent form. In undertaking this analysis, the court adopted a clear problem-solution approach.115 It went to great lengths to consider the function of the limitations in the claim, assessing the relative merits of both the patented article and the contested embodiment, and was clearly concerned with the technical effects of both. The fact that this initial analysis was conducted outside of the confines of a discussion of literal infringement is significant as it avoided the need to concentrate on a meticulous analysis of the consequences of using the term ‘helical spring’. The starting point was therefore, once again, what the person skilled in the art would interpret the patent as teaching. As such, the court considered that the skilled addressee would: easily recognize that the coil spring is only proposed for the reason that it is an elastic cylindrical body which may be quickly rotated in the arcuate state and, above all, for the reason that it features . . . means that stretch the surface of the body to form gaps at the convex side, while at the concave side they result in clamping areas with the help of which the hairs that entered the gaps may be clamped and plucked.116

Therefore, the claim is considered to provide functional information to the skilled addressee concerning the operation of the patent. Critically, the basic thesis is that ‘a person skilled in the art will not interpret the coil as a spring, but as an elastic body with gaps . . . as it is obvious that the helical spring is not used as a spring per se’.117 The main issue is thus evidently not simply a matter of assuming that the patentee must have intended to restrict his claim to the precise wording used unless there is clear evidence to the contrary. Rather, it is that the claim should be interpreted with function in mind. This approach is similar to that proposed by Lord Reid in Van der Lely v Bamfords 118 and Rodi & Wienenberger v Showell.119 (both discussed in chapter one, above) in that it reflects the difficulties in drafting allencompassing claims from the outset. The only thing that is essential, once it has been ascertained that the spring is not operating as a power source and functions solely to pluck the hair, is that hair must be able to ‘enter between adjacent areas of the body (walls), and that the walls must approach it up to clamping it’.120 Given the 114 115

Above, n 112, at 841. ie examining the problem that the patented invention set out to solve and the solution that it pro-

vides. 116 117 118 119 120

Above, n 112, at 843. Ibid. [1963] RPC 61. [1969] RPC 367. Above, n 112, at 844.

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function of the spring, the substitution of a slotted rubber rod was clearly obvious and therefore fell within the scope of protection. As we shall see when we come to consider the English courts’ decision in this case, the outcome there was somewhat different.121 The important factor here is that the German court approached the problem from the point of view of operating the invention. Therefore, the question of whether the scope of protection should be extended from the narrower wording of the claims to cover obvious variants does not hinge on the conveyed intent of the drafter, as is the case under the traditional British approach, discussed in chapter one, above, as intention is assumed. By focussing on rewarding inventive efforts, the German courts necessarily provide an opportunity for broader protection than would be available where the rationale for the grant is based on other considerations. However, such an approach cannot be dismissed out-of-hand as inconsistent with the Protocol, despite its obvious links to Third Period interpretative practices, as it is clear that the claims function to define the scope of protection. Furthermore, a middle ground is, in fact, trodden between giving them a literal interpretation and using them only as guidelines. The fact that there were different outcomes in the German and British legs of the ‘Epilady’ litigation does not alter this fact. Indeed it can be argued that such differences are inevitable; after all, if litigation were homogenised and reduced to algorithm so that every judge held exactly the same view the appeal process would, in many instances, be redundant. The specific endresult, win or lose, must not therefore be allowed to cloud the issue and become our primary concern; to seek absolute clarity, unimpeachable opinion agreed with by all is in any case an impossible wish. Brändle makes a superficially attractive point on this matter when he states that a solution to the problem must therefore be found that ensures ‘if not identical application of the law in all countries, then at least legal certainty’.122 Despite its charm as a sound bite, this statement narrowly misses the key issue.Whilst the aim should not be absolute conformity of decision, for it is evident that even when national courts consider patent infringement cases different conclusions may be drawn from identical claims by different judges, there must be conformity of approach to application of the law. The very goal of predictability, of justice if you like, is coloured by the legitimate expectations of the parties, and these expectations must now be seen and understood from the European viewpoint. If there is a central position from which protection may be hatched, then the expectation that the same approach will be taken in applying the principles of claim construction across the board is legitimate. This does not necessarily mean that identically worded tests must be applied, for the essential question of what the claims are understood to mean can be dressed up in as many different semantic cloaks as there are patents on the register. However, it does mean that the underlying principles of claim construction should 121

See the discussion in text accompanying n 84–115 in ch 9, below. Brändle, ‘Can and May Interpretation and Determination of the Extent of Protection of a European Patent in Different Countries Lead to Different Results?’ (1999) 30 IIC 875, at 878. 122

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be the same. The problems must be approached from the same direction and the principles underlying the grant must be identical. Currently they are not.

Implications and Recent Practice Since the turn of the century, commentators have noted that the approach of the German courts has been moving towards implementation of a Catnic-like123 test for the determination of a patent’s scope of protection. Indeed in a 2001 article, Franzosi went as far as to ask ‘Will Europe Adopt Catnic? ’124, pointing to a decision of the German Supreme Court in which reference was made to the British case. Thus, in Müller-Hilty,125 the Bundesgerichtshof stated that the correct approach determining the scope of protection of a patent was to ask whether: The means used in the contested embodiment, instead of the means expressly recommended in the patent, serve to solve the concrete problem set in the patent and achieve the effect intended by the patent at least essentially. These principles . . . correspond to the principle developed in English case law within the framework of the so-called Catnic questions . . . Modifications are outside the scope of protection if they have a significant effect on the functions of the invention.126

However, despite mentioning the case, this decision offers little more than illustration of the German Court acknowledging the existence of the general Catnic approach, and falls far short of providing evidence that it was being applied as Franzosi seems to suggest. His closing comment that ‘In the end, I would not be surprised if in Europe everybody applies Catnic’,127 appears, at the time he was writing, to have therefore been somewhat premature. This said, he does note that even if this test is adopted for all of Europe it does not guarantee, and nor would he expect,‘uniformity because of that’.128 Engel takes a more realistic view of the subject and, rather than making any great proclamations about shifting to a British viewpoint, concentrates on establishing trends in the concrete practice of the courts. He highlights specific terminology utilised in judgments such as Ion Analysis;129 noting that the ‘Wortsinn’, the ‘meaning of the words’, ‘is intended to express the notion that the examination of an infringement should not be tied to the literal wording of the claims, but should be based on its identifiable meaning . . . The decisive factor is not the philological meaning of the wording but rather the technical sense that the person skilled derives 123 124 125 126 127 128 129

Catnic Components v Hill & Smith [1982] RPC 183. Franzosi,‘Three European Cases on Equivalence—Will Europe Adopt Catnic?’ (2001) 32 IIC 113. Also known as Spannschraube [1999] GRUR 909. Quoted from Franzosi, n 124, above, at 120. Ibid, at 123. Ibid. Ionenanalyse, n 105, above.

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from the claims’.130 Therefore, whilst it is clear that Engel believes the Third Period practice of completely detaching the scope of protection from the wording of the claims is firmly behind the German courts, it would still appear that a significant degree of latitude will be given based on the technical teaching. Engel’s belief is supported by a quintet of judgments handed down on the same day in early 2002 by the German Supreme Court. These five decisions; Plastic Pipes,131 Cutting Knife I,132 Cutting Knife II,133 Custodiol I 134 and Custodiol II 135, are described by Takenaka as having ‘surprised German patent professionals’ by introducing new restrictions on the possibility of finding protection outside of the literal coverage of the claims under the doctrine of equivalents.136 Given the narrowing trend in the court’s judgments within the Fourth Period, now spanning almost twenty years, and in particular the fact that during this time the claims had consistently been stated to provide the decisive basis for the patent’s scope of protection, the ‘surprise’ of German patent professionals must, itself, be treated with a degree of suspicion. Whilst undoubtedly narrowing from a Third Period perspective, there was nothing unpredictable or overtly shocking about the pronouncements within the context in which they were delivered. Moreover, the decisions also clearly demonstrate the court’s continuing focus on reward as being the main justification for protection, and show a tacit, but steadfast, commitment to providing a broad, yet predictable, interpretation of the grant.

Plastic Pipes The Plastic Pipes decision concerned an invention for sound-proofed plastic pipe. The patent specified, amongst other things, that the pipe should have a density within a range of 1.8 to 2.7 g/cm3, and a minimum weight per unit area of 8kg/m2. The defendant sold pipes that had all of the features of the patented article except that their density was 1.6g/cm3, ie outside of the specified range. The question that came before the court was therefore whether this numerical range was to be interpreted as excluding the possibility of variance; in other words given that numbers may be considered to be more certain than other language, did their use force a literal interpretation? 130 Engel, ‘The “Wortsinn” of Patent Claims in German Case Law on Patent Infringement Disputes’ (2003) 34 IIC 233 at 235. 131 Plastic Pipes (Kunststoffrohrteil) [2002] GRUR 511. English translation available in [2003] ENPR 163 and (2003) 34 IIC 302. 132 Cutting Knife I (Schneidmesser I) [2002] GRUR 515. English translation available in [2003] ENPR 309 and (2002) 33 IIC 873. 133 Cutting Knife II (Schneidmesser II) [2002] GRUR 519. 134 Custodiol I [2002] GRUR 523. 135 Custodiol II [2002] GRUR 527. English translation available in (2003) 34 IIC 197. 136 Takenaka, ‘Protection Scope for Claims Including Numerical Limitations: Range of Equivalents and Prosecution History Estoppel’ (2004) 11 CASRIP Newsletter. The quote comes from the 2nd column of the article. Available online at: http://www.law.washington.edu/casrip/Newsletter/Vol11/ newsv11i1Takenaka.pdf.

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The court thought not, and laid down a three-stage test to assist in determination of the patent’s scope of protection. First, it asked whether the embodiment solved ‘the problem addressed by the invention with means which, albeit modified, objectively have substantially similar effects?’ Second, would ‘the skilled person, as a result of his specialised knowledge . . . be able to arrive at the modified means as means having substantially similar effects . . . on the basis of the claim?’ Finally, is the effort that the skilled person has to make ‘based on the sense of the technical teaching protected in the claim, so that he considers the differing embodiment with its modified means to be a solution equivalent to that of the patent?’137 The reader may note that this three-stage assessment bears more than a passing resemblance to the questions formulated by Hoffmann J (as he then was) in Improver v Remington 138 and utilised as the de facto test for claim interpretation in the UK for almost fifteen years before being superseded by that in Kirin-Amgen.139 Yet, the focus of the assessment is defined more in terms of equivalency than is the case in the UK (especially now following Lord Hoffmann’s comments in Kirin),140 and clearly reflects the German courts’ past interpretative tradition. However, the references to the skilled addressee being able to divine the technical solution ‘based on the claims’ suggests that the move, that was started in Formstein, from the uncertain practices of the Third Period is maintained in current decisions. The Plastic Pipes case also provides another example of the German Supreme Court referring explicitly to Catnic. However, interestingly it latches on to the approach taken by Lord Diplock as being authority for the proposition that the decisive factor in the construction of the claim is the semantic context of the patent determined using the description and the drawings. Therefore, rather than simply adhering to the patentee’s alleged intention in drafting the claim, the court asks whether, given the purpose of the invention, the skilled addressee would consider that protection extends to the accused embodiment.As we shall see, in chapter nine, below, this approach is strikingly similar to the dissenting judgment of Aldous LJ in Wheatley v Drillsafe,141 and provides for an interesting comparison. However, for now we must content ourselves with consideration of the German position alone, and here, once again, we can note that the issue is approached from a direction that places significant emphasis on the concept of fairness. The skilled addressee expects the patentee to have intended to cover all embodiments that are made obvious by the claims. Moreover, where some elements are expressed in certain terms and others are worded so as to provide a degree of latitude, the addressee will note this and progress accordingly. In this case, the court considered that the skilled reader would have understood the density to be simply a ‘core range within which he was to operate to prevent him from arriving at the specified minimum value for the weight per unit area by 137 138 139 140 141

[2003] ENPR 163 at 169. [1990] FSR 181. Discussed in more detail in ch 9, below. Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667. See text accompanying n 66–82 in ch 10, below. [2001] RPC 133.

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selecting too thick a wall’.142 The fact that the weight per unit area was claimed as a minimum that had to be complied with, there being no such insistent wording used for the density, was most significant, as when combined with the description’s statement that the walls of the pipe should be relatively thin it told the addressee that they had a certain degree of flexibility in determining whether infringement had taken place. The claims, as understood in light of the description and drawings, thus clearly form the anchor for the investigation. However, the skilled addressee’s expectations, the mindset with which they view the claims, allows a more benevolent interpretation than may otherwise be the case.143 This interpretation is still clearly within the confines demanded by the Protocol, as it treads the infamous middle-path; fairness to the patentee is clear, and as long as the principles of construction are well known, the requirements of predictability, and indeed certainty, are fulfilled. It is also important to note that the presumption of intention is rebuttable where the claims are precise in their scope, and where the desire to confine protection in this manner would be plain to the skilled addressee. However, generally the patentee is still afforded protection consummate with their contribution to the art. Such an approach graphically illustrates the court’s perceived focus of the grant, which, based on historical and economic analysis, must be to encourage and reward innovative activity. Therefore, rather than extending protection via strict adherence to an additional elemental analysis under an US-style doctrine of equivalents, the courts are to provide adequate reward for equivalents by benevolent interpretation of the expectations of the skilled addressee.

Cutting Knife I The slant that appears to be being taken on the Catnic decision is further illustrated by the judgment in Cutting Knife I.144 Here, once again, the British test is held to be authority for the proposition that the skilled person may consider some degree of inaccuracy to be within the technical sense of a claim, and therefore within the patent’s scope of protection. The case concerned a patent for a paper cutting apparatus that comprised a cutting knife co-operating with a counter knife, which were inclined at between 9 and 12 degrees to each other. In the allegedly infringing article, the blades were inclined at 8°40’, ie just outside of the range.

142

[2003] ENPR 163 at 179, para 29 of the decision. Almost certainly more benevolent than would be the case in the English and Welsh courts, where the preponderance of decisions have held figures to relate to ‘the specified number to two significant figures’. Per Pumfrey J in Halliburton Energy Services v Smith International [2006] RPC 25, at para 91. See Aldous LJ’s statement in Lubrizol Corp v Esso Petroleum [1998] RPC 727 at 748 that:‘The notional skilled man would read the claim and the specification using conventions adopted by scientists, one of which was that numbers are given to the number of figures that are significant’. 144 [2003] ENPR 309. 143

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Approaching the issue of construction, the Bundesgerichtshof stated that the essential question was whether: the skilled person, on the basis of considerations linked to the sense of the invention protected in the claims and by using his specialised knowledge, was able to arrive at the modified means used in the contested embodiment as means having substantially similar effects in terms of solving the problem addressed by the invention.145

However, it then reiterated comments made in the Handle Cord for Battery 146 case that the requirement of certainty ‘ranks equally with the concept of fair protection for inventive skill’ ”, and that the claims were no longer to be merely the starting point for determining scope, but were now the ‘authoritative basis’ for doing so.147 The court also reiterated the three-stage test used in Plastic Pipes but then, significantly, proceeded to consider what the British approach may have been in this particular case. It issued a broad statement that: An embodiment can be considered to have substantially similar effects in the sense of the patent claim only if the skilled person can arrive at it as an embodiment that actually achieves not only the effect of a feature of the invention that is numerically limited in the claim but also the very effect which he understands to be inherent in the numerical limitation of this feature according to the claim. If that is not the case, an embodiment even having otherwise substantially similar effects—both objectively, and technically as perceived by the skilled person—is essentially not covered by the extent of protection conferred by the patent.148

And concluded by noting that in order to establish whether infringement had taken place the UK courts: agreeing with the above in essence, considered whether the reader skilled in the art could expect and be prepared for strict compliance with the primary meaning of the patent claim to be an essential requirement of the invention . . . In relation to a single feature in the patent claim, what is important is whether the feature in question appears to the skilled person to be one that can be used only literally if the practical technical teaching claimed is to be followed.149

Therefore, it is clear that despite paying lip-service to the British test here, the German court is still approaching the problem from a direction in which fairness is exalted. The investigation is very definitely focussed on the claims as determining the scope of protection, but the presumption of intention, as we shall see in chapter nine, is diametrically opposed to that applied under the iteration of the Catnic test which was operative in the UK at the time. Furthermore, the fact that the court related the interpretation of the claims to the effects of the limitations contained within them when examined by the skilled addressee is reminiscent of the technical teaching test of the Third Period. When approached with the presumption that the 145 146 147 148 149

Ibid, at 315–6. Above, n 107. See Cutting Knife I [2003] ENPR 309 at 316. Ibid, at 318. Ibid, at 318–9.

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patentee must have intended to include all obvious variants within their claim unless the contrary is conclusively demonstrated, this results in a broad, rewardbased, interpretation. Thus, when the court came to apply these principles to the facts of the case, rather than interpreting the numerical values as decisive cut-off points, whether absolute or to two significant figures,150 it once again looked to the effect of the restrictions. The purpose of angling the blades at between 9 and 12 degrees to each other was simply to ensure a smooth cut. This benefit was also achieved when the angle was slightly more acute. Therefore, when considering whether an angle of less than 9° was outside of the scope of protection, the court was of the opinion that where: a specific range was stipulated in a patent claim and there was nothing in the patent specification to suggest that the values claimed might be meant only by way of an example, the skilled person would generally have no reason to consider whether the invention might be capable of being performed even if other values were selected. The situation was, however, inevitably rather different with values that lay only so minimally outside of the range stated in the patent that there seemed from the outset to be absolutely no likelihood of the effect being significantly modified.151 (emphasis added)

The focus on the effect of the variant is interesting as it suggests that the primary question is whether the defendant’s modification is within the teaching of the patent rather than within the exact wording of the claim per se—an approach that is strikingly similar to Lord Reid’s formulation in Van der Lely v Bamfords.152 The fundamental consideration therefore remains fairness to the patentee. However, by ensuring that the test is based on objective considerations, the court safeguards predictability of result. The effect of the judgment is to confirm Franzosi’s suspicion that adoption of a single test would not necessarily result in conformity of decision across Europe, for the philosophy underlying the judgment will have a great effect on the projected outcome.153

Conclusion The German experience provides graphic illustration of an alternative method to the relatively strict literalism of the traditional British approach to claim interpretation. The fact that the German courts have habitually viewed the determination of 150

As is the practice in adopted by the courts of England and Wales. See n 143, above. Cutting Knife I [2003] ENPR 309 at 320. 152 [1963] RPC 61. Discussed at n 42–5 in ch 1, above. 153 Such is obliquely acknowledged by Lord Hoffmann when discussing the differences between the German and British approach to construction in Hoffmann,‘Patent Construction’ [2006] CIPA Journal 727. Of particular note is the statement (at 731) that ‘When Dr Peter Meier-Beck very kindly sent me comments on a draft of the Amgen [decision] a couple of years ago and explained the German approach to equivalence, I told him that the only difference there seemed to be between us was that I was brought up on the 1960s Oxford philosophy of language and he was brought up on Hegel’. 151

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patent scope from the point of view of rewarding the patentee is significant, for this necessarily leads to a broader interpretation (even when using substantially similar) than when the patent is viewed as an exception to an otherwise absolute prohibition on monopoly. The runaway protection of the Second and Third Periods has, to a great extent, been brought under control by the tenacity of the Supreme Court, and it is undeniable that current practice does accord with the Protocol. However, as Franzosi notes, this does not necessarily mean that there will be harmonisation under the EPC (in the strict sense of the word) because of it.154 Indeed, it is debatable whether uniformity is actually achievable at all in the absence of a common appellate court given the wildly divergent legal foundations upon which any decision would ultimately be based. Brändle’s cry for legal certainty 155 in preference to identical application of the law is an oxymoron that cannot be acceptable in practice. Fairness and predictability are intertwined under Article 69 EPC and the Protocol, bound together by the legitimate expectations of the parties. These expectations have to be common in a system in which identical patents are issued via central examination. Yet differences in the background justifications for the grant, the preconceptions of the skilled person through whose eyes the patent is to be viewed, and the application, or not, of a problem/solution approach within construction, have ripple effects that may cause different perceptions to arise. If perceptions and expectations vary, then so does any notion of fairness. After all, predictability, like beauty, is in the eye of the beholder. The Cutting Knife (Schneidmesser) questions have become the de facto standard for claim interpretation in Germany (at the time of writing most recently applied by the Supreme Court in the Stapeltrockner decision).156 There is obvious similarity between this test and that of the pre-Kirin English approach, embodied by the socalled Protocol questions,157 which has caused some commentators to express a degree of disquiet that the UK abandoned this formulation just as Germany was adopting it.158 However, as Hölder quite rightly explains: ‘Upon closer examination, however, not very much has actually changed’.159 The UK courts, as their German counterparts, are still giving effect to the same old principles and viewing the problem from the same old directions even if operating under new tests. This said, there are key-figures that appear hold the opinion that the two countries’ approaches are cut from the same cloth, even if they differ ever so slightly in the window-dressing. Lord Hoffmann, for example believes that: ‘there is no difference between Britain and Germany in what we understand the Protocol to Article 69 to 154

See Franzosi, n 124, above, at 123. Brändle, n 122, above at 878. 156 [2006] GRUR 313. 157 The Improver questions (referring to Hoffmann J’s reformulation of Catnic in Improver v Remington [1990] FSR 181) were rebranded the ‘Protocol’ questions in Wheatley v Drillsafe [2001] RPC 133. See further, ch 9, below. 158 See Pagenberg, ‘Conclusion and Proposals for Greater Harmonization’ in Cornish & Pagenberg, Interpretation of Patents in Europe: Application of Article 69 EPC (Cologne, Heymanns, 2006), at 262. 159 Hölder, ‘Exogenous Equals Endogenous? Claim Construction After the Amgen Decision’ (2006) 37 IIC 662 at 665. 155

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mean and no difference in what we understand by fair protection for the patentee combined with reasonable certainty for third parties’.160 However, understanding what something means and creating a construct for applying it in a manner that is universally consistent are two very different things. Whilst the current German approach provides predictability in a manner that is less objectionable (ie more easily objectively verifiable) than the arguably broader protection of the Second and Third Periods, the concept of rewarding the patentee is still central to the determination of scope. The trend that was evident in the cases that followed Germany’s implementation of the EPC was to clearly constrain the runaway doctrines that preceded it. Errant decisions of the lower courts were firmly, but fairly, corrected at the earliest point possible and brought into line with the Supreme Court’s understanding of the text of Article 69 EPC and the Protocol. However, the rationale upon which the decisions were based remained unchanged. The Fourth Period’s initial uncertainties, caused in no small amount by the action of change in itself, have now settled to a point were the Bundesgerichtshof is content to make a direct comparison with the British tests. This analogy is not made with the intent of exposing a different view, for the references in recent decisions reveal what the court obviously believes to be conformity of approach. However, the point still remains that the question, indeed philosophy, of construction is considered with a benevolent eye that tends towards broad interpretation. Simply put, the fact that interpretative traditions lying behind the courts’ decisions are so disparate in the two jurisdictions is sufficient to doubt the integrity of any apparently harmonised, yet objectively unpoliced, practice. The crux of the issue lies in the lack of a final arbiter in any dispute, for without one we are in a position in which all can conform to a given standard and yet still reach disparate results (and not just based on small differences of individual opinion). When the German and British States had the absolute right to self-determination on issues patent, neither one’s approach could have been said to be any more right, or wrong, than the other. From the inside, both systems worked based on the different goals, justifications, philosophies and rationales that underpinned them. However, postharmonisation the issue is more pressing, and also more complex. As justice is inextricably linked with the legitimate expectations of the parties it is not sufficient for construction to appear to be the same on the surface if the foundations are different. Either the underlying rationale of protection must be harmonised or there must be conformity mandated from above. However, this is to stray somewhat from the point. The question that remains after examination of the traditionally broad protection provided by the German approach to claim construction is whether the foundations of the patent system can be fulfilled by radically different means. We have already seen, in chapters four and five, above, that the patent grant may have a value independent of scope, for the simple fact that it is a patent. We have also seen that the provision of broad protection, based on the uncertain concept of the general inventive idea did not stifle 160

Hoffmann, n 153, above, at 727.

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Germany’s technological growth to any appreciable, or quantifiable, extent during the Second and Third Periods. Therefore, it is sensible to now ask whether the effectiveness of the system may be affected by interpretation at the opposite end of the spectrum, ie that which is very narrow. In order to provide an answer, we turn our attention to Japan, and its tradition of sub-literal interpretative practices.

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8 Japan ‘And We Shall Have Patents’

We have looked about us to see what nations are the greatest, so that we can be like them . . . We said,‘What is it that makes the United States such a great nation?’ and we investigated and found that it was patents, and we shall have patents. Korekiyo Takahashi, Founder of the Modern Japanese Patent Law

Preface Of the three patent systems that comprise the modern triptych,1 the Japanese is easily the most esoteric when viewed from a common law perspective. The current law2 was enacted in 1959 and, although somewhat harmonised to a world standard by international agreements such as TRIPS, still maintains certain features that mark it out as distinct from the other systems that we have considered. Perhaps the most interesting, and certainly the most important, distinction from our point of view is Japan’s novel approach to the determination of patent scope. Article 70 of the 1959 Patent Ordinance inserted, for the first time, a requirement into the substantive law that the courts should determine the technical scope of an invention, and therefore the breadth of protection, by reference to the claim.3 Previously patent scope was decided by reference to the disclosure in the specification alone, a practice akin to the traditional German approach to claim interpretation.4 However, the promotion of the claim in the 1959 legislation did little to 1 Namely the US, European and Japanese systems; still considered by many to be the leading patent systems in the world, even if Isayama’s claim that their combined output amounts to approximately 90% of the world total no longer holds true. See Isayama, ‘Japan’s Views on a Desirable IP System for the Global Economy’ (1999) 2 Journal of World Intellectual Property 679 at 685. As noted in ch 6, above, the Korean and Chinese patent systems have recently seen a massive surge in activity, overtaking the EPO and placing them in third and fourth place respectively in WIPO’s world ranking. See WIPO Patent Report: Statistics on Worldwide Patent Activity (2006), B2 ‘Top 20 offices of filing’ available at: http://www.wipo.int/ipstats/en/statistics/patents/patent_report_2006.html#P104_9303. 2 Tokkyoho (Patent Law) (Law No 121, 1959). 3 At this point in time the Japanese patent system only allowed applications to contain one claim. 4 See Takenaka, Interpreting Patent Claims: The United States, Germany and Japan (Munich, Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, 1995) (Takenaka, Interpreting Claims) at 193.

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change the institutionalised perception that Japanese patents were fundamentally narrow in scope. The traditional Japanese attitude to claim drafting and interpretation is aptly summed up by Takura, who notes that there are three main positions that may be adopted in the determination of the scope of a patent. The first is that of literal interpretation; this, he explains, emphasises the importance of legal certainty. The second is to afford the claims a supra-literal interpretation, expanding the patent’s scope beyond their precise wording, thereby emphasising protection of the right holder. Both of these approaches will be familiar to the reader; the former being a parody of the traditional British process, and the latter the traditional German one. The third, it would appear is peculiar to Japan. It calls for a sub-literal interpretation, providing for a narrower understanding of the claim than the actual wording would suggest, and emphasises protection of the general public. As Takura states: It is only a matter of course that an application should be given a high appreciation, if it is far from any prior art, by anyone’s judgement . . . [However, if it is not then] the closer the invention is . . ., the more limited the protection ought to be.5

He continues, giving examples of where the court has followed this seemingly unorthodox pathway. Thus, in the case of ‘thin token lender in a game center’6 the Osaka District Court ruled that ‘the scope of protection should be limited to what is indicated in the working example’.7 Therefore, despite the fact that the 1959 Patent Law Ordinance stipulated, in Article 70, that the scope of the invention be determined by reference to the claim(s), it is clear that as late as 1990 the claim was still simply being utilised as a guiding principle, to be remoulded at will. This malleability of claim language is reminiscent of the traditional German practice of utilising the claims to identify the general inventive idea and then extending protection from this point;8 critically however, in Japan protection was introverted rather than expanded. Thus, as Takenaka states, the claim was considered to provide a succinct summary of the invention, and little more.‘[T]he scope of protection had to be decided on the basis of the entire application including the specification and drawings’.9 5 Takura, ‘Japanese Claim Interpretation’ (1994) 19(5) AIPPI Journal 215 at 215. This approach is similar in underlying principle to the course of action taken by the House of Lords in Biogen v Medeva [1997] RPC 1, where their Lordships, by an exercise of semantic gymnastics, imported the requirement of s14(5) Patents Act 1977 (that the claims must be supported by the description) into the grounds of invalidity found in s72(1)(c) (that the patent must contain an enabling disclosure). However, whereas their Lordships revoked the patent, the Japanese courts merely restrict the scope of protection that it provides. 6 Token Lender—Ace Denken KK v Yuai Shoji—p113 Hanrei Jihou (Law Report) No 1390 (19 Jul, 1990). 7 Takura, n 5, above, at 216. 8 For a discussion of the traditional German approach see ch 7, above. Also Winkler, ‘The Scope of Patent Protection: Past, Present and Future’ (1979) 10 IIC 296. 9 Takenaka, Interpreting Claims, n 4, above, at 194. Referring to Nakayama, Chukai Tokkyoho (Detailed Explanation of Patent Law) (Tokyo, Seirin shoin Publishing, 1983) at 520.

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Therefore, the Japanese system gave protection to what the inventor realised he had invented, and thus had fully disclosed in the specification.10 This limiting principle suppresses the breadth of any patent, as the patentee may only claim protection for what he has actually created and therefore fully disclosed to the public. As an ideology, it fits very well with an economic model that promotes importation and assimilation of technology, a kind of legalised piracy promoting patent clusters,11 rather than giving incentive to create pioneer inventions. In order to understand why the Japanese law took and maintained this unique shape well into the 1990s we must first consider the historical context in which the seed for Japan’s legal protection of inventions was first planted.

Brief History Japan originally introduced a viable patent system in 1885,12 some 95 years after the US had instituted similar protection, and 260 years after the Statute of Monopolies had declared that legitimate patents of invention were not to be condemned as abuses of Crown prerogative. As such, Japan was a relative latecomer in the patent law stakes; what Kahn calls a patent follower country.13 This tardy adoption of legal protection for inventions, and the eventual shape that the system took once created, can, at least in part, be ascribed to the particular political and cultural influences that prevailed in Japan from the late-sixteenth, until mid-nineteenth, century. It is therefore to this period that we briefly direct our attention.14

Towards Isolation The sixteenth century was a troublesome period in Japanese history.15 Intense conflict between powerful daimyo (landholding military lords) had wracked the land, and the traditional feudal system was in a state of steady decline. By the mid 1500s, the civil wars of the previous century had moved into an even fiercer stage of

10 This practice of limiting patent scope based on the disclosure in the specification rather than the wording of the claims is often labelled the inventor’s recognition theory (ninshiki gendo ron). See, eg, Takenaka, Interpreting Claims, n 4, above, at 66. 11 ie the grouping of patents that are narrow in scope and claim only incremental advances over the prior art around any given inventive concept. 12 Tokkyo Senbai Jorei (Exclusive Selling Patent Ordinance) (Law No 7, 1885). 13 Kahn, ‘Intellectual Property and Economic Development: Lessons from American and European History’, Study Paper 1a of the Commission on Intellectual Property Rights. This can be found at: http://www.iprcommission.org/papers/text/study_papers/sp1a_khan_study.txt. 14 The following discussion of the history of Japan is, to a great extent, based on that found in Beasley, The Japanese Experience: A Short History of Japan (London, Phoenix Press, 2000). 15 So troublesome in fact that the Japanese label for the years from 1467 (the outbreak of the civil wars) to 1560 is Sengoku, meaning ‘the country at war’. See Beasley, ibid at 117.

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conflict as daimyo struggled to consolidate power by expansion of their domains. Eventually, one warlord, Oda Nobunaga of Owari province, succeeded in capturing the capital (Kyoto) as first feudal unifier in 1568. Nobunaga’s regime was marked by bold wars of suppression waged against other daimyos and any other pockets of resistance. By 1590 Nobunaga’s successor, Hideyoshi, had all of Japan under his control, and had proclaimed himself Taiko (chancellor). He died in 1598, leaving five regents to protect the interests of his young son, and heir, Hideyori.16 Despite promises made to Hideyoshi, one of these regents turned against the heir apparent and sought power for himself. A bitter power struggle therefore ensued between those daimyo that supported Hideyori and those that followed the challenger, Tokugawa Ieyasu, Hideyoshi’s erstwhile most powerful daimyo. Matters came to a head in 1600 at the battle of Sekigahara where Ieyasu won a decisive victory, and therefore control of Japan. Hideyori, who was still a child, was reduced to daimyo of the Kinki (Osaka) district and forced to live in his father’s castle there. In 1603 the Emperor appointed Tokugawa Ieyasu to the position of shogun. The appointment ushered in over 250 years of Tokugawa shogunate rule. Ieyasu established his government at Edo (Tokyo)17 and brought the country under tight control. Attracted by trade as a source of wealth and military strength, he was initially tolerant of Christian teachings,18 but later came to fear such ‘risky thinking’, realising that Christian policy threatened the highly organised feudal system that was the key to much of the shogun’s power.19 In addition, Ieyasu is said to have feared that the Christians would join with Hideyori and resist his government. Therefore in 1612 and 1614 he issued decrees to prohibit the spread of Christianity. His distrust was proved correct as a large number of Christian soldiers came to Hideyori’s aid when Ieyasu, who had noticed that he had become a focus of antiTokugawa sentiment, attacked Osaka castle in late 1614.After the castle finally fell in June 1615, and Hideyori had been forced to commit suicide, Ieyasu made proclamations banning Christianity and expelling all priests from Japan. Ieyasu died in 1616 and under his successors the policy against Christian teaching became much more severe, manifesting itself in the 1630s with the issuance of a number of directives enforcing national seclusion at the expense of trade. Thus in 1635 the Japanese were forbidden to make journeys overseas or indeed return from abroad. In 1639 Portuguese ships were forbidden to visit Japan, and trade with the outside world was reduced to limited links with the Dutch and Chinese through the port of Nagasaki.20 Furthermore, all foreign literature was banned. In the earlyeighteenth century a law was even proclaimed that prohibited the manufacture of 16

Hideyori was born in 1593 and so was only five when his father died. See Beasley, ibid. at 128. Thus giving the era of Tokugawa rule its alternative title: the Edo bakufu. That inevitably came twinned with trade from Portugal and other Western nations. 19 In addition, as Beasley notes, the link between Christianity and trade was weakened when the Portuguese lost their near monopoly on imports from China at the beginning of the 17th century. See Beasley, n 14, above, at 150. 20 See the discussion of Christianity and Seclusion in Beasley, n 14, above, at 147-51. 17 18

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any new product based on new technology in Japan.21 In short, the ‘Tokugawa tried to stop the clock of history’,22 and for the next 200 years the country was almost entirely isolated from the outside world.23 The impact of this seclusion policy was profound. To begin with it was instrumental in enabling the Tokugawa shogunate to establish almost 300 years of peace. It cemented the power of the shogun by enforcing a strict hierarchical system of social interaction, with the shogun and daimyos at the top and the peasant classes at the bottom. However, it also led to severe technological retardation. As a consequence Japan missed out on the developments ushered in by the Industrial Revolutions that had already swept across Europe and the US, and by the close of the eighteenth century was still tilling the land as it had always done.

From Abstention to Acceptance—Isolation’s End By the mid-nineteenth century external pressure for reform was strong,24 and in 1858 the Tokugawa shogunate government finally bowed to the combined weight of the US, Britain, Germany and France, and opened its doors to overseas commerce. Japan suddenly found itself as a feudal economy thrust into an industrial world in which it could not compete. The impact that Japan’s opening had on its culture was profound; feudalism was simply unable to survive the onslaught. As a result the Edo government, with its power so firmly based in this type of rigid economy, collapsed amidst bitter internal conflict. However, before its demise it entered into a number of unequal treaties with the Western powers in an attempt to gain a trading foothold. These agreements were heavily biased, and granted outside nations extraterritoriality whilst depriving Japan of its own tariff levying rights.25 The repeal of these ‘humiliating treaties’ is stated by Rahn to have been one of the ‘overriding political objectives of the Meiji state during its first decades’.26 21 Shinkihatto no ofuregaki (Ordinance Prohibiting Innovations), Ordinance of the Military Government of Jul 1721. See Rahn, ‘The Role of Industrial Property in Economic Development: The Japanese Experience’ (1983) 14 IIC 449 at 453 (Rahn, The Japanese Experience). Rahn confusingly states in the main body of the text that law was passed in 1718. The citation given above is taken from the footnote. See also Kumagai, History of Japanese Industrial Property System,A Joint Production of the Japanese Patent Office and the Asia-Pacific Industrial Property Centre (2005), at 2. This can be found at: http://www.apic.jiii.or.jp/p_f/text/text/1-07.pdf (registration now required to access site). 22 Beasley, n 14, above, at 152. 23 ‘Almost entirely’is an apt descriptor for, as Cullen explains, during the period of Tokugawa rule first the Portuguese and then the Dutch became the external eyes of the shogun, with reports filing back through interpreters in Nagasaki. See Cullen, A History of Japan, 1582–1941: Internal and External Worlds (Cambridge, Cambridge University Press, 2003) at 60-2. 24 Including the famous display of American naval might perpetrated by Admiral Matthew C Perry and his fleet of warships that entered Uraga Bay in July 1853. 25 See Kumagai, n 21, above, at 6. See also Rahn, n 21, above, at 461–2. The main treaties in question were the Treaty of Kanagawa (also known as the Perry Convention, 1854) and the Harris Treaty (1858). Discussion of both may be found in Beasley, n 14, above, at 189–203. 26 Rahn, n 21, above, at 462.

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A Return to Imperial Rule The Meiji Restoration is the title commonly applied by Western scholars to the political changes that returned power to the Imperial House in 1868.27 It is in this period that we see the start of sweeping reforms, both legal and institutional, aimed at modernising an essentially Mediaeval Japan. Rahn notes that the ‘Japanese embarked on a feat of learning by borrowing’, taking the US and Europe as their models.28 Therefore, the early years of the Meiji Restoration are marked with rapid assimilation of foreign technology. However, it is clear that although significant advances were being made, the country was still a long way behind the West. In order to spur on advancement, therefore, it was not sufficient to simply continue appropriating technology from abroad; Japan had to entice foreign investment, and to do this it had to offer some degree of protection from competition. In addition, a number of famous cases in which Japanese inventors had the profit of their inventions misappropriated—such as that of Tatchi Gaun, the inventor of a prize-winning Japanese-style spinning machine, who was reduced to poverty by the wholesale piracy of his invention—had highlighted the need for some degree of protection for the creators of new things.29

The Protection of Invention—a False Start As already noted, Japan introduced a working patent law in 1885. The 1885 Ordinance was not, however, the first attempt to provide protection to inventors in the Japanese state. In 1871 the Meiji Government implemented the ‘Concise Regulation of Exclusive Selling’30, based on first-to-file principles and purporting to employ preliminary examination of applications. However, Kumagai notes that this first attempt at a quick fix was doomed to failure, as it was adoption of a law in the ‘absence of a basis for its operation’.31 Although claiming to examine applications there was actually no government office in place to accept one. Furthermore, there were no officials appointed to handle applications.32 Additionally, the new principle was a ‘complete departure from the Tokugawa Shogunate government 27 It is interesting to note that the Japanese term this period a renovation, stressing the dramatic innovative change that the country underwent. 28 Rahn, n 21, above, at 458. Also see Beasley, n 14, above, at 216 for a discussion of the Western influence on the development of the Japanese legal system at this time. 29 See Kondo, ‘Keynote Address at Symposium to Commemorate the Centennial Anniversary of Japan’s Accession to the Paris Convention—Roles of the Intellectual Property Rights System in Economic Development in the Light of Japanese Economy’ (2000) 25 AIPPI Journal 28, at 30 for a more thorough discussion of this case. See also Kumagai, n 21, above, at 4. 30 Senbai Ryaku Kisoku (Law No 105, 1871). See Takenaka, Interpreting Claims, n 4, above, at 40. Rahn, n 21, above, at 460 calls this Ordinance the ‘Summary Rules of Monopoly’. See also Kumagai, n 21, above, at 3. 31 Kumagai, ibid. 32 See Kumagai, n 21, above, at 3. Also Heath, ‘Commercialising University Inventions in Japan’ (2001) 6 Zeitschrift für japanisches Recht 199. Previously available at: http://www.cmmi.gr.jp/jalo4/pdf/ heath.pdf. [Link no longer active].

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policy’ of the previous 160 years, and was thus hardly accepted amongst the Japanese people.33 The law was therefore repealed in 1872, scarcely 12 months after its adoption.34 The years that passed between 1872 and 1885 were marked with explosive advances in Japanese technological understanding. Unhindered by any form of patent protection, industry was able to progress at a remarkable rate by the assimilation of foreign technology. As Rahn notes: A period of sweeping reform and extensive modernization [had begun] . . . At this time, what has now become a fixed tradition, was started on a grand scale: young Japanese by the thousands were sent abroad . . . [to study] American railways, British textiles and metallurgy, French and German law35

‘Foreign mania raged everywhere, and everything was manufactured in imitation of foreign articles’.36

The 1885 Ordinance The 1885 Ordinance is one of a number of statutes that marked a new period in Japanese legal philosophy. As noted above, earlier attempts at founding systematic protection for invention had failed due to the lack of a sound institutional and theoretical basis. Put simply, the prospect of promoting technology was too great a culture shock to be sustained in the years immediately following the Tokugawa seclusion policy. The pressures of the commercial world into which Japan has suddenly found itself thrust were too great, however, to thwart the institution of such a system for long. The disadvantage at which the country was placed in the technology transfer stakes, alone a major hindrance to industrial progress,37 forced political and cultural change. Furthermore, the great benefits of a system for the protection of intellectual property (and inventions in particular) was apparent to all concerned with the renovation of the Japanese political structure during the Meiji restoration. One account above any other brings this realisation into focus. Upon visiting the US to study the American patent system Korekiyo Takahashi, the founder of modern Japanese intellectual property law, is quoted as saying:

33

Kumagai, n 21, above, at 3. As Rahn states, it is proof that it is ‘impossible to create a functioning patent system out of nothing by just promulgating a law’. Rahn, n 21, above, at 460. 35 Rahn, n 21, above, at 458. Beasley, n 14, above, discusses this ‘Study of the West’ at 203–9. 36 Lockwood, The Economic Development of Japan: Growth and Structural Change (1868–1938), (Princeton, Princeton University Press, 1954) at 326. Quoted from Rahn, n 21, above, at 459. 37 The reader may recall the lengths to which the English crown went to remedy a similar technological lag. See ch 2, above. 34

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We have looked about us to see what nations are the greatest, so that we can be like them . . . We said, ‘What is it that makes the United States such a great nation?’ and we investigated and found that it was patents, and we shall have patents’.38

Despite this forthright declaration of pro-American technology policy, it is apparent that the structure of the 1885 Ordinance owed a great deal to both the US and Continental European patent systems. As Kumagai states, the requirement in the Ordinance that the applicant file a description specifying the scope of the invention39 was a distinctly American concept, however the choice of term of the patent (a maximum of 15 years) and the ‘invalidation of a patent right due to non-use were adopted from the French patent law’.40 In addition to these features, the Ordinance called for the adoption of the principle of examination, required that the invention be novel and useful and stipulated that there could only be one invention per application.41 It also deemed inventions contrary to public order or relating to pharmaceuticals not to be patentable.42 The Ordinance of 1885 represents a great step forward in the invention of a modern Japan. It is clear evidence of a country wishing to advance and embracing the opportunities that modern technology has to offer.

American Influences The influence of US patent law policy at this point in time was strong. In 1888, for example, the patent law was revised to include the first-to-invent principle. Provision was also made for the annulment of a patent if the invention was not new, 38 See US Department of Commerce, Patent Office, The Story of the United States Patent Office (Washington, US Department of Commerce, 1972). See also Hayashi, ‘Comparative Study on Patent Systems between US and Japan—1987 and 1993 Revisions in Japan’ (1995) 20(4) AIPPI Journal 171 at 171; Rahn, n 21, above, at 450; Vaver, ‘The future of Intellectual Property Law: Japanese and European Perspectives Compared’—Text of a talk given at the Third Oxford University Academy Salon at Academy Hills, Tokyo, 13 Apr, 1999. This can be found at http://www.oiprc.ox.ac.uk/EJWP0999.pdf. 39 Notice No 5 of the Exclusive Selling Patent Procedure 1885 (Senbai Tokkyo Tetsuzki) stated that the procedure for applying for a patent ‘requires the inclusion in an application of a description specifying the scope of the invention. It is recommended that the phrase “the scope that is claimed for a grant of patent regarding this invention” be used’. See Takenaka, Interpreting Claims, n 4, above, at 40. 40 Kumagai, n 21, above, at 5. Also Heath, ‘Enforcement of Patent Rights in Japan’ (2000) 31 IIC 749 at 751, noting the influence of Continental European legal systems on early Japanese patent law. Additionally, it is interesting to note the wider influence of the Continental European legal system (particularly that of Germany) on the Japanese reforms of the Meiji era. Eg, there was a feeling held by many Japanese at the time that state constitutions provided the unity that gave Western nations their strength. A Japanese constitution was therefore drafted, which was published in 1889. The commission that was responsible for its creation was headed by Ito¯ Hirobumi, who was personally aided by two German advisors, Alfred Mosse and Hermann Roesler. In preparation for the drafting, Ito¯ travelled widely in Europe. He is said to have been drawn to the Germanic approach as it provided a sensible balance between imperial power and constitutional forms that allowed Japan to embrace a certain degree of modernity without risking social disorder. In related areas, the French system is said to have been rejected as being ‘too foreign’. See Beasley, n 14, above, at 216–7. 41 This principle added to the perception of the Japanese patent system as one that granted very narrow rights, as it limited the applicant to one claim per patent. 42 See Kumagai, n 21, above, at 5–6 for a brief discussion of the main features of the 1885 Ordinance.

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or ‘if the specification contained incomplete or superfluous disclosure’.43 In addition, interference procedures, strongly reminiscent of American practice at the time, were introduced. Furthermore, as Takenaka states: ‘The theory that a patent constitutes a substantive right also shows strong American influence, because Japanese patent law at that time regarded a patent as a right to exclude others’44 in the same way that US patent law did.45 German and French law, on the other hand, regarded the right not only to exclude, but also to exploit the patented invention. However, although American influence was predominant at this point in time, it is clear that the law shows what Vojácˇek describes as the ‘wise eclecticism of Japanese legislators’, as many provisions were copied from other countries.45

National Favouritism—a Lesson from the West? However, despite evidence of foreign influence in the shaping of patent law and policy, there remained a number of peculiarly Japanese practices connected with the granting of patents. Vestiges of the Tokugawa shogunate’s seclusion policy can be seen to have survived the Restoration in that, although not specifically prohibited in any Ordinance, foreigners could not, at least in the early years of the system, file a patent application with the Japanese Patent Office.47 This principle of national favouritism appears to have been a calculated manoeuvre intended to rapidly improve Japanese technological standing; operating in much the same manner as the importation of valuable ideas that had improved England’s technology under Elizabeth I.48 In addition, it also gave Japan a powerful bargaining tool in the renegotiation of the unequal treaties signed in 1858.49 It is clear that, when implementing a similar policy in the mid-sixteenth century, England had the benefit of being amongst the first to instigate a system for the promulgation and promotion of invention by the offer of time-limited monopoly. There was no external agenda to contend with, no pressure for conformity at an international level, and no fiction of the right to protection. England could concentrate on self-improvement without fear of recrimination, content in the knowledge that, to all intents and purposes, the country’s business was its business alone. The Crown could tailor the scope of the grant, and, most importantly, settle upon a recipient by exercising prejudice and policy with impunity. Japan was not so fortunate. Times had changed by the point at which it entered the international arena and 43 See Vojácˇek, A Survey of the Principal National Patent Systems (1936; Prentice Hall, New York) at 159. He discusses Japan at 159–65. 44 Takenaka, Interpreting Claims, n 4, above, at 41. 45 Tokkyo Senbai Jorei (Exclusive Selling Patent Ordinance) (Law No 84, 1888); Art 1 provided ‘A patent means granting an inventor a special right to exclude unauthorized people from making, using and selling the patented invention’. Taken from Takenaka, Interpreting Claims, n 4, above, at 41. 46 Predominantly France, Germany and Britain. See Vojácˇek, n 43, above, at 160. 47 See Kondo, n 29, above, at 30; See also Kumagai, n 21, above, at 5–6. 48 See further, ch 2, above and Fox, Monopolies and Patents: A Study of the History and Future of the Patent Monopoly (Toronto, University of Toronto Press, 1947). 49 See Rahn, n 21, above, at 461–2.

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the impossibility of maintaining a xenophobic patent policy (despite the benefits that it offered) was clear. However, it appears that it was too good an opportunity to overlook completely. The reason that national favouritism held such allure, and one possible explanation of the shape that the system took once such a policy was rendered impossible by Japan’s accession to the Paris Convention in 1899, can be ascertained if we look towards the alternative. One of the fundamental qualities of an open 50 intellectual property system is that anyone can apply for, and be granted, protection for their creation as long as it meets certain objective criteria. This provides what would commonly be regarded as a fair system, a meritocracy, which would clearly be the case where the field on which the entities vying for protection is reasonably level. However, in the situation in which Japan found itself at the end of the nineteenth century, the field was perilously steep. It will be recalled that one of the fundamental complaints about the British patent system during the anti-patent debate of the mid-nineteenth century concerned its interaction with the UK’s trading partners in the international dimension.51 A powerful argument dispatched against the system was that other significant players on the European trade scene were exploiting British technology by piracy. This criticism was particularly levelled against Germany, as it had no patent system itself until 1877. The argument was, to a varying extent, used by both sides to justify arguments for, or against, the system depending on where it was focussed. The anti-patent lobby’s claim was that Europe should be on equal footing, that it was unfair that European industry should be able to exploit their British counterparts’ inventions free of charge. The pro-patent lobby, on the other hand, introduced famous ‘defectors’ such as Bessemer and Siemens to attest to the success of the British system in enticing talent such as theirs to the country. However, critical to the success of the pro-patent lobby was the simple fact that the patent system was already in place, to abolish it would have resulted in a significant, and unquantifiable, change in the status quo. The situation that faced Japan was, in many respects, diametrically opposed to that of Britain in this period. There were some similarities, but there were more fundamental differences. Crucially, Japan was a country that was racing to catch up; it was a country whose economy was struggling to change from feudalism to embrace industrialisation. Therefore, whereas Britain was technologically advanced and was concerned with overseas piracy, Japan was retarded, floundering in the international mire and fixated on developing domestic industry. Successfully competing on the international stage was not an option, but competition from international players and the resultant strangulation of domestic interests was a harrowing plausibility. For, whilst it may be true that a strong open patent system encourages domestic innovation and the disclosure of information when the country in ques50 The term ‘open’ is used to denote a system that adheres to the principle of national treatment— ie that all applications are treated equally, regardless of whether they are from foreign or national applicants. 51 See ch 3, above.

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tion is developed, when it is not it simply provides security for foreign businesses wishing to open up new markets. Strong protection of such interests will clearly lead to new technology being introduced into the state in question but, critically, it will be introduced at a premium price, and then only if there is considered to be a market for it. Therefore, the home nation only receives the (delayed) benefit of innovation deemed by external forces to be economically viable. Domestic industry does not directly benefit from this sort of bargain as it cannot (generally) make the jumps in technology that are required to get ahead of the pack, let alone to maintain this position if it gets there. Instead, it is left to pick the bones, becoming reliant on external innovation without being able to learn by improving. Once established, piracy is taboo. However, on the road to establishment it is an aid of unparalleled efficacy in educating and developing a nation’s technological standing. Indeed, if we look at the birth of the patent system in England then we see that great advance was made through this very practice, through the systematic importation of knowledge from abroad.52 Therefore, whilst Britain was free to dictate its own fortunes and form an innovation policy that benefited no-one but itself, Japan had emerged from its seclusion into an arena governed by international trade and subject to a new world order. External pressure from the international community for the ‘equal’protection of inventions was strong.53 On patent matters, therefore, it was clearly caught between a rock and a hard place. It recognised the need to advance technology and the benefits that a system of granting temporary monopolies could provide. In addition, it was clear that foreign investment and the introduction of overseas inventions was needed, however, it would have been equally clear that there were significant dangers and disadvantages to domestic industry if the protection offered was too strong. Therefore, by initially prohibiting foreign interests from receiving patent protection, Japan gained valuable bargaining power in the renegotiation of the unequal treaties that it had entered into upon the suspension of its seclusion policy. In addition, it enabled domestic interests to defend against internal competition in a bid to spur on intellectual and industrial development. The grant of narrow rights would have been optimal in the pursuit of such a policy as these encourage incremental technological growth rather than fundamental innovation.54 As already noted, Japan’s accession to the Paris Convention in 1899, and the patent law revision Ordinance that accompanied this, put an end to the outright 52 This was, after all, the primary purpose of many of Elizabeth I’s initial grants. See Fox, n 48, above, at 62–5, discussing the classification of monopolies granted at this time. See also, text accompanying n 50-84 in ch 2, above. 53 The story of the creation of the NEC Corporation is a vivid example of the international pressure that Japan found itself under to give strong recognition to intellectual property rights. The Corporation, formed from a tie up of Nippon Electric Co Ltd of Japan and the Western Electric Co Ltd of the US, was created just two days after the Paris convention went into force in Japan, and included provisions on the management of intellectual property rights in its articles of incorporation. For more detail on the creation of NEC see Kondo, n 29, above, at 30. 54 And why bother to invest in fundamental innovation, a costly process, when you can import, assimilate and improve upon someone else’s work?

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prohibition upon granting protection to foreign applicants.55 However, it is apparent that the policy interests underpinning the principle of national favouritism, primarily the need to encourage domestic industry, were not so easily removed. Indeed, they maintained such a fundamental role in the shaping of Japanese patent law that the system was often criticised as encouraging follow-on inventions at the expense of fundamental innovation until well into the 1990s.56 Sato, is blunt in his comments on the matter: ‘[i]n the hundred-odd years from the Meiji Era onward, the Japanese industry has developed by improving technology from abroad’.57

Post-Convention—Incremental Development The 1899 patent law Ordinance was the first of a series of revisions that Takenaka asserts demonstrate the movement from an essentially American to a Germanic system of principles regarding the scope of protection.58 She explains that whilst the 1885 law was based on the US system and saw the patent as a right to exclude others, the 1899 revision provided that the patent gave the right to ‘use exclusively and distribute the patented invention’, something that the US system did not.59 This process was continued with the 1909 Ordinance, which adopted a pseudoGermanic model of jurisdictional separation between the Patent Office and the courts,60 and was completed with the 1921 Ordinance,61 adopting the first-to-file system of application priority.62 However, in one important aspect the Japanese system was to retain its own specific identity.

55 However, there was still an obligation to designate an agent residing in Japan. See Kumagai, n 21, above, at 6. 56 See Maskus & McDaniel, ‘Lessons from Japan for US Patent Reform: Policy Implications of a PreGrant Disclosure System’, a Japan Information Access Project working paper (revised on 1 Jun, 1999). Available online at: http://www.jiaponline.org/publications/docs/1999/june/FINAL%20PAPER%206.1.99.pdf at 5. 57 Sato, ‘Strengthening the Protection of Intellectual Property Rights to Meet the Needs of the 21st Century—Future Policy on Intellectual Property Rights’ (2001) 26(4) AIPPI Journal 199 at 200. This observation, is shared by the Report of the Commission on Intellectual Property Rights in the Twentyfirst Century to the Commissioner of the Japanese Patent Office, 7 Apr, 1997—Toward the Era of Intellectual Creation: Challenges for Breakthrough. A detailed outline of the report may be found at: http://www.jpo.go.jp/shiryou_e/toushin_e/kenkyukai_e/rep21eng.doc. 58 Takenaka, Interpreting Claims, n 4, above, at 41. See also Vojácˇek, n 43, above, at 160-5. On the post 1899 developments in Japanese patent law he summarises by stating that ‘We see clearly [in this period] . . . the development of the Japanese patent system, which in its essential features inclines more and more to the German and Austrian system . . . [However, p]eculiar to the Japanese system are stipulations concerning . . . contingencies which, as to minuteness have hardly a parallel in any other patent law’. Vojácˇek, at 165. 59 Takenaka, Interpreting Claims, n 4, above, at 41. 60 Art 49, Tokkyoho (Patent Law) (Law No 32, 1909). This meant that anyone wishing to invalidate a patent had to commence proceedings at the Patent Office, as per the current German model. 61 Tokkyoho (Patent Law) (Law No 96, 1921). 62 See Kumagai, n 21, above, at 8.

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The patent scope certification trial was introduced by the 1899 Patent Ordinance, and effectively functioned to vest interpretative power concerning the scope of protection in the Patent Office. The trial enabled the patentee to bypass the court system when questions of this kind arose, and its use may go some way to explain the very low incidence of reported patent cases in the period up to its abolition with the 1959 Patent Ordinance. The existence of the certification trial was very important as it functioned to erode the separation of jurisdiction envisaged by the 1909 Ordinance. As matters of interpretation were being considered by the Patent Office, a situation akin to that in the UK and the US63 was effectively in existence based, however, upon German principles. Therefore, as the Patent Office took the main role in developing claim interpretation theory, the courts were relegated to second-fiddle. This had important repercussions for cross-jurisdictional transfer of theory between Germany and Japan, for it is clear that from the 1899 Ordinance onward the influence of the German legal system was strong. Examples of such international transfer of policy/theory are given by Takenaka and include the establishment of the concept of ‘identification of the invention’, similar to the general inventive idea of the German courts, sitting at the core of interpretative theory. In addition, she mentions the classifications that the Patent Office utilised to divide modifications being almost wholesale copies of their German counterparts.64 However, the blurring of the separation caused by the patent scope certification trial meant that whereas in Germany these principles were simply utilised to decide the scope of the patent once granted, in Japan they could also be used to deny protection. This factor had important repercussions for claim interpretation theory, as it essentially enabled the courts to operate unrestricted by their wording. The claim functioned to define the invention, but the disclosure made by the patentee in the rest of the specification was considered to be of more importance when the scope of protection was considered. Thus, over and above the principle of classifying modifications, the Germanic doctrine of the general inventive idea was bastardised and effectively functioned to limit the scope of the patent to that explicitly recognised by the inventor, evidenced by the disclosure in the specification. This theory, often known as the inventor’s recognition limitation theory65 came to be the governing doctrine in Japanese claim interpretation, and confined the protection afforded by the patent to the explicit disclosure.66 Unlike the German system, 63 Where one body has competence to decide on issues of both infringement and validity. In these countries that role is played by the court. 64 The classifications that she mentions are ‘mechanical workshop modifications’ (sekkei henko), ‘insignificant modification’ (sekkeijo no bisa), ‘designing around the invention’ (ukai hatsumei), and ‘inferior modifications’ (kaiaku jisshi). See Takenaka, Interpreting Claims, n 4, above, at 42. 65 Ninshiki gendoron. See Takenaka, Interpreting Claims, n 4, above, at 43. 66 Takenaka utilises a judgment of 16 Oct, 1915, (Taisho 7 No 459), stating on at 43, fn 21: ‘Since an application including descriptions of the nature and purpose of the invention, a detailed explanation of the invention, the scope claimed for the grant of the patent, and specified the gist of the invention and means and devices by which the invention is embodied so that he or she claimed the characteristic portions of what he described, the meaning of each element described in the claim must be interpreted with respect to the nature and purpose of the invention and the detailed description of the invention’.

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where the general inventive idea was utilised to expand the scope of protection to those devices that could have been conceived by the skilled addressee based on the claim language and the disclosure in the specification, the Japanese inventor’s recognition theory operated to limit the scope of the patent to what the inventor was perceived to have intended to claim based on the disclosure in the rest of the specification.67 The patent scope certification trial had removed the need to be bound by the claims by enabling the Patent Office, the forum in which the claims were drafted, to also determine their scope. The fact that the apparent separation of powers envisaged by the 1909 Ordinance did not adequately correspond to this model appears to have gone unnoticed in the years that followed its enactment, and the Patent Office continued to operate as judge, jury and executioner on matters of claim scope. It was in this respect far more powerful than the courts or Patent Offices in any of the other jurisdictions that we have considered, as it was free to re-examine and re-draft the patent as it determined its breadth.Various practices arose to surround this core concept, including the determination of the gist of the invention (hatsumei no yoshi), which augmented the narrowing of protection scope by reading the limitations in the description as limitations on the claims themselves.68 However, this was not the end of the matter, as the Japanese courts also adopted this procedure to justify redrafting the claim in infringement proceedings ‘by declaring a new claim as the gist of the invention or patent’.69 The fact that the courts adopted this process served to further muddy the jurisdictional separation between the two bodies, with both entities believing that they had the power to redraft and reinterpret any claims at will. Therefore, we see the same principles that were being used in the German courts to expand the scope of protection being used in the Japanese Patent Office in scope certification trials, and in the courts in infringement actions, to narrow the claims. All that the jurisdictional separation envisaged by the 1909 Ordinance succeeded in doing was to render the decisions of the Patent Office unquestionable in court. The German motivation for such a division of power was not transferred into the Japanese model, and, as such, the system preferred narrow protection. This said, it is clear that the system was able, as and when the circumstances dictated, to expand protection on an ad hoc basis to minor modifications that did not appear in the description or drawings.70 However, as Takenaka states, this: involve[d] the mechanical one-to-one exchangeability of claim elements but . . . [did] not involve the equitable consideration of the patentee’s interest and the public’s interest in the 67 The reader may note that a perception of intention test bears certain similarities with the British approach to claim interpretation discussed in ch 9, below. The repercussions of this approach are discussed therein. 68 Takenaka, Interpreting Claims, n 4, above, at 44–45. 69 Ibid, at 45. 70 An example of the ad hoc application of the doctrine of equivalents can be found in the decision of the Tokyo District Court of 28 Sep, 1964 (Hanrei No 168). See also, Kukimoto,‘The Patent Law: Chapter 3 The Patent Right’ (2001) 26 AIPPI Journal 79 at 87.

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context of the patent policy of encouraging innovation . . . [so as to provide a] broad range of equivalents.71

It is also eminently clear that such expansion of the claim was far from normal. It may be possible that the outcome of this process was, as some commentators have claimed, based on incomplete understanding of the legal principles that were employed in its key stages of creation.72 However, this conclusion ignores the fact that, from an economic and practical point of view, a policy of granting narrow patents was manifestly beneficial to Japan and Japanese industry.73 It would be naïve to conclude that a practice that encourages progression by imitation, therefore creating patent ‘clusters’74 and spurring on domestic industry75—industry that would be in danger of being strangled by broader protection—could only be based on such ‘incomplete understanding’. Rather, it would appear that the system flourished, and Japan made the immense technological leap that it did in the manner that it did, precisely because of the nature and scope of the rights that the patent system granted.76

Cultural Formatting: Institutional Collectivism? The fact that a Japanese patent traditionally granted only narrow protection also accords very well with the wider picture of Japanese legal culture. The honourable nature and form of all social interactions carried over into the country’s legal 71 Takenaka, Interpreting Claims, n 4, above, at 46. Whilst this may be the case, the implicit assumption in this statement that narrow protection does not encourage innovation at all is somewhat incorrect. This point is discussed in more detail in the next section. 72 See Takenaka, ibid, at 44 et seq. 73 The conclusion that broader protection encourages more innovation is, in itself, dubious. See Sakakibara & Branstetter, ‘Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms’ (Apr 1999) NBER Working Paper Series, No 7066. Available at: http://www.nber.org/papers/w7066.pdf. 74 Again referring to the situation whereby an inventive concept becomes surrounded by patents that are narrow in scope and claim only incremental advances over the prior art. 75 A vivid example of an incremental innovation that nonetheless came to define an age and demonstrates the encouragement of domestic industry is that of the Sony Walkman. The pioneer invention accompanying this advancement (tape recording) was not made in Japan, but who can remember the inventor? The Walkman spawned a whole host of related products, and marked its producer as one of the industry greats. For a more in-depth discussion of the invention of the Walkman, and other Japanese incremental advances that became giants in their own right see Rosen & Usui, ‘The Social Structure of Japanese Intellectual Property Law’ (1994) 13 UCLA Pacific Basin Law Journal 32, at 41–3. 76 The credence of this view is bolstered by Vojácˇek’s contemporary comments that ‘present Japanese law may justly claim to be the most carefully thought out and perhaps the best modern law in the world’. See Vojácˇek, n 43, above, at 165. Takenaka’s conclusion that it was based on ‘incomplete understanding’ seems to be grounded in an assumption that anything that is not manifestly American/European is somehow wrong. The benefits to a developing market of the Japanese approach simply cannot be dismissed so glibly. Indeed, it would appear that Takenaka herself also later accepted the undeniable benefit that the system in Japan actually had at the time. See Takenaka, ‘The Role of the Japanese Patent System in Japanese Industry’ (1994) 13 UCLA Pacific Basin Law Journal 25.

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system77 and helped to shape the envelope of intellectual property in general, and patents in particular. Thus, the interests of society are clearly evident in the decision, explicit or not, to confine the scope of protection within narrow boundaries.78 The Japanese system can therefore be seen to emphasise the protection of the general public by limiting the claim to what the inventor has disclosed in the specification. This sub-literal protection also promotes another element of Japanese patent culture, that of collectivism, over and above the more Western notion of individual reward. With a system of narrow grants, patents beget patents and it is virtually impossible for one entity to control all of the technology surrounding an invention.79 The consequent ‘flooding’80 that results from many competing applications may soon render the initial innovation impotent. Therefore, rather than doggedly defending one’s territory and bringing expensive legal actions in order to ward off competitors, as is the Western approach, Japanese patentees traditionally entered into cross-licenses as a matter of course.81 This institutionalised diplomacy was vital to the success of the patent system in Japan, for without it the system would have rapidly become gridlocked. The fact that the Japanese system encourages the ‘laying open’ of technology may also account for the monumental progress, both technological and cultural, that the country has witnessed since the Meiji Restoration. By opening the knowledge contained in the inventive pool by effective cross-licensing, the Japanese system has gone far beyond the information/disclosure function of the patent grant itself, in effect rationalising innovation as a national rather than individual activity. This process accords with the Schumpeterian notion that large entities are conducive to 77 ‘[I]n order to obtain the highest degree of compliance possible, both judicial opinions and public laws try to find the common ground or, that magic word, “consensus” regarding any specific subject’. Port, ‘The Spirit of Japanese Law (Book Review)’ (2002) 1 Washington University Global Studies Law Review 573 at 574, reviewing Haley, The Spirit of Japanese Law (Athens (GA), University of Georgia Press, 1998). 78 See, Harris,‘Competition Law and Patent Protection in Japan: A Half-Century of Progress, A New Millennium of Challenges’ (2002) 16 Colombia Journal of Asian Law 71 at 75 to 76. See generally, Rosen & Usui, n 75, above. 79 This narrow division of the inventive field into numerous ‘thin’ patents has led some critics of the Japanese system to nickname it the ‘sashimi’ system, after the sliced fish delicacy—see Sakakibara & Branstetter, n 73, above, at 3. 80 A term utilised by many commentators including Rosen & Usui, n 75, above, to describe the ‘multitude of patent applications claiming minor, incremental changes’ over previous innovations—see Sankaran, ‘Patent Flooding in the United States and Japan’ (2000) 40 IDEA 393 at 394. See also US General Accounting Office, Intellectual Property Rights: US Companies’ Patent Experiences in Japan (Jul 1993) GAO/GGD-93–126, at 18, which states that whenever a patent of value is published, competitors of the patentee will file ‘excessive numbers’ of patents claiming minor variations, a practice known as ‘patent flooding’. 81 See, eg, Rosen & Usui, n 75, above, at 45–6. Further, in an interview with a Japanese Patent Attorney visiting the UK this author was told that that ‘The honourable thing to do is to come to an agreement, not to litigate. I think that this principle still applies to many patentees in Japan. They learn from their Western competitors, but it is better to trade than to fight’. The general view of the British-qualified patent attorneys interviewed for ch 4, above, is aptly summed up by one by the following quote: ‘The Japanese on the whole don’t care [about the quality of individual grants, they] . . . only want a patent, they collect them. They may amass [thousands a year] . . . and bargain with them, they go to their competitors and say “we’ve got more than you, give us some money”. They don’t seem to care about the value of each one’.

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innovation—ie the process of investing in invention—provided that they are able to satisfactorily recoup research and development costs.82 In Japan the fact that narrow protection was granted moves the scope of protection and therefore the return on each individual innovation outside of the primal sphere of influence. The scope of the rights is therefore not as important as the fact that rights are granted in the first place. Form is championed at the expense of content. In other words, the whole process of innovation becomes one of numbers. Competitive advantage is gained, not by the quality of the advances made, but rather by the quantity of patents that can be thrown into the bargaining pot, thus shifting the focus of the patent incentive rather than replacing it entirely.83

Continued Pressure for Reform This process of cannibalisation by the collective, the assimilation and improvement of (primarily foreign) technology, operated well when Japan was playing catch up, but it is clear that by the end of the 1950s the system, as it stood, was becoming unworkable.84 Japan’s technological progress had been explosive, moving it from the Middle Ages to a point at which it was able to compete with the Industrialised West in a period of less than 100 years. However, this growth was now in danger of being thwarted by the very system that had enabled this rapid progression: it was time for reform. As already noted, the current incarnation of the Japanese patent law was promulgated in 1959. It implemented changes recommended by the Council for the Study of Intellectual Property System Revision, which had been installed at the Ministry of International Trade and Industry in 1950, and was designed to update the system to enable it to cope with Japan’s rapid industrial progress after World War II.85 Furthermore as Takenaka states, the Ordinance served to codify a number of judicially created principles; for example, it inserted an inventive step requirement into the substantive law.86 In addition, it expanded the scope of the novelty provision by 82 See Schumpeter, Theory of Economic Development (Cambridge (MA), Harvard University Press, 1936). This work was first published in German as Theorie der wirtshcaftlichen Entwicklung (Leipzig, Duncker Humblot, 1911). Discussed further in ch 5, above. 83 See similar conclusions concerning the efficacy of the Japanese patent system in providing incentives to innovate in Cohen et al,‘R&D Spillovers, Patents and the Incentives to Innovate in Japan and the United States’ (Working Paper Jun 2001). Available at: http://www.druid.dk/conferences/nw/paper1/ cohen.pdf. Subsequently published as (2002) 31 Research Policy 1349. 84 See Kumagai, n 21, above, at 8. He states that the ‘laws had some provisions no longer effective in handling real issues and unable to catch up with the country’s rapid progression in economic and industrial development in the post-war years’. 85 See Takenaka, Interpreting Claims, n 4, above, at 47. See also Kumagai, n 21, above, at 9–10. 86 In Art 29, para 2—‘Where an invention could easily have been made prior to the filing date of the patent application by a person with ordinary skill in the art to which the invention pertains on the basis of an invention or inventions referred to in any of the paragraphs that provide the novelty requirements, a patent shall not be granted for such an invention’. Translation quoted from Takenaka, Interpreting Claims, n 4, above, at 47. See also, Kumagai, n 21, above, at 9.

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including overseas publications within its remit, and it made it possible to file a patent application that covered more than a single invention for the first time. It also inserted a requirement, in Article 70, that the court determine the technical scope of an invention, and therefore the breadth of protection, by reference to the claim.87 Protection scope certification trials were also abolished, thereby transferring responsibility for claim interpretation to the courts and clarifying the jurisdictional separation envisaged by the 1909 Ordinance. The inclusion of Article 70 in the new law was intended to prevent the courts from re-examining the patent claim, as had been the pre-1959 practice. By inserting direct reference to it in determining the scope of protection, ‘the legislature aimed at forcing courts to read the claim as it was granted in infringement litigation’.88 However, as ever, legislative intent and court practice do not always see eye-to-eye, and the courts continued to utilise pre-1959 practice to limit the claim based on disclosures made elsewhere in the specification. Subsequent revisions to the Patent Law attempted to expand the scope of protection. Therefore in 1975, a multiple claim system was introduced.89 Whereas previously it was only possible to include one single, independent, claim in an application, the revision allowed the inclusion of multiple dependent claims.90 However, this amendment did not substantially alter the number of claims actually included in most patent applications at the time.91 The reasons for this are manifold, but a significant contributing factor to this observation must have been the fact that the revision was primarily motivated by Japan’s ratification of the Patent Cooperation Treaty,92 ie an external rather than an internal factor. This suggests that there was no institutionalised call for more claims and therefore, as the single claim system was perceived internally to be working well, there was little need to include more claims in the application. This argument is supported by the fact that the number of patent applications continued to grow year-on-year throughout this period, rather than suffering downturn as broader protection removed the need for a patent clustering protection strategy.93 In 1987, following two relatively minor revisions,94 the law was again amended and the claim system modified to allow multiple independent claims. Furthermore, the ease with which related inventions could be included in a single patent was significantly increased with the new law. It would appear that these revisions had far 87 At this point in time the Japanese patent system only allowed applications to contain one claim, thus seriously limiting the scope of protection. 88 Takenaka, Interpreting Claims, n 4, above, at 50. Referring to Comments made by Justice Masao Miyake, former Japanese Supreme Court Judge. 89 Art 36, Law No 46, 1975. 90 See Sakakibara & Branstetter, n 73, above, at 3–4. Also Takenaka, Interpreting Claims, n 4, above, at 48, and Kumagai, n 21, above, at 11–12. 91 Sakakibara & Branstetter, n 73, above, at 39, provide statistical data gathered by the Japanese Patent Office that shows that until 1987 the average number of claims per patent application across the board was below 1.5. 92 And therefore its need to comply with the provisions of the Treaty. 93 See Sakakibara & Branstetter, n 73, above, at 38. 94 One in 1978 (Law No 30, 1978), and one in 1985 (Law No 41, 1985).

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greater effect on the average number of claims per patent application than any of the previous amendments did. For example, figures from the Japanese Patent Office show a rise from approximately 1.2 to somewhere in the region of 2.5 claims per application between 1987 and 1988 when the reforms were implemented.95 This is significant, for an effective multi-claim patent should (theoretically) enable greater breadth of protection, even under a sub-literal interpretative regime, than a patent consisting of a single claim would allow. This can be seen in figure 1 (below):96

Key

Prior Art

Independent Claim

Prior Art

Scope of Single Claim Scope of Multiple Claims

Independent Claim

Independent Claim

Prior Art

Figure 1: Scope of Single Claim and Multi-Claim Patents

The diagram shows that the use of three relatively narrow independent claims enables the patentee to utilise the space surrounding the inventive core of the application without straying into the prior art more effectively than a single claim would do.Whilst this scope of protection could theoretically have been achieved before the reforms by the filing of multiple applications (as was the common practice), it is clear that the revised system would have significantly reduced the cost of a given level of protection. In addition to this, as Sakakibara & Branstetter note, the multiclaim system may also have improved matters by making it possible for ‘innovations 95 See Sakakibara & Branstetter, n 73, above, at 39, fig 3. By 1989, the average number of claims per application was 2.8—see Japanese Patent Office, ‘Trends of Industrial Property Right Applications and Registrations’, previously available at http://www.jpo.go.jp/shiryou_e/trends_of_ipr.htm [link now dead]. The data set in the latter document spanned 1989–2001, and showed a year-on-year rise in the number of claims per application. 96 Inspired by a similar diagram in Sakakibara & Branstetter, n 73, above, at 37.

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that could not be completely protected under the old system . . . [to] now receive full protection’.97 Therefore, by implementing measures such as these, the scope of a Japanese patent was manipulated without the need for changes in the established rules of interpretation. It should be noted, however, that up-take of the multiple claim system by Japanese patentees was relatively slim in the first few years of its operation,98 suggesting that there was a need for an institutional change in working practices in addition to legislative reform.

Policy Reforms Continued international pressure and criticism, both internal and external, of the narrow scope of protection afforded by the courts’ interpretation of Japanese patents finally became too much to ignore. Therefore, in the midst of a decidedly pro-patentee era in Japan—evidenced by the publication of reports such as that of the Commission on Intellectual Property Rights in the Twenty-First Century, entitled Toward the Era of Intellectual Creation,99 that details proposals for accelerating the cycle of intellectual creation through intellectual property rights100—the Japanese Supreme Court issued what has been described as a landmark decision101 in Tsubakimoto Seiko v THK KK 102 (the Ball Spline decision), explicitly endorsing the doctrine of equivalents.103 As noted, the Japanese system in the pre-equivalents era was heavily biased towards protection of the interests of society over and above the interests of any individual patentee. The policy in the early years of the system was geared towards technological growth, to reduce the yawning gap between Japan and the advanced Western nations on which it modelled its renovation. Improvement and advance97 Sakakibara & Branstetter, n 73, above, at 6. For more detail on the ways in which the revisions in 1987 expanded the effective scope of Japanese patents see 8–11 therein. 98 Eg, whereas 91.2% of non-Japanese applicants utilised multiple claims in their applications to the Japanese Patent Office in 1989, only 40.9% of Japanese applicants did so. See Japanese Patent Office, Trends of Industrial Property Right Applications and Registrations, n 95, above, figs. 1–3. 99 Above, n 57. 100 A report of the Planning Subcommittee of the Industrial Property Council entitled ‘To the Better Understanding of Pro-Patent Policy’ is rather more blunt in its recitation of policy. This is available online at: http://www.jpo.go.jp/shiryou_e/toushin_e/shingikai_e/report.pdf. 101 By Yamamoto & Tessensohn, ‘Doctrine of Equivalents adds Torque to Japanese Patent Infringement’ (1999) 81 JPTOS 483 (Yamamoto & Tessensohn,‘Torque’) at 483. 102 1630 Hanrei Jiho 32 (Supreme Ct, 1998). 103 Discussions of the Ball Spline decision are many, and include Takenaka, ‘The Doctrine of Equivalents in Japan’ (2000) 6 CASRIP Symposium Publication Series 125 at 125–6. Available online at: http://www.law.washington.edu/casrip/Symposium/Number6/Takenaka.pdf. Also see Tani,‘THK Co. v Tsubakimoto Seiko Co.—Infringement Case for Ball Spline Bearing’ (1998) 1(6) Journal of World Intellectual Property 963. Kim, ‘A Comparative Analysis of the Japanese Supreme Court Decision on Doctrine of Equivalents’ [2002] IPQ 18. Sonoda & Kobayashi, ‘Doctrine of Equivalents in Japan’, available at: http://www.patents.jp/Archive/19980703-01.pdf. Also Yamamoto & Tessensohn,‘Torque’, n 101, above.

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ment were the watchwords, and therefore individual success was less important than the success of the collective. Technology advanced by assimilation and there was no room for the uncertainties that extending protection into the area beyond the literal scope of the claims would allow. Indeed, as Takenaka notes,‘the Japanese Courts refused to introduce an unclear concept of equivalents into their patent system’, resulting in a patentee’s claim for infringement by equivalents often being viewed as an admission of no infringement.104 It was only in exceptional cases, with the aim of preventing a manifestly unfair result, that any protection beyond the textual meaning was achieved, and even in such circumstances this was facilitated by manipulation of the literal meaning under what was known as the substantial identity rule.105 Explicit recognition of the doctrine of equivalents by the Japanese supreme judicial body is therefore of considerable importance in the evolution of the intellectual property system there.

The Ball Spline Decision The report issued in 1997 by the Council for the Consideration of Intellectual Property in the Twenty-First Century, Toward the Era of Intellectual Creation— Challenges for Breakthrough, called for a paradigm shift in Japan’s intellectual property system in order to adequately protect the fruits of research and development labour. During the previous ten years the explosive technological growth witnessed in the early and mid-1980s had slowed, and competition within the high-tech industries intensified in consequence. This increase in competition can be seen to have spilled over into the realm of litigation as the number of patent cases filed before Japanese courts rose by a staggering 66% between 1994 and 1998.106 It was therefore in a highly litigious climate, with the added pressure of pro-patent policy considerations, that the shift of interpretation in favour of the patentee finally occurred. The decision in case No Heisei (O) 1083, Tsubakimoto Seiko v THK KK (the Ball Spline decision) had been eagerly awaited by both the Japanese and international patent communities. In an earlier decision, the Osaka High Court (a very influential appellate court in Japan) had wholeheartedly endorsed the application of the doctrine of equivalents in a clear-cut case of attempted evasion of Genentech’s t-PA clot busting drug patent.107 The decision in this case was described at the time as 104

Takenaka,‘The Doctrine of Equivalents in Japan’, ibid, at 125–6. Somewhat similar to the old British approach utilised to avoid results that would rob the patentee of all protection, evidenced by cases such as Henriksen v Tallon [1965] RPC 434. 106 See Yamamoto & Tessensohn, ‘Broadly, Correctly and Openly—Japanese Patent Litigation as a Weapon for the 21st Century’, in Yamamoto (ed) 20/20 for the 21st Century: 1979–1999: A Special Twentieth Anniversary Issue of IP Japan (Osaka, Yamamoto Patent Law Offices, 1999), 242 at 243. This increase in litigation may, to a certain extent be a knock-on effect of the expansion of the scope of protection given by the introduction of the multiple claim system with the 1988 reforms. 107 For a detailed discussion of the case (Genentech Inc v Sumitomo Pharmaceutical C. Ltd H-6 (ne) No 3292 (29 Mar, 1996)), see Yamamoto & Tessensohn, ‘The Born-Again Doctrine of Equivalents in Japan: The Genentech Appeal’ [1996] EIPR 572. (Yamamoto & Tessensohn,‘Born-Again’). 105

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being ‘epoch-making’108; it was therefore considered to be only a matter of time before the Supreme Court was called in to conclusively rule on the issue. The chance came in Ball Spline.

The Patent The case concerned a patent for an ‘endlessly sliding ball spline bearing’ (constituent element E) comprising four sub-elements A to D. The defendant’s product satisfied elements C, D and E, but differed from the claimed product in the following manner. In regard to element A, the patent called for ‘an outer cylinder having torque transmitting load-bearing ball-guiding grooves with a U-shaped cross-section, . . . the outer cylinder having an annular circumferentially directed groove [in portion 7]’109 The Defendant’s product differed in that it was of ‘semicircular cross section’ and had a ‘cylindrical portion 7’110 The patent claimed element B as a retainer that functioned as a guide for the balls in their continuous circulation, to retain the balls when the spline shaft was removed, and as a guide for the ribbed portions of the spline shaft. In the defendant’s product these functions were effected by the co-operation of three separate members.111

The Original Decision The Tokyo District Court had determined that there was infringement as, despite its differences, the defendant’s product was held to fall within the technical scope of the invention for the following reasons; first, the two products were substantially the same in respect of ‘the solution for solving the technical problem, the basic technical idea, and the effects obtained by the constituent features’;112 second, with regard to the structure of the retainer (constituting element B), there was ‘recognized interchangeability between the present invention and the appellant’s product and ease of interchangeability at the time of filing’; and113 finally, concerning the differences in element A between the two products, there was no special technological significance that could be attributed to the substitution of a ‘semicircular cross section’ for a ‘U-shaped cross section’, or to the difference between a ‘circumferentially directed groove’ and the ‘cylindrical portion 7’.

108

See Yamamoto & Tessensohn,‘Born-Again’, ibid, at 578. Taken from a translation of the claim reproduced in Tani, n 103, above, at 966. 110 The reader may note the similarity in these differences with the English case of Rodi & Wienenberger v Showell, [1969] RPC 367. 111 For a full translation and reproduction of the claim and discussion of the defendant’s product see Tani, n 103, above, at 966. 112 Para 2.4 of the translation of the decision of the Supreme Court in Ball Spline annexed to Tani, n 103, above, at 980. All subsequent references to the translation of the case are to this version. 113 Ibid. 109

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The Appeal On appeal, the Supreme Court was not content to uphold the decision of the Tokyo Court on the reasoning given above. Rather it proceeded to take the opportunity to clearly explain the ‘policy justification for finding infringement under the doctrine of equivalents, and clarified the appropriate test for applying’ it.114 The court began by referring to Article 70 of the 1959 Patent Ordinance and stated that the technical scope of the patented invention must be determined by reference to the claims in the specification.‘If there are elements that differ between the constitution described in a patented claim and corresponding product and the like, the corresponding product cannot be said to fall within the technical scope of the patented invention’.115 However, it continued stating that even if there were elements that differed between the patent claims and the accused infringement, the latter may be said to be equivalent to the constitution described in the claim, and may be said to fall within the technical scope of the patented invention, as long as certain criteria were satisfied. Viz: (1) that the differing elements are not the essential elements in the patented invention; (2) even if the differing elements are interchanged by elements of the corresponding product and the like, the object of the patented invention can be achieved and the same effects can be obtained; (3) by interchanging as above, a person of ordinary skill in the art to which the invention pertains (hereinafter referred to as an artisan) could have easily achieved the corresponding product and the like at the time of manufacture etc. of the corresponding product; (4) the corresponding product and the like are not the same as the known art at the time of application for [the] patent or could not have been easily conceived by an artisan at the time of application for [the] patent; and (5) there [are] not any special circumstances such that the corresponding product and the like are intentionally excluded form the scope of the claim during patent prosecution.116

In sanctioning a departure from the exact wording of the claims, the Court noted the difficulty of writing a specification that took into account all future modes of infringement at the outset. In addition, it said that the value of a patent in encouraging innovation would be greatly diminished if another party could easily circumvent its protection by replacing part of the composition with techniques or materials that became available after the filing date. Such restriction on the rights of the patentee would not only violate the ‘purpose of patent law to contribute to the development of industries through protection of and encouragement of invention, 114

See Yamamoto & Tessensohn,‘Torque’, n 101, above, at 483. See para 3.1 of Tani’s translation of the decision of the Supreme Court in Ball Spline, n 103, above. 116 Hereinafter referred to as the test. Paras 3.1.1 to 3.1.5 of the translation of the decision of the Supreme Court in Ball Spline. See Tani, n 103, above. It should be noted that (1) to (3) are the positive requirements for invocation of the doctrine and that (4) and (5) are restrictions on the scope of the doctrine. See further below. 115

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but [would also deny] . . . social justice, resulting in the breach of the concept of equity’.117 The court considered that it should therefore be understood that the substantive value of a patented invention should extend from the claims to cover equivalents that would be obvious to a third party and which are substantially identical to the constitution described in the claims. Conversely, protection would not extend to technology that was known at the time of filing the patent, or which would have been obvious to those skilled in the art at the filing date. Furthermore, where the patentee has intentionally excluded technology from the scope of the claims (eg during prosecution), or has committed an act that can be outwardly interpreted as doing so, she will be estopped from making contrary assertions at a later date.118 The court then considered the merits of the case and concluded that despite the defendant’s variants being inessential, having no material effect on the way the invention worked or on the result obtained, and being obvious substitutes for the elements in the patentee’s invention119 there was, nonetheless, no infringement. The reason for this finding lay in the final (negative) requirements for the invocation of the doctrine of equivalents, specifically requirement (4)—that the accused embodiment is not the same as the known art at the time of application for the patent nor could have been easily conceived by one skilled in the art at this time. The court found that the accused embodiment could have easily been arrived at without the teaching of the patented invention and was therefore not equivalent to the claimed invention.120 This finding is in itself important, as the defendant’s device in this instance was a patented invention.121 Therefore, by its finding that the device did not infringe by reason of being within the prior art, the Supreme Court effectively invalidated the patent despite not having the jurisdiction to do so explicitly.

The Repercussions and the Fallout On a superficial examination, the repercussions from the case appear to be mainly positive for the patentee. For example, the court stated that the proper viewpoint from which to view the claim language was that of a person with ordinary skill in the art. This put an end to the court’s previous practice of interpreting the language of the claims from their own (ie the judge’s) viewpoint. The restrictions previously placed on claim scope by viewing the examples disclosed in the specification as limiting the monopoly were now superseded by instruction to view them for what they were: examples. The use of extrinsic evidence in the form of technical experts and the shift in focus to the claim language122 in the interpretation of the patent also 117

Para 3.1 of the decision of the Supreme Court in Ball Spline. See Tani, n 103, above. Paraphrased version of the remainder of para 3.1 of the decision of the Supreme Court in Ball Spline. 119 ie fulfilling elements (1) to (3) of the test for invoking the doctrine of equivalents. 120 See para 3.2 of the decision of the Supreme Court in Ball Spline, as translated by Tani, n 103, above. 121 Japanese patent No 1611468. 122 Rather than the language of the specification as a whole. 118

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facilitated ‘an expansion of the literal infringement scope’.123 Furthermore, explicit recognition of the existence of the doctrine of equivalents has meant that the prevalence of cases in which it is pleaded has seen a dramatic increase.124 As already noted, the fear before Ball Spline was that alleging infringement by equivalents was tantamount to an admission of no literal infringement. However, the Supreme Court not only made clear that the doctrine supplemented the literal scope of a patent but, furthermore, provided a test that must be applied before infringement by equivalents could be ruled out, thus forcing lower courts to consider both tests. However, whilst the decision in Ball Spline is undoubtedly very important for establishing clear rules for the application of the doctrine of equivalents in Japanese patent law, this is not its only value. In one sense, the decision clearly marks a departure from the previous restrictive attitude of the Japanese courts, but in another it can be seen as the perfect illustration of this restriction. The reason for this lies primarily in the application of the test laid down by the court, specifically its concentration on the restrictive elements. The inclusion of the prior art defence, and the attendant standard of the ordinary person skilled in the art is particularly important as this condition potentially imposes a broader conception that that of the skilled addressee per se.125 Therefore, although the Supreme Court can be seen to have followed the German model of the state-of-art defence established and applied in its expanded form in Formstein,126 its exact scope was unclear, based, as it was, on the muddy concept of what is ordinary.

Subsequent Interpretation Subsequent cases have demonstrated the ‘Japanese court’s reluctance to apply the doctrine of equivalents’127 by reliance on restrictive interpretations of the positive factors, in particular the demonstrable confusion that has arisen over what exactly characterises a non-essential element of the invention.128 The decisions that directly followed Ball Spline struggled to come to terms with the sudden change of direction and degree of ambiguity that it left in its wake. A small number are worthy of note. In SS Seiyaku v Zensei Yakuhin KK,129 the Osaka District Court considered the meaning of the phrase ‘essential elements of the invention’, and stated that these must be understood as being the ‘fundamental technical features which produce the results particular to the invention’.130 As such, they are the elements which, if 123

See Takenaka,‘The Doctrine of Equivalents in Japan’, n 103, above, at 127. Ibid. Indeed, as will be seen, later decisions have transformed the potential into the actual. 126 (1987) 18 IIC 795 with comments by Geissler. Also [1991] RPC 597. 127 See Yamamoto & Tessensohn, ‘The Evolution of the Doctrine of Equivalents in Recent Japanese Patent Litigation’, in Yamamoto, 20/20, n 106, above, 276 at 280. 128 The first requirement of the Ball Spline test. 129 Heisei 8 (wa) 8927, a decision of the Osaka District Court (17 Sep, 1998). 130 Quoted from the translation of the decision in Sonoda & Kobayashi, ‘Doctrine of Equivalents in Japan after the Supreme Court Decision in 1998 on the Ball Spline Bearing Case’ (Oct, 1999). Available at: http://www.patents.jp/Archive/19991007-02.pdf. 124 125

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replaced, would result in a technical idea different to that of the patented invention. By adopting this definition, the court effectively elides the first two questions of the test and, additionally, provides interpretative freedom in the determination of when such an element will ‘produce effects particular to the invention’ that are not contributed by prior teaching. Indeed, it is clear that almost any element can be seen to produce effects particular to an invention and therefore be deemed to be essential131—therefore precluding the application of the doctrine of equivalents. In SS Seiyaku, the court considered that the element for which the defendant had provided a substitute was indeed essential, and therefore declined to find infringement. Further, considering the non-obviousness of the substitution, it concluded that the third test for the invocation of the doctrine of equivalents was also not satisfied.132 Another decision that is of interest is that of the Tokyo District Court in KK Kouken v KK Tatsumi Ryouki.133 The case concerned an invention for a water resistant load system that comprised a cylindrical main electrode and a hollow cylindrical base electrode. The base electrode was insulated and the patent required the main electrode to pass through the bottom of this element. In the alleged infringement, the main electrode was modified so that it did not pass through the base electrode, but was rather spaced apart from it.134 It was accepted that this produced a risk of electrical short-circuit being created via the water. The court began by explaining that the basis for the doctrine of equivalents was found in the court’s ability to give recognition to substance over precise form. In the same way that the court could recognise a relationship between a man and a woman who had not registered their marriage but were in substance a married couple, so it could recognise infringement where the accused and the patented devices were, in substance, the same. This ability under the general law enabled the court to avoid unfair results that would be produced by strict enforcement of formality requirements. Having rationalised the application of the doctrine in this way, the court then proceeded to apply the criteria laid down by the Supreme Court in Ball Spline. In doing so it allocated the burden of proof for the first three stages of the test (the positive criteria) to the patentee, and the latter two (the negative criteria) to the defendant.135 131 For parity of reasoning see, eg, majority’s judgment in the House of Lords’ decision in Van der Lely v Bamfords [1963] RPC 61 whereby the patentee, by specifying ‘hindmost wheels’ mountable in line with the foremost wheels in his patent, precluded infringement by a competitor’s machine wherein the foremost wheels were mountable in line with the hindmost.Applying the test set out above, it can be seen that the specification of hindmost wheels mountable in line with the foremost wheels produces an effect that is particular to that invention, therefore making this an essential element. 132 ie that the person of ordinary skill in the art would not have perceived the substitution as obvious, and therefore there could be no infringement. 133 Hanrei Jiho No. 1657, 122 (1999) a decision of the Tokyo District Court (7 Oct, 1998). 134 The summary of the case that appears in the next few paragraphs is largely based on that found in Yamamoto & Tessensohn, ‘The Evolution of the Doctrine of Equivalents in Recent Japanese Patent Litigation’, n 127, above at 283–6. See also Takenaka, ‘The Doctrine of Equivalents after the Supreme Court “Ball Spline”Decision’ (1999) 5 CASRIP Newsletter.Available at: http://www.law.washington.edu/ CASRIP/Newsletter/Vol5/newsv5i4jp1.htm. 135 In contrast to the US position, whereby the burden is placed on the patentee once the prosecution history has been raised.

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Regarding the first and second conditions, ie that the difference must be in an inessential element of the invention and that the modification must not alter the function and result of the patented invention, the court found that the defendant’s machine was substantially the same as the patentee’s invention. However, it was on the interpretation of the third leg of the test—that the variants adopted by the defendant should have been readily understood by everyone in the field of the invention to be substitutes for those detailed in the patent—that the possibility of infringement by equivalents floundered. The court considered that the risk of electrical short-circuit in the defendant’s product was sufficient to dissuade many in the field from adopting the variant, thus it was not readily conceived by everyone in the field, and was consequently not equivalent to the patentee’s invention.136 The adoption of such a standard is most significant, as it renders the degree of obviousness for the replacement of features between the patented device and the accused infringement at a much higher level than the corresponding test for inventive step.137 Therefore the protection provided by the patent under an equivalents analysis does not accurately correspond to the degree of ‘dead flesh’ that the grant creates around any given innovation, and furthermore does not correspond to the Supreme Court’s policy justification of the doctrine of equivalents in Ball Spline.138 As such, the establishment of a strict standard enables the courts to provide narrow protection, denying the application of the doctrine of equivalents to all but the most obvious modifications—ie those cases in which a literal interpretation of the claims would produce an unfair result; startlingly similar to the pre-Ball Spline position. Having denied infringement by equivalents in this way the court obviated the need to enter into the treacherous area surrounding the issue of file wrapper estoppel, in which virtually the whole of the defendant’s arguments had been based. Therefore, at the same time as the courts in the US were limiting the effect of the doctrine of equivalents by heavy reliance on the prosecution history,139 the Japanese courts were developing their own limitations based on other elements of the test. Foremost in this exercise was the continued tension over what exactly characterised an essential element of the invention. A review of decisions immediately following Ball Spline reveals that the courts most frequently rely upon the ‘essential element’ test when rejecting the patentee’s request to invoke the doctrine of equivalents.140 One such example of this approach is the decision in SS Seiyaku, discussed above; another is the judgment of the Tokyo District Court in Shinwa Seisakusho v Furuta 136 Although this does seem to be precipitously close to saying that an infringement done badly is not an infringement. 137 The test for the inventive step being defined in Art 29(2) of the Patent Ordinance as ‘would not readily have been conceived by one skilled in the art’. 138 See text accompanying n 114–21, above. 139 See the judgment of the Court of Appeals for the Federal Circuit (CAFC) in Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co Ltd, 234 F.3d 558 (2000, CAFC). Discussed in text accompanying n 176–96 in ch 6, above. 140 See Takenaka, ‘The Essential Element Test Provides a Big Hurdle to Japanese Doctrine of Equivalents’ (2000) 7 CASRIP Newsletter (Takenaka, ‘Essential Element’). Available at: http://www.law. washington.edu/CASRIP/Newsletter/Vol7/newsv7i2jp4.pdf.

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Denki KK.141 The latter was the first case since the recognition of the existence of the doctrine in Ball Spline in which the claim of infringement by equivalents was upheld. It concerned apparatus for separating seaweed from other matter in seawater, and the decision hinged on the definition of ‘essential element’. The court considered that this phrase should be interpreted as meaning the technical features that give a basis for solving the problem unique to the patented invention.142 However, the judgment is less important for the exact formulation of the test than for the clarification of the policy justifications behind adopting the definition. The court stated that: The patent system attempts to protect the essential value of the invention, that is the disclosure of the technical idea which has not been existed in the prior art and results in a solution of a technical object that has never been attained by the prior art. Accordingly, the essential part should be understood to comprise the technical features, which relate to the core of the technical idea underlying the solution of the technical object unique to the patented invention . . . Because the patented invention results in a function and result unique to that invention through a physical combination of technical features, in determining whether the difference in technical features of the accused device relates to an essential part, a court’s analysis should not simply focus on the technical feature that is removed from the rest of features recited in the disputed claim. Instead courts should examine the prior art and identify the characteristic principle underlying the solution of the technical object unique to the patented invention. They should then examine whether the principle underlying the solution of the accused product is substantially the same as the identified principle of the patented invention.143

Therefore, under this analysis, whether an element is essential or not depends on the view that is taken of the prior art, ie the path by which the invention may have come about. This can be seen as a variation of the problem-solution approach undertaken by the European Patent Office when determining inventive step,144 and suffers from the same problems—in that the perception will vary with the choice of prior art. Hence, where there are two equally close prior disclosures that concern different elements it may be difficult to decide which, if either, to use to determine the essence of the invention. After all, any element added to distinguish from one or the other piece of prior art may be seen to be essential and thus not variable. Additionally, Takenaka suggests that the adoption of this test will contradict the ‘well-accepted notion of a greater scope of equivalents for pioneer inventions and important improvements than for minor improvements’.145 This is because the greater the gap between the prior art references and the patented invention, the 141

Decision of the Tokyo District Court dated 23 Mar, 2000. See Takenaka,‘Essential Element’, n 140, above. 143 Reproduced in Takenaka,‘Essential Element’, n 140, above. 144 Evident in cases such as Bayer/Carbonless Copying T1/80 [1979–85] B EPOR 250. Although this is not to say that this was ever intended as such by the Japanese Court. 145 Takenaka,‘The Doctrine of Equivalents in Japan’, n 103, above, at 131–2. The reader should appreciate that whilst it may be a ‘well accepted notion’ that pioneer inventions should receive broader protection, it is by no means universally accepted. See, eg, Merges & Nelson’s ‘race to invent theory’ described in their 1990 Colombia Law Review article ‘On the Complex Economics of Patent Scope’ (1990) 90 Colombia Law Review 839. See further text accompanying n 129–56 in ch 5, above. 142

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more likely the elements are to be seen as essential—given that they form the basis for solving the problem unique to the patented invention. The potential for a wide range of equivalents will, therefore, be most marked in inventions resulting from a combination of known features, as here all of the elements already exist in the prior art, and cannot be seen as being essential. This is a critical distinction, as the introduction of the doctrine of equivalents into Japanese law was, to a certain degree, prompted by Japan’s desire to move from a net imitator to net producer of technology: to enter the ‘era of intellectual creation’. It will be recalled that the pre-equivalents Japanese system had been widely criticised as promoting incremental rather than pioneer innovation. The pioneer invention entails the greatest risk on the part of the innovator; it has an uncertain benefit/cost ratio and is therefore the invention that benefits most (in terms of increasing the probability of production) from patent protection.146 The Ball Spline decision was hailed as an epoch in Japanese claim interpretation, casting off the restrictive burden of the previous narrow practice.Yet the requirements and limitations placed on the operation of the doctrine of equivalents under Ball Spline (as interpreted) once more favour the incremental over the pioneer.147

Conclusion Despite explicit recognition of the doctrine of equivalents in Japanese patent law with the decision in Ball Spline, the subsequent ambiguity and narrow approach of the lower courts when considering the scope of the five-stage test has somewhat lessened its impact. However, the very fact that it was introduced at all is significant as it marks conscious recognition by the Supreme Court of Japan’s need to move from a net importer of technology to an ‘era of intellectual creation’. However, the question that now arises is whether the changes were actually required to make this transition, or whether, as the cynic may suggest, they were implemented in order to fit in with an increasingly Americanised market? Let us examine the evidence. In pre-Ball Spline Japan the patent system still managed to push forward technology. However, it did not do this by offering broad monopoly grants designed to reward only the first to innovate in any given area. It pushed the technological boundaries by providing a structure in which invention, and innovation, could be traded. Inventing became not so much a practice of quantum leaps, but rather one 146 This analysis is based on Scherer’s categorisation of invention that can be found in his highly influential study, Industrial Market Structure and Economic Performance (Boston, Houghton Mifflin, 1980; 2nd Ed) at 443–50. See text accompanying n 50–2 in ch 5, above. 147 The reader may note that the approach taken by the House of Lords in Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667 also seems to limit the interpretation placed on the patent claims in ‘fast moving’ technologies (where pioneer inventions are generally to be found). See further, text accompanying n 96–112 in ch 10, below.

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of continual refinement. Business practices, specifically the patent trade that accompanied the development of technology, avoided the need to go to court and therefore avoided the need for wide grants. A complex trading game,148 whereby corporations would pay royalties and negotiate licences based on the number of patents that they have, operated in a connected sphere. This emphasises that factors other than broad scope can be utilised to manipulate and control inventive activity. The Japanese experience proves that it is a fallacy to conclude that patents are just important for the protection that they offer. They are also important, as has been noted,149 for the very fact that they are patents. Therefore, does the interpretation that is given to the claims actually matter as long as it is consistent? As has been shown, there is a strong argument that can be made for very narrow interpretation, akin to that available in pre-Ball Spline Japan, in order to spur on the refinements in technology that forms a broad basis for future leaps. No equivalents protection, indeed no broad protection of any kind, is required to fulfil this aim provided the position is clear and industry can react. The traditional Japanese patent system (ie that before Ball Spline) actually incorporated a device that can be seen to operate in the same manner as the US style doctrine of equivalents albeit by radically different means. By limiting the scope of the patent to that actually embodied in the specification as a whole, with the claims limited as necessary by the description and drawings, the Japanese system simply made the extension to cover equivalents unnecessary. It was the market as a whole that dictated the equivalents protection, and the patent system protected these by the grant of additional patents. Admittedly this protection was not complete, but the adoption of different standards for the assessment of inventive step and the assessment of when a variant will be obvious enough to be considered an equivalent leaves much the same gap in protection even post-Ball Spine. In the pre-equivalents days, as the narrow position was well known to all that were involved in the process of innovation, it was unnecessary to extend the scope of protection to enable any one patent to cover the ground that the mass could cover. The research and development spending was structured in such a manner as to avoid the complications that could have arisen. The answer to narrow protection was not, nor could it ever have been, litigation: the answer was the development of business strategies, including simple bargaining between companies, which augmented the patent system and served to qualify its perceived limitations. In such a model, the only people not benefiting were those unfamiliar with the customs or unwilling to play the game. It is therefore no coincidence that these parties were the very ones pushing for reform to a fairer150 international standard. The question that then arises is whether the world system, as we see it, needs disparity between nations, with some giving broad protection and others giving narrow protection, in order that the spectrum of innovative activity can be maintained? If this is the case then the push towards a world standard of intellectual 148 149 150

‘Pokemon’ anyone? See ch 5, above. ie more familiar, Westernised.

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property protection151 may actually do more damage than good. Japan’s story vividly demonstrates the difficulty of technological evolution in an increasingly international world. The meteoric rise from feudal surf to technological whiz-kid that the country has undergone in less than 150 years is little short of astounding, and poses the question of whether it could be repeated today. The homogenisation of patent law, the claim implicit in TRIPS that one size can, and indeed should, fit all, does not adequately correspond with the picture of Japan’s evolution. If Sakakibara & Branstetter’s conclusion is correct, and the Patent Law reforms of 1988 did not have an appreciable effect on the level of innovative activity in Japan, despite objectively broadening the potential scope of the claimed invention,152 then the American premise that stronger is better seems to be misplaced. The object of any patent law cannot be the satisfaction of international interests over and above protection/ stimulation of national ones, and yet this is what TRIPS demands. If, as the Japanese experience suggests, narrow protection does not necessarily equate to slow progress, and moreover broadening protection does not automatically lead to an increase in innovation, then, as Sakakibara & Branstetter conclude, ‘some of these theoretical models and the “pro-patent” public policies based on them will need to be reexamined’. 153 Indeed.

151 152 153

As evidenced by international treaties such as TRIPS. Sakakibara & Branstetter, n 73, above, at 31. Ibid, at 32.

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9 From Pith to Purpose British Claim Interpretation under the Protocol In principle, according to the authorities, a patent specification is to be construed like any other document, due regard being paid to the special functions of the claims. . . . This, however, is theory: in practice, it should not be assumed that the inquiry the Court makes by way of ‘purposive construction’ of patent claims . . . will relate to the meaning of the words of the claim, in any ordinary sense, at all. Blanco White, Patents For Inventions (London, Stevens & Sons, 1983; 5th Ed) at 2-101.

Preface The European Patent Convention (EPC) was signed in Munich on 5 October, 1973, and entered into force four years later, almost to the day, on 7 October, 1977.1 As one of the original fourteen signatories, the UK’s obligations under the Convention were discharged by the passage of the Patents Act 1977 (the 1977 Act) into law.2 Receiving Royal assent on 29 July, 1977, most of the Act came into force on 1 June, 1978,3 ushering in a new era of patent law. The Act has been described as a ‘watershed in UK patent jurisprudence’,4 clearly demarking the boundary between old patents whose applications were filed before its entry into force,5 and those subsequent applications that must be dealt with solely under the new regime. The reality of the situation is, however, not quite so clear-cut, for the transitional provisions of the 1977 Act extended some elements of its influence to existing patents applied for under previous legislation. Notably, whilst the provisions on infringement within s60 were explicitly proclaimed to be 1 See Haertel, ‘Forward II’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983) at xv. 2 The full title of the Act is: ‘An Act to establish a new law of patents applicable to future patents and application for patents; to amend the law of patents applicable to existing patents and applications for patents; to give effect to certain international conventions on patents; and for connected purposes’. 1977 c.37. 3 See SI 1978/586. 4 Ferguson, ‘Claims in the UK Patent Office’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983), 102, at 102. 5 ie those patents applied for under the Patents Act 1949.

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applicable cross-boundary in this manner,6 s125 of the 1977 Act, concerning the definition of invention and scope of protection, was not. Notwithstanding this deliberate omission, there was still a degree of uncertainty that surrounded the issue of scope, for whilst it was clear that the Protocol on the interpretation of Article 69 EPC (the Protocol) applied for the purposes of 1977 Act patents,7 it was unclear what effect it had on those applications already made under the old law. At face value, both Article 69 EPC and Protocol’s ‘diplomatic compromise’—intended to guard against ‘extreme interpretation’8 and thereby bring the laws of the Member States together on the issue of determination of scope—did not apply to applications already existing at the 1977 Act’s entry into force. However, the transitional provisions’ tortuous wording9 meant that argument to the contrary could clearly be made: thus, as s60, which was explicitly stated to be applicable to both new and old patents,10 defines infringement in terms of the ‘invention’, and s125(3) expressly imports the Protocol into s125(1)’s definition of this ‘invention’, so the Protocol could be argued to apply equally, at least as far as infringement is concerned, for both old and new patents. However, as Blanco White explains, acting against this construction is the fact that ‘it is not open on the wording of the 1977 Act to raise the same argument in relation to validity, and it can hardly have been intended that claims should be differently interpreted for infringement and for validity’.11 The better view, therefore, appears to be that the omission of s125 from the transitional provisions excluded consideration of the Protocol for old Act patents. Seen in this manner, the position would have been relatively clear. Patents applied for under the provisions of the 1949 Act were to be interpreted in line with the authorities decided under that Act, whilst applications made under the new legislation would require consideration in light of Article 69 and the Protocol. However, the opaque wording of the transitional provisions meant that divination of the draftsman’s precise intention in this matter was far from straightforward. Additionally, any separation between approaches was heavily dependent on the view taken of what each actually demanded of the interpretation to be applied to the patent. Here the ‘intrinsically woolly’12 language of the Protocol did not assist.

6

By s3(2) of Sch 4 of the 1977 Act. Expressly by virtue of s125(3). However, as Furguson, n 4, above, at 104, explains, this provision is ‘strictly otiose’because the effect of s130(7) is that the Protocol would have to be taken into account when interpreting s125(1) in any case. Nevertheless, this double entry may perhaps be seen as indicating the UK legislature’s intent that the provision be given full effect. 8 Armitage, ‘Interpretation of European Patents (Art 69 EPC and the Protocol on the Interpretation)’ (1983) 14 IIC 811, at 814. 9 See the short discussion on this point in Reid, ‘The Catnic Decision: The Construction of Patent Claims’ [1981] EIPR 56 at 58. 10 See s3(2) of Sch 4 PA 1977. 11 Blanco White, Patents for Inventions (London, Stevens & Sons, 1983; 5th Ed) at 2-106. 12 Reid, n 9, above, at 58. 7

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Patents in Transition The transitional provisions of the 1977 Act appear, therefore, to have created two distinct types of patents which had to be interpreted in different ways. The first consisted of those grants applied for before June 1978, which, even after the 1977 Act’s entry into force, would still have had to be interpreted in light of the old law. The second group comprised those applied for under the 1977 Act which should have been interpreted under the new watershed provisions. Given patents applied for under the 1949 Act would have had a maximum life of 20 years following the entry into force of the new legislation,13 it would not have been until 1998 that the last of those granted under the old system (and therefore subject to the old interpretative mechanism) would have expired. Two distinct interpretative regimes may therefore have been expected. As already noted,14 the prevalent interpretative mechanism before the passage of the 1977 Act was the doctrine of pith and marrow. This ‘mixed metaphor’ was used to describe the fact that infringement could be said to occur when the defendant duplicated the essential elements of the patentee’s invention whilst substituting mechanical equivalents for the rest. The scope of protection of the patent was therefore defined both in terms of the literal meaning of the claims and by reference to this second, expansive, doctrine. In Rotocrop v Genbourne 15 Graham J considered the effect that the EPC and the Protocol would have on pith and marrow, concluding that previous decisions of the House of Lords in this area appeared ‘to be in line with and indeed to have anticipated that underlying the interpretation of the scope of monopolies under the European Patent Convention’.16 The British position was thus considered to be practically synonymous with that of the Protocol. Therefore, whilst acknowledging that it was not actually applicable to old-Act patents, Graham J’s statement appears to suggest that the specification should nevertheless be interpreted with an eye to the balance that the Protocol requires. The UK’s interpretative position was also considered by Jacob (later to become Jacob LJ) in his then contemporary comment on the new Act when he stated that: ‘It seems therefore that the Protocol adds virtually nothing to our existing methods of construction’.17 The gap between the newly imposed structure, under Article 69 and the Protocol, and the traditional British approach to claim interpretation appears, therefore, to have been perceived as insignificant at the time of the 1977 Act’s entry into force. The caricatured approach of the courts taking a strict, literal, view of the claims, 13 Previously the term of the patent was governed by s22(3) Patents Act 1949 and was fixed at a maximum of 16 years. s4, Sch 1 PA 1977 extends this to a maximum of 20 years for ‘existing patents’, as defined in s3, Sch 1 PA 1977. 14 In ch 1, above. 15 Rotocrop International Ltd v Genbourne Ltd [1982] FSR 241. 16 Ibid, at 261. 17 Jacob, ‘Interpretation of Claims and Infringement’, in Vitoria (ed), The Patents Act 1977 (London, Sweet & Maxwell, 1978) at 67.

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construing the specification as though it were a conveyancing document and providing no latitude to the patentee, was seen to be something from the past; things had moved on. Given that the ‘ridiculously rigid’18 approaches to interpretation of the 1950s and 60s had now been isolated and left behind, the UK’s courts were in a position which contrasted starkly with that prevailing in Germany at the time. In this latter state reform was not simply a possibility, it was a necessity. Pre-EPC German law on claim construction was clearly not in conformity with the Convention.19 Realisation of this factor, however, gave the German courts an advantage. They could now start afresh and try to turn the cart around; in Britain there was no such impetus for change. Any division that appears to have been envisaged by the 1977 Act between old and new patents regarding interpretation of the claims was therefore eroded by the assumed conformity of previous and new approaches. Therefore, whilst the (notably vague) wording of the Protocol was complied with, the spirit of the EPC, or more accurately the harmonisation efforts embodied by the Protocol, were being ignored in the name of familiarity. As Spengler intones, ‘It is inappropriate to decline to co-operate on the achievement of legal unification whenever one’s own solution has not been chosen as the model for that of the Community’.20 However, whether the same may be said if you consider your rules are still governing the game is another matter entirely. By assuming conformity, no attempt was made to assess the actual impact of the transition to a common European position and how this should affect the approach to be adopted. In addition, the House of Lords’ next pronouncement on the matter of claim interpretation simply served to muddy the water further, making the prospect of critical consideration of prevailing position even more distant.

The Catnic Legacy Catnic Components v Hill & Smith,21 whilst decided in the context of a 1949 Act patent, was the House of Lords’ first (and for almost 25 years following the decision, only) opportunity to discuss the intricacies of claim interpretation since the passage of the 1977 Act. As noted, the transitional provisions of the 1977 Act would not have allowed consideration of the Protocol’s influence on this case even if the litigation had been initiated after June 1978. Given this state of affairs, the decision should have been of relatively little interest,22 dealing as it did with a system that, by the 18

Blanco White, n 11, above, at 2-101. See the discussion of the Third Period in German claim interpretation in text accompanying n 46–84, particularly that between n 70 and 84, in ch 7, above. 20 Spengler,‘Abschied vom allgemeinen Erfindungsgedanken’ [1967] GRUR 390, quoted from Singer & Stauder (eds), The European Patent Convention: A Commentary (Berlin, Carl Heymanns Verlag, 2003) Vol I at 239. 21 [1982] RPC 183. 22 At least within this chapter. 19

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time the case came before their Lordships, had at most 18 years left to run.23 However, erosion of the distinction between old and new patents caused by the assumption that the UK’s approach was already in accordance with the Protocol meant that the case’s importance was magnified.

The Dispute The facts of the case are remarkably straightforward. The dispute concerned Catnic’s patented steel lintel, designed to be ‘light, inexpensive and easy to handle’.24 It was specifically intended for use in spanning apertures in cavity walls. The claims of the patent specified as part of the invention that a rigid support member should extend ‘vertically from or from near the rear edge’ of a horizontal plate.25 The defendants had produced lintels substantially identical to Catnic’s but in which the rear wall was inclined at 82 or 84 degrees to the horizontal. At first instance, Whitford J considered that, despite the claim drawing by its terms a distinction between ‘inclined’ and ‘vertical’ members, the defendants had still infringed under the doctrine of pith and marrow. He explained that: ‘So far as any question of function is concerned, in as much as there is a difference [between the plaintiff ’s and defendant’s products], it is not such a difference as ought to be considered . . . a material difference’.26 The action therefore succeeded on the basis that the defendants had simply made immaterial changes to the claimed subject matter of the invention in order to evade the strict, literal, wording of the claim; this was still infringement. The majority of the Court of Appeal, on the other hand, came to the opposite conclusion. Buckley LJ stated that the crux of the matter was the problem of what distinguishes a feature of a claim that is essential from one which is not essential.27 In order to answer this conundrum, he focussed on the distinction drawn in the claims between ‘vertical’ and ‘inclined’ members. He explained that, by making this distinction, the drafter of the patent had therefore made the restriction essential by their choice of words, even though the support member need not be exactly perpendicular to the horizontal plate in order for the invention to work.28 Therefore, with reasoning strikingly similar to that of the majority of the House of Lords in Van der Lely,29 he considered that the patentee had made strict compliance with the primary, literal, meaning of the claim an essential feature of the invention. Further, 23 The case was heard in the Lords on 29 and 30 October 1980, judgment was handed down a little under three weeks later on 17 November. As stated in n 13 above, the term of patents already existing, or applied for, at the time of the entry into force of the 1977 Act was extended to a maximum of 20 years by that Act. All 1949 Act patents would therefore have expired by 1 June 1998, and at this point the Act itself could be laid to rest. 24 See the specification of patent No 1,298,789, reproduced in [1982] RPC 183 at 186. 25 See claim 1 of the patent, ibid, at 188. 26 Above, n 21, at 218. 27 Ibid, at 225. 28 Ibid. at 228–9. 29 Van der Lely v Bamfords [1963] RPC 61, discussed in text accompanying n 37 in ch 1, above.

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Waller LJ, concurring, was of the opinion that ‘to a person familiar with the art, an engineer or man concerned with the construction of a steel lintel, the use of the word “vertical” would indicate precision’.30 Thus, irrespective of the patentee’s actual intentions, the court was of the belief that the skilled addressee would consider the scope of the patent to have been limited, as ‘vertical’ was a word of precision that it appeared had been deliberately chosen and used. The plaintiffs appealed to the House of Lords.

Catnic in the Lords As already noted, the prevailing view before the Catnic decision was that the UK courts’ use of the pith and marrow test was in accordance with the requirements of Article 69 and the Protocol, and therefore there was little if anything that needed to be done to bring British practice into line with that required by the EPC. As Cole, writing just before the House of Lords passed judgment in Catnic, suggests, in any case it seems ‘doubtful whether the Protocol will materially change . . . [the courts’] attitude except, perhaps, in the long term’.31 The pith and marrow approach was therefore considered to be likely to stay and dominate the interpretative landscape. The House of Lords, however, did not agree and consigned it to history with the creation of a new doctrine: purposive construction. Lord Diplock, notable for the narrow view that he took (when a Lord Justice) of the doctrine of pith and marrow in Rodi & Wienenberger v Showell,32 gave the sole judgment. In the earlier case, his Lordship had stated that the doctrine should be viewed as simply relating to construction of the claim language itself rather than being seen as expanding protection beyond these confines.33 This view lies in stark contrast to that taken by the Court of Appeal in Catnic, which had said that there were clearly two types of infringement: textual, and then, extending protection from this point, infringement of the pith and marrow.34 Given this background, it is perhaps unsurprising that the case was to proceed in the manner that it did.

30

Above, n 21, at 234. Cole, ‘Patent Infringement—“Pith and Marrow”: A Review of United Kingdom Practice’ [1980] EIPR 289, at 299. 32 [1969] RPC 367. 33 See Diplock LJ’s judgment in Rodi & Wienenberger v Showell [1966] FSR 160 at 176 in which he states that ‘In construing a modern specification, to speak of looking for the “substance” or the “pith and marrow” of the invention, may lead one erroneously to suppose that the patentee, whatever be the precise language in which he has framed his claim, is entitled to a monopoly of the mechanical or other principle of which his invention makes use or of the result which his invention achieves. This is not so.’ It is the language of the claim that is important, which ‘upon its true construction specifies a number of elements or integers acting in a particular relation to one another as constituting the essential features of his claim, the monopoly which he obtains is for that specified combination of elements or integers so acting in relation to one another—and for nothing else’. 34 See, eg, the view of Sir David Cairns in Catnic, n 21 above, at 234. See also the judgment of Buckley LJ at 225 of the same. 31

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The Judgment Lord Diplock began his discussion of infringement by considering the nature of the specification. This, he thought, could be categorised as a unilateral statement made by the patentee ‘in words of his own choosing, addressed to those likely to have a practical interest in the subject matter of his invention’.35 It had the function of informing this person of the essential features of the product or process for which protection had been granted. Such was not controversial. However, his Lordship then continued, stressing that there were no separate questions of ‘textual’ and ‘non-textual’ infringement:36 simply put, there is ‘but a single cause of action’. Therefore, the: specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge.37

In one fell swoop the doctrine of pith and marrow was therefore extinguished, replaced by a single-stage purposive construction of the claims; a construction startlingly reminiscent of Lord Diplock’s earlier narrow interpretation in Rodi.38 The essential question (later to be called the Catnic question) was therefore to ask: whether persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside of the monopoly claimed, even though it could have no material effect on the way the invention worked.39

His Lordship continued, stating that this was only to be answered in the negative: when it would be apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants which, to the knowledge of both him and the readers to whom the patent was addressed, could have no material effect on the way in which the invention worked.40 (emphasis added)

Voiced in this manner, and excepting the compaction of the test into one-stage, there is little that was not presaged by his Lordship’s earlier judgment in Rodi. 35

Per Lord Diplock, in Catnic, n 21, above, at 242–3. As was the position under the pith and marrow test discussed in ch 1, above. Above, n 21, at 243. 38 Lord Diplock’s apparent uneasiness with the doctrine was not limited to just this one earlier decision, for as part of the court considering the appeal in Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153, he agreed, at 200, with the defendant’s contention that the ‘increasing particularity with which the claims are drafted an multiplied in modern specifications may have reduced the scope of application of the doctrine of pith and marrow’. However, at this point in time he did not feel able to accept that the doctrine was obsolete. 39 Above, n 21, at 243. 40 Ibid. 36 37

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However, the manner in which this test was applied to the facts belies a subtle nod in the direction of the Protocol and, despite never being acknowledged as such, may be evidence of an attempt to further distance the UK from the literalism of the past. Therefore, the view is taken that the addressee of the specification would not, in this case, have considered that strict compliance was intended by the patentee.‘No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention . . . [as to] render his monopoly for practical purposes worthless’,41 an argument very similar to that advanced in Henriksen v Tallon.42

Problems with Application of the Test One of the key factors when assessing the scope of the patent under Lord Diplock’s formulation is selection of the appropriately skilled addressee; the person through whose eyes the invention is to be viewed and the specification, including the claims, interpreted. This in itself is an eminently sensible, if not the only sensible, choice. The specification, the teaching of the patent and the statement of territory claimed as new, inventive, etc.,43 upon which no other may trespass without the consent of the proprietor, must clearly be interpreted by one that has the requisite knowledge and skill to understand the technology in question. To demand otherwise, and replace the skilled addressee with the man on the Clapham omnibus for example, would place too high a burden on the patentee, who would then have to teach their technology to all, even those not technologically gifted. However, despite identifying this person as someone ‘likely to have a practical interest in the subject matter of . . . [the] invention’, ie interested in performing or producing the invention and utilising the teaching of the specification to enable production of the subject matter in question, the person his Lordship actually identified as addressee does not really conform to this model. Lord Diplock summarised the question to be asked thus: Would the specification make it obvious to a builder familiar with ordinary building operations that the . . . [claim to a] back plate . . .‘extending vertically’ from one of the two horizontal plates . . . could not have been intended to exclude lintels in which the back plate although not positioned at precisely 90° to both horizontal plates was close enough to 90° to make no material difference to the way the lintel worked when used in building operations?44

Identification of the skilled addressee as a ‘builder familiar with ordinary building operations’, is intriguing. By making this selection, Lord Diplock actually 41 42 43 44

Above, n 21, at 244. [1965] RPC 434. Discussed at n 26–9 in ch 1, above. See the requirements for patentability laid down in s1(1) PA 1977. Above, n 21, at 244.

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addresses the specification to the user of the product, a consumer, rather than the person strictly interested in performing the invention so disclosed or in creating the inventive product. His Lordship made no attempt suggest that the test for ascertaining the identity of the skilled addressee was being changed by his judgment, yet the accepted standard at the time, laid down by Lord Reid in Technograph Printed Circuits Ltd v Mills & Rockley (Electronics) Ltd, operated far from this level.45 By focussing the investigation through this person, the consumer or user of the goods in question, Lord Diplock necessarily provides an opportunity to expand the boundaries of the grant. Therefore the consumer, unversed with the intricacies of patent law, sees no reason to hold the patentee to the literal meaning of the wording used in their claim where this would obviously rob them of all protection. Thus, 82 or 84 degrees from the horizontal is ‘vertical’ for all practical purposes.46 However, operating within this test, it would have been perfectly possible to come to completely the opposite conclusion, as the addressee, in order to be able to answer the question of interpretation properly, would need to first be informed of the function of the claims in a patent. As Turner notes, their answer would then depend on what they were told. If, for example, they had been schooled in the British approach, and informed that the claims define the outer boundary of protection, a narrower interpretation would be forthcoming than if the addressee had been told the claims simply identified the principal features of the invention.47 Moreover, within these different approaches, the test is also susceptible to modification of result depending on what the justification for the grant is held to be. If reward considerations dominate then, as we have seen when examining the German approach to interpretation, a broader view may be taken of the patent’s scope of protection than if incentive arguments come to the fore. In other words, the outcome of the claim construction exercise under the Catnic test is largely dependent upon the courts’ view of the theoretical underpinnings of the grant: a point to which we return in due course.

An Objective Assessment . . . with Prejudice This is not, however, the end of problems with the judgment. In addition to demonstrating a standard of almost infinite malleability in selection of the appropriately skilled addressee, Catnic also provides an intriguing twist on this person’s objective assessment. In requiring consideration of whether it appears to the addressee that the patentee intended strict compliance with the primary meaning of the claim, 45 [1972] RPC 346. Lord Reid’s classic statement may be found at page 355 of the report and states that ‘the hypothetical addressee is a skilled technician who is well acquainted with workshop technique and who has carefully read the relevant literature. He is supposed to have an unlimited capacity to assimilate the contents of, it may be, scores of specifications but to be incapable of a scintilla of invention’. A far cry from most builders. 46 See Catnic, n 21, above, at 244. 47 Turner, ‘Purposive Construction—Seven Reasons why Catnic is Wrong’ [1999] CIPA Journal 700 at 700–1.

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Lord Diplock introduces a fiction of intent into the equation.‘Would the specification make it obvious to . . . [the skilled addressee that the claim] could not have been intended to exclude . . . [minor variants]’.48 Therefore the question becomes one of taking an objective interpretation of the subjective intention of the patentee, whilst operating under a presumption that the patentee has restricted themselves to a literal interpretation of their claims unless this cannot have been their intention.49 In reality, the fact that a variant does not appear within the literal wording of the claim would simply suggest that the person drafting the patent, whether the patentee or (more likely) the patent attorney, had not thought of it. It would not necessarily flow from this that they therefore intended to exclude all variants. Thus, whilst there could be an argument that the scope of protection should be restricted to that explicitly asked for and thereby claimed in the patent, it is another thing entirely to infer intention from the fact that a variant did not cross the patentee’s mind. It is, of course, accepted that taking an objective view of the intent of the drafter is an approach adopted by the courts when considering the interpretation of contracts. The classic statement on this point being that:‘Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract’.50 However, this does not necessarily explain why the same principles should therefore be extended to construction of a patent’s claims. The essence of the contract is the concept of bargain, yet the patent specification (containing the claims) is defined as a unilateral statement ‘in words of [the patentee’s] . . . own choosing, addressed to those likely to have a practical interest in the subject matter of his invention’.51 There is no bargain between the inventor and the state in the proper sense of the word, only a statement of territory exclusively claimed. Indeed, the ‘patent as bargain’ metaphor discussed in chapter three, above,52 is perhaps better understood in the context of incentives rather than bargains per se. The comparison with contract law is not improved even if the patent is considered to be a unilateral contract rather than a bargain, for then the accepted method of interpretation is to require strict performance.53 In the words of Lord Hoffmann in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd, this means that, for example: ‘If the clause had said that the notice had to be on blue paper, it would be no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease’.54 There is, in fact, no compelling reason why 48

Catnic, n 21, above, at 244. This point is also discussed by Bruchhausen, ‘The Interpretation of Patent Claims—A German Appreciation’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983), 213 at 228. 50 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912, per Lord Hoffmann. 51 Per Lord Diplock, in Catnic, n 21, above, at 242–3. 52 See text accompanying n 130-56 in ch 3, above. 53 See Lewison, The Interpretation of Contracts (London, Sweet & Maxwell, 2004; 3rd Ed.) at 15.13. 54 [1997] AC 749, at 776. In this particular case, their Lordships held that the condition in question related solely to the meaning which the notice had to communicate to the landlord and nothing more. 49

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the patent should be considered to be a contract at all. True, the concepts share some similar features, but common ground does not make an orange a lemon and there is no reason why it should succeed in making the patent’s grant of property rights into a contract.

Interpretation as of Publication One final element of imprecision is added to the mix when selecting the date at which the patent’s claims are to be interpreted. Lord Diplock stated that infringement could not arise ‘unless at the date of publication of the specification it would be obvious to the informed reader’ that the variant would have no material effect on the way in which the invention worked(emphasis added).55 The effect of this restriction is two-fold. It again requires a fiction to be created. The skilled addressee, a construct of the court in any case, must be transported back in time to the point at which the patent was first made public, and must interpret the claims as they then would have done without consideration of the alleged infringement. The court, however, will necessarily be aware of the defendant’s formulation, and so will the expert witnesses that guide the court’s understanding of the technology in issue, yet all are expected to cast notions of the alleged infringement from their minds when assessing the scope of the patent in hand. Such is unrealistic, and it has been suggested that, since at the date of publication the court does not know what ‘would have been obvious to an instructed reader as to the intentions of the writer of the claims, there is a tendency to substitute the Court’s own idea of what would then have been seen to be essential to the effective operation of the invention’.56 Such ‘hindsight bias’ must, as has been shown in recent empirical studies,57 inevitably affect the outcome of any investigation. Moreover, as we shall see, this restriction also often renders the application of the Catnic question quite impossible in cases concerning ‘pioneer’ patents,58 as alternatives obvious at the time of infringement may never have been contemplated, or even have been possible, at the date of publication and yet may still unjustly profit from the inventor’s efforts. It is also difficult to rationalise the requirement of interpretation at publication with the justifications of the patent system discussed in chapters three and five, above. The traditional incentive arguments, for example, would suggest that scope 55 Catnic, n 21, above, at 243. The origin of the requirement of interpretation as of publication can probably be traced back to the comments of Lord Esher MR, in Nobel’s Explosives Co v Anderson (1894) 11 RPC 519, at 523. 56 Blanco White, n 11, above, at 2-104. 57 See, eg, Mandel, ‘Patently Non-Obvious: Empirical Demonstration that the Hindsight Bias Renders Patent Decisions Irrational’ (Jun 2006). 1st Annual Conference on Empirical Legal Studies Paper. Available at SSRN: http://ssrn.com/abstract=871684. Also Mandel, ‘Patently Non-Obvious II: Experimental Study on the Hindsight Issue before the Supreme Court in KSR v Teleflex’ (Aug 2006). Available at SSRN: http://ssrn.com/abstract=928662. 58 ie patents representing a ‘spectacular technical contribution’. See Scherer, Industrial Market Structure and Economic Performance (Boston, Houghton Mifflin, 1980; 2nd Ed) at 448. One such example is given by the facts of Kirin-Amgen v Transkaryotic Therapies Inc [2003] RPC 31 (CA), [2005] 1 All ER 667 (HL). The facts are outlined in text accompanying n 250–2, below.

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should be determined at the time of application,59 as is validity. Indeed, if the claims are to be given the same interpretation for validity as they are for infringement then it stands to reason that the interpretation should be conducted at the same point in time. As Hölder explains, if this were not the case then ‘non-infringement and lack of novelty could not be alternatives from a logical point of view’.60 Moreover, choosing publication as the effective time for interpretation causes problems in relation to harmonisation, for it is clear that the German practice, in continuation of that in the Third Period,61 is to interpret the claims at the priority date of the patent.62 On the other hand, it can be forcefully argued that to fully reward the patentee it is necessary that the assessment should be made at the time of infringement. None of the theories advanced in chapters three and five, above, would, however, suggest publication was an appropriate time for construction. Interpretation at this time also struggles to fit in with the general principles of construction of other commercial documents, which would suggest that the correct date for interpretation should either be the point of drafting or the last point at which the applicant could have altered their specification freely (within the constraints of s76 PA 1977) before the right was granted.63 Therefore, even if the comparison were appropriate, in no case would publication be the decisive point for determining the document’s meaning. The date of the claims’ construction adopted in Catnic also introduces a significant level of unpredictability into the determination of scope that impacts upon the patentee’s competitors ex ante infringement. When designing around an invention, the competitor’s attention cannot simply be focussed on what the claims of the patent appear to encompass at that point in time. Rather they have to consider what the court will, at some unknown point in the future if an infringement action were to be brought, consider that the skilled addressee would think the patentee had intended the language of the patent to cover at the date that the patent was published. The risk, of course, is that because of the tendency to substitute the patentee’s alleged intention with the court’s own understanding of the essential elements of the invention, and because the competitor’s embodiment produces the same result,64 infringement may be forthcoming regardless of the actual wording of the claims. However, equally, the court may come to the conclusion that the wording chosen is essential and that there is consequently no infringement. Neither outcome is clear. 59 For the patent can only provide incentive to invent or to innovate in the point up to the application stage, after this time the focus necessarily passes into realisation of the incentive. 60 Hölder,‘Exogenous Equals Endogenous? Claim Construction After the Amgen Decision’ (2006) 37 IIC 662 at 669. 61 See text accompanying n 68 in ch 7, above. 62 See, eg, the decision in Cutting Knife I (Schneidmesser I) [2003] ENPR 309, at 320. 63 Eg, Deeds, are to be interpreted at the time of execution: see Balfour v Welland (1809) 16 Ves 151 at 156, also Lord Hastings v North Eastern Railway Co [1899] 1 Ch 656 at 664. In contract law, there is a presumption that the agreement will be interpreted at the date when the contract was made, and that words will be interpreted as of that date. See Lewison, n 53, above, at 5.14, referring to Shore v Wilson (1842) 9 Cl. & Fin. 355, Shell Petroleum Co Ltd v Gibbs [1982] QB 946, and Texaco Antilles Ltd v Kenochan [1973] AC 609, amongst others. 64 Given the intention to design around the claims.

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With the level and character of the skilled addressee, including what they are told about the function of the claims, being so critical to the subsequent interpretation, and the further uncertainties introduced by the choice of publication as the date for interpretation, the Catnic test appears to offer little more than a judicial licence to enforce, or excuse, on a whim. Yet as we shall see, for the next 20 years it was, with a certain degree of reinterpretation, to become the de facto test for claim construction in the UK.

Post Catnic The Catnic decision, as noted, is unsatisfactory in a number of respects. Lord Diplock’s judgment, seemingly a fair one on the facts, sought to take the UK further from the literalism of the past and attempted to remedy some of the problems associated with application of the doctrine of pith and marrow. However, in bringing the construction under a single-stage assessment it rendered the grant eminently less predictable. Whilst clear that the approach of the courts under pith and marrow was less than fair to the patentee at times, the potential efficacy of a two-stage assessment in providing clarity of reason and predictability of approach can be argued to far outweigh that of a single-stage test. By splitting the investigation into two parts, the court is able to consider the various questions that the notion equivalence raises without them becoming confused or entangled in debate concerning literalism. In other words, separation of the issues would promote lucidity of argument and assessment. If, as the factual matrix suggests it should have been, the decision in Catnic was limited to its context,‘old’ patents in which the application was processed under the Patents Act 1949, then the problems with the decision could have been contained. The dwindling number of these patents, having a maximum of eighteen years left to run at the time of the decision, would have provided a sandbox in which it could spend its final days. A new interpretative regime, led by the Protocol’s guidance on the interpretation of Article 69 EPC, could then have been implemented for new Act patents, as was happening in Germany.65 However, in what has been described as a ‘miraculous sleight of hand’66, subsequent cases held that Lord Diplock’s approach was fully consonant with the Protocol and should therefore be applied to 1977 Act patents as well. To describe the perpetuation of Catnic in this manner is somewhat misleading, as it suggests a degree of deception or fraud that was simply not present. The case’s timing is, admittedly, unfortunate, for whilst not mentioning the Protocol explicitly it is inconceivable that Lord Diplock was not aware of its effect when delivering his 65

See the discussion in ch 7, above. Norman, ‘Determining the Scope of the Patentee’s Monopoly: Purposive Construction Revisited’ [1998] Anglo-American Law Review 221, at 238. 66

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judgment. Therefore, it is tempting to conclude that he must have modified the courts’ approach to construction in order to provide a Protocol-aligned test in the UK. However, given the prevailing opinion that pith and marrow already satisfied the EPC’s demands in this area, this conclusion is illogical. Moreover, as already noted, Diplock had long held the view that the doctrine of pith and marrow in its classic form was an inappropriate tool for the construction of the patent’s claims,67 and an opportunity had now presented itself for the requisite changes to be made.68 Therefore, rather than trying to bring practice in line with the Protocol, the (notably broadly drafted)69 Protocol simply happened to be in alignment with the position that was being advocated. Given the Protocol’s provenance as a diplomatic compromise intended to shepherd the member states of the EPC into some sort of common approach, and the fact that its language is ‘intrinsically woolly’70, this is hardly surprising. However, by moving away from one of the polar positions outlawed by the Protocol, Catnic marred any prospect of separation between old and new act patents. Given Jacob’s contemporary view in 1978 that the ‘Protocol adds virtually nothing to our existing methods of construction’71, it would have been impossible to conceive that moving further from the literalism of the past could somehow misalign the UK’s approach. Furthermore, the tortuous language used in the transitional provisions meant that the draftsman’s apparent intention to separate old from new was debatable at best. This fact alone had led Reid to comment shortly after the Catnic decision that ‘it is not beyond the bounds of possibility that the old law will still be with us in the forthcoming new century.’72 It is therefore perhaps unsurprising that the Catnic approach was adopted as the de facto test under the new law when the first cases concerning the interpretation of 1977 Act patents finally came to be considered by the appellate courts.

67 At least since his contribution to the Court of Appeal’s judgment in Rodi & Wienenberger v Showell [1966] FSR 160, at 176. See n 33, above. 68 His Lordship’s earlier judgment in Beecham Group Ltd v Bristol Laboratories Ltd, see n 38, above, did not really provide a good set of facts for detailed discussion of the shortcomings of the doctrine of pith and marrow. Yet, in applying the law to the facts, his Lordship may be seen once again to be adopting a position on construction that demonstrates a move away from the classic view of pith and marrow. The case was concerned with importation of a product (hetacillin), which was considered to be the patented product (ampicillin) ‘wearing a temporary mask to be discarded before it gets to work’. The defendant’s product therefore converted to the patented product when ‘put to use for the only purpose for which it is intended’, see Lord Diplock’s judgment in the case at [1978] RPC 153 at 197, 202. 69 The protocol was, after all, a diplomatic compromise intended to guard against ‘extreme interpretation’ of any of the official texts. Armitage, n 8, above, at 814. 70 See Reid, n 9, above, at 58. 71 Jacob, n 17, above, at 67. This view is shared by Cornish in the first edition of his textbook on intellectual property; Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (London, Sweet & Maxwell, 1981). He states, at 130, that Art 69 ‘simply reflects British practice’. He also notes, at 191, that as the EPC ‘in principle’ accepts the British ‘fence-post’ view of the claims,‘accordingly British practice is likely to remain largely unchanged’. By the second edition (London, Sweet & Maxwell, 1989; 2nd Ed), this statement had changed, at 160, to ‘accordingly no radical re-direction of British practice has been called for’. 72 Reid, n 9, above, at 58.

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Catnic Begets Improver Whilst it has been forcefully argued that Catnic should have had no relevance to the interpretation of the claims of patents granted under the 1977 Act,73 a bastardised version of the test (eventually branded the ‘Protocol Questions’)74 was to govern claim interpretation in the UK for almost 25 years following the decision. Indeed, even under the House of Lords’ new approach75 the influence of Catnic can still be felt. The story of the adoption of Catnic as the test of choice for the British courts begins with a number of decisions of the Court of Appeal concerning 1949 Act patents. Therefore in Codex v Racal-Milgo,76 May LJ, giving the opinion of the court, noted that it had been referred to ‘a substantial number of authorities’ and had heard ‘much interesting and instructive argument’ on the issue of claim construction, including ‘the comparison or relation between textual infringement on the one hand and infringement by taking the “pith and marrow” on the other.’77 He then commented that,‘without any disrespect to the full arguments put before us by both sides, we do not now find it necessary to consider these in detail nor to refer to earlier decided cases in the light of the [Catnic decision]’. Catnic had therefore supplanted the doctrine of pith and marrow. In Société Nouvelle des Bennes Saphem v Edbro Ltd,78 a judgment handed down exactly a week after Codex, Lawton LJ reiterated this conclusion, noting that Catnic was the correct (and indeed only) test to apply.79

Post Catnic : Hiatus Despite there being a number of decisions concerning the interpretation of 1949 Act patents in the years immediately following Catnic, there is no reported case that discusses construction of the claims of a 1977 Act grant until May 1988 when Harding’s Patent was considered by the courts.80 As noted when examining the German position in chapter seven, above, it would be expected to take a number of years before decisions concerning the new statutory regime began to filter through 73 See, eg, Turner, n 47, above. Also see the judgment of the Court of Appeal in PLG v Ardon [1995] RPC 287. 74 See, eg, Wheatley (Davina) v Drillsafe Ltd [2001] RPC 133. Because, as noted in ch 5 in relation to the misbranding of the patent right as a monopoly, names matter. See also Jacob’s comment that ‘A squirrel is a rat with good PR’. Jacob,‘Industrial Property—Industry’s Enemy’ [1997] IPQ 3 at 3. 75 Laid down in Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667. 76 [1983] RPC 369. 77 Ibid, at 380. 78 [1983] RPC 345. 79 Ibid, at 360. It is interesting to note, however, that Oliver LJ seemingly still refers, at 366, to textual infringement and infringement under Catnic’s purposive construction as alternatives. 80 [1988] RPC 515. A decision of Whitford J concerning an application under s72(1)(d) PA 1977 for revocation of a patent.

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to the appellate courts. However, in contrast to Germany, where the first cases arrived in the Supreme Court in 1985,81 nothing even appeared in the English Court of Appeal concerning new grants until August 1988,82 a full 10 years after the 1977 Act had come into force. This, in itself, is odd, as this period in time is not devoid of discussion of other provisions of the 1977 Act. The issue of construction, however, seems to have passed the UK’s courts by in the decade that runs from the 1977 Act’s commencement. Whether this hiatus was due to the fact that parties who owned 1977 Act patents were discouraged from entering into litigation because of the perceived interpretative uncertainty after Catnic is a matter of conjecture. Such uncertainties do not however appear to have had a similarly crippling effect on the flow of litigation in Germany at the same time. This discrepancy may be explained by noting that whereas the German courts, especially the Bundesgerichtshof, felt that their practice did not conform to the Protocol and therefore went to great lengths to ensure change, the UK attitude was rather more Imperial in nature: current practice satisfied the Protocol, and no discussion would be entertained on the subject. However, this explanation is also somewhat deficient as it fails to explain the complete lack of any first-instance reported decisions on the construction of 1977 Act patents in this period.83 Perhaps, therefore, the most rational explanation is that the mid- to late1980s, the exact period at which we would expect to see litigation of new 1977 Act patents beginning to filter through the court system, was a boom time within the UK. During such periods it would be reasonable to conclude that patent holders concentrate on gathering and licensing their intellectual wares; with more money available for R&D this, rather than litigation, forms the business focus. Hence, cases concerning patent claim interpretation may be expected to be few in number during periods of growth. However, once the tide turns and growth becomes recession, as happened in the UK towards the end of the 1980s, the stored value in patent grants could become the focus of investigation and infringement actions would begin to be observed. As noted above, all of this is conjecture, but whatever the reason, it is clear that by the end of the 1980s the issue of claim construction was one that was beginning to demand increased consideration from the courts. 81 See text accompanying n 92 in ch 7, above. The German position may, however, be a special one due to the sheer number of cases that the Supreme Court handles. Pagenberg,‘The Scope of Art 69 European Patent Convention: Should Sub-Combinations be Protected?—A Comparative Analysis on the Basis of the French and German Law’ (1993) 24 IIC 314, notes, at 321, that ‘it is worth mentioning that the German Federal Supreme Court and its 10th Senate, the Patent Chamber, handles nearly 100 patent cases per year in nullity, infringement and both granting and opposition proceedings—a volume which is probably unmatched worldwide for a last instance court in this special field of law’. 82 This case was Improver Corp v Remington Consumer Products Ltd [1989] RPC 69. It concerned an appeal against the decision of Falconer J, given on 14 Jul, 1988, in which he struck out Improver Corp’s action for interim relief in respect of alleged infringement of the patent on its ‘Epilady’ depilatory device. 83 There are, in fact, also remarkably few reported cases that discuss construction of the claims of 1949 Act patents in this period. The vast majority of those that do appear (some 6 or 7 in total) between the decisions in Catnic and Harding’s Patent are in the Court of Appeal, litigation having been commenced some years previously.

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Improver in the Court of Appeal The case that eventually enabled the Court of Appeal to break the silence on claim construction under the 1977 Act was, however, far from ideal as a vessel for detailed consideration of the law. Improver v Remington84 concerns an appeal against the first instance court’s refusal to grant an interim injunction over an alleged infringement of the patent for a depilatory device that plucked hair from the body by essentially trapping it in the windings of a ‘coiled helical spring’ as it was rotated. Rather than including a spring in their alleged infringement, the defendants had substituted a slotted elastomeric rod, which, when bent and rotated, performed substantially the same function. The case is unsatisfactory primarily because it is an interim hearing. Therefore it was not open to the parties to submit, or the court to undertake, the same degree of argument and detailed consideration of the issues as would have been the case at full trial. Additionally, the complete lack of any prior judicial discussion of the topic of claim construction in the context of 1977 Act patents can only have served to entrench the view that the Protocol added nothing to the existing law.85 The uncertainties introduced by the wording of the transitional provisions had been left to fester for 10 years by the time that the Court of Appeal came to give its decision. Yet during this time, practice had continued as normal and the potential effect of any change of position had therefore been magnified. Patents claiming priority as of 1 June 197886 were halfway through their lifecycle by this time. Thus, the convenience of avoiding change, if nothing else, dictated that the ‘settled approach’ should be extended to the new provisions. As noted, this is in stark contrast to the German experience, whereby a decision was clearly made that Third Period practice did not conform to the Protocol and must therefore be changed.87 So, in the first case in which the issue of claim construction under the 1977 Act reached the Court of Appeal, the two-man court did little more than confirm that Catnic was consistent with the Protocol.88 This said, the court also noted the differing opinions of the English and German first instance judgments on the facts of the case,89 commenting that they: cannot both be correct as interpretations of the same patent in accordance with the Protocol. Either one has fallen into the error of attaching too much weight to the strict literal meaning of the wording used in the claims, or the other has fallen into the error of 84

[1989] RPC 69. See Jacob’s comments, reproduced in text accompanying n 17, above. The date of the Act’s entry into force. 87 This is not to say that the pace of change was rapid, or that the transition was smooth, simply that the choice was made. 88 The Court consisted of Dillon and Croom-Johnson LJJ. In his judgment, Dillon LJ states: ‘It seems to me, if I may say so with respect, that the well-known speech of Lord Diplock in . . . [Catnic] correctly indicates the same approach to construction as is indicated in the Protocol’. Above, n 84, at 76. 89 The reader will recall that parallel actions were brought in the courts of Germany, England & Wales and a number of other jurisdictions concerning alleged infringements of Improver Corp’s ‘Epilady’ depilatory device. 85 86

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extending protection from a consideration of what from the description as understood by a person skilled in the art the patentee may be supposed to have contemplated.90

Given the notably imprecise wording of the Protocol and the fact that its aim, according to Armitage, was simply to guard against ‘extreme interpretation of any one [of the official] text[s]’91, the Court of Appeal’s rigid view of the situation is clearly erroneous. To assume that one decision is correct and that the other, in another jurisdiction, is incorrect misunderstands the nature of the Protocol and the harmonisation brought about under it.All that the provision states is that a position should be adopted between the extremes which combines fair protection for the patentee with a reasonable degree of certainty for third parties. On the basis of the foregoing discussion of the state of German claim interpretation at the time of the decision,92 the outcome of Improver v Remington was perfectly predictable in that jurisdiction. The courts there were, admittedly, in a period of transition from the more liberal protection of the general inventive idea, but decisions in patent cases were never plucked from the ether. In terms of certainty the perfectly harmonised position imagined by the Court of Appeal, whereby a patent may be selected at random and assured the same degree of protection in whatever circumstance it finds itself litigated, is unrealistic in a national (let alone international) context.93 Therefore, what the Court of Appeal comments upon is clearly the ideal position, but is nevertheless not an outcome that can inevitably be provided for by the vagaries of the Protocol alone. Moreover, the different interpretative backgrounds of the courts in both states renders exact conformity of approach unlikely, if not impossible, in the absence of a common appeal court. However, this is not to say that the outcome will necessarily be any less predictable in one or the other as long as the national rules relating to construction are understood. On any interpretation of the Protocol, the Court of Appeal’s implicit assumption that there is only one correct position possible under it that combines a fair degree of protection for the patentee with a reasonable degree of certainty for third parties is absurd. The wording is simply not that precise and the requirement of certainty will depend greatly on the point from which the claims are viewed. As Armitage explains, when considering this issue,‘The Convention has been able to express only the broad lines and it remains now for the court jurisprudence to fill in the details.’94 Indeed, if we look at the Catnic decision using the mantle of a structural engineer (the designer) rather than a builder (the consumer) then the decision falls the other way—‘vertical’ is a word of precision. The essential difference, therefore, between the English and German courts’ treatment of the Epilady litigation95 is the focus of justification for the grant. In the UK, the courts’ approach concentrates, in tradi90

Above, n 84, at 76. See Armitage, n 8 above, at 814. See text accompanying n 113–22 in ch 7, above. 93 The fact that the thing is litigated in the first place reflects the point that different views can, and do, exist concerning its interpretation. 94 Armitage, n 8 above, at 815. 95 ie that in Improver v Remington. 91 92

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tional terms, on the freedoms removed by the patent, viewing it as providing incentives to innovate but noting that advancement may be stifled if its scope is too broad, and therefore tends towards strict interpretation of the claims.96 In Germany, by contrast, the focus at this point in time was still very firmly on rewarding the patentee’s contribution to the art.97 Both approaches can be seen to be in accordance with the Protocol, in that they both tread a middle ground between extremes, but both necessarily provide different, although by no means less-predictable, decisions. The choice of justification is largely historic, as has been shown in earlier chapters, and is something which the Protocol makes no claim to address. Ironically, a variant of this very point is advanced by Lord Hoffmann as illustration of the fact that the British and German approaches to claim construction are both cut from the same cloth. He states that:‘When Dr Peter Meier-Beck very kindly sent me comments on a draft of the Amgen [decision] a couple of years ago and explained the German approach to equivalence, I told him that the only difference there seemed to be between us was that I was brought up on the 1960s Oxford philosophy of language and he was brought up on Hegel’.98 Such blithe dismissal of the nature and extent of the interpretative problem is indicative of the fact that full harmonisation will not, indeed cannot, occur until there is a point of common appeal in patent cases within EPC’s contracting states. And even then, if the conceptual differences between various states’ philosophies of protection perpetuate, true harmonisation may still be thwarted.

Improver At Full Trial: Reformulation of the Test Whilst the Court of Appeal’s first outing into claim construction under the 1977 Act was, as explained above, less than satisfactory in many respects, its effect was farreaching: Catnic was here to stay. Therefore, in the next case of this kind to come through its doors, counsel before the Court of Appeal agreed that the ‘guidlines [sic] enunciated by Lord Diplock represent the same approach as the approach now enjoined by the 1977 Act and the Protocol’.99 And the test was cemented. Thus, at the substantive hearing in Improver v Remington, Hoffmann J (as he was then) felt bound to follow the Court of Appeal’s approach and adopt Catnic.100 Critically, however, instead of simply reiterating Lord Diplock’s words, he reformulated the one Catnic question into a three-stage test by combining it with the paragraph immediately following it in the earlier decision. Therefore:

96 Hence Lord Diplock’s presumption that the patentee has restricted themselves to a literal interpretation of their claims unless this cannot have been their intention. See text accompanying n 48, above. 97 And indeed still is. 98 Hoffmann,‘Patent Construction’ [2006] CIPA Journal 727, at 731. 99 See Anchor Building Products Ltd v Redland Roof Tiles Ltd [1990] RPC 283 at 287. 100 See Improver v Remington [1990] FSR 181 at 190.

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If the issue was whether a feature embodied in an alleged infringement which fell outside the primary, literal or acontextual meaning of a descriptive word or phrase in the claim (‘a variant’) was nevertheless within its language as properly interpreted, the court should ask itself the following three questions: 1. Does the variant have a material effect upon the way the invention works? If yes, the variant is outside the claim. If no— 2. Would this (i.e. that the variant had no material effect) have been obvious at the date of publication of the patent to a reader skilled in the art. If no, the variant is outside the claim. If yes— 3. Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention. If yes, the variant is outside the claim. On the other hand, a negative answer to the last question would lead to the conclusion that the patentee was intending the word or phrase to have not a literal but a figurative meaning (the figure being a form of synecdoche or metonymy) denoting a class of things which included the variant and the literal meaning, the latter being perhaps the most perfect, best-known or striking example of the class.101

The resultant test, known as the Improver questions,102 displays a subtle change in focus from the original Catnic formulation. This three-stage assessment necessarily narrows the approach to the essential question: would the skilled addressee consider that the patentee intended, for whatever reason, that strict compliance with the primary meaning of the claim was an essential requirement of the invention? This occurs because the presumption, which arises by working through the initial two questions, is that there must have been some (unknown) reason for the patentee to want to restrict their claim to exclude this obvious equivalent, or else why would they not have included it explicitly. The decision therefore leans towards literalism in the same manner as Catnic itself, by utilising presumptions within the framework to underscore how the addressee would understand the claims. Furthermore, by anchoring assessment of the second Improver question at the publication date of the patent, the test perpetuates the unpredictability, and unfairness, of Lord Diplock’s elected time of construction.

The Test in Operation Upon applying the newly-created questions to the facts of the case before him, Hoffmann J considered that the substitution of the slotted rubber rod for the coiled helical spring specified in the patent had no material effect on the way in which the invention worked. Both devices operated by trapping and removing hair in a tweezer-like manner and both plucked ‘to the satisfaction of customers’. Therefore, the differences,‘so far as they exist, are not material’.103 Hence the first question was answered in the negative, and the assessment continued. 101 102 103

See Improver v Remington [1990] FSR 181, at 189. At least until their re-branding in Wheatley v Drillsafe [2001] RPC 133 as the Protocol questions. Improver v Remington, n 100, above, at 192.

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When considering the second question, Hoffmann J was of the opinion that the fact that the variant had no material effect on the way in which the invention worked would have been obvious to the person skilled in the art at the date of publication of the patent, even if this variant could not have been used in all of the preferred embodiments. He cautioned against reading ‘obvious’ in this context as one would understand it in an assessment of inventive step, stating that: the question supposes that the skilled man is told of both the invention and the variant and asked whether the variant would obviously work in the same way.104

This question basically asks whether the skilled addressee would have thought at the time of publication that the variant shared all of the essential characteristics of the integer specified—here was it ‘bendy’ and ‘slitty’—such that it could perform the function of the former if substituted for it, albeit not necessarily as efficiently. Hoffmann J considered that it could. Yet by treating the second element of the test in this way, the approach taken to the final, Catnic, question is further narrowed. This occurs because, by following this line of thought, the investigation is now focussed on assessing why the patentee would have restricted themselves to wording that would exclude patently obvious variants from the wording of their claims, rather than on what the patent claims actually suggest to the person skilled in the art. This twist on Lord Diplock’s statement that the skilled man would obviously not consider the patentee to have bound themselves to a literal reading of the claim where the wording ‘cannot have been intended . . . to exclude minor variants which, to . . . [both their] knowledge . . ., could have no material effect on the way in which the invention worked’105, reflects a narrow approach to claim interpretation. It is therefore most interesting to note the alternative standard adopted by the German courts in relation to the same restriction when construing the claims. Thus, in the Plastic Pipes (Kunststoffrohrteil) decision,106 the Bundesgerichtshof considered that the question should be whether ‘the skilled person, as a result of his specialised knowledge . . . [would] be able to arrive at the modified means as means having substantially similar effects . . . on the basis of the claim’.107 These two approaches are evidently not synonymous as they advance upon the question from two completely different directions: Hoffmann J from the point of view of direct substitutability, and the Bundesgerichtshof from a position of evident equivalency. Following on from this narrowed approach, it is hardly surprising that the British court therefore considered that the skilled addressee would read ‘coiled helical spring’ as excluding the defendant’s mechanical equivalent, the slotted rubber rod. Hoffmann J explained his conclusion:

104 105 106 107

Ibid. Ibid. [2003] ENPR 163. See further, text accompanying n 136–42 in ch 7, above. Ibid, at 169.

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This is not a case like Catnic in which the angle of the support member can be regarded as an approximation to the vertical. The rubber rod is not an approximation to a helical spring. It is a different thing which can in limited circumstances work in the same way.108

In order to support this conclusion, he considered that the problems associated with hysteresis and the fact that the plaintiff inventors had done no work on rubber rods provided the answer to Lord Diplock’s rhetorical question of why the patentee should wish to restrict his invention to the specified embodiment only, thereby making avoidance easy. Thus, having treated the patent claims as one would treat a contract, interpreted objectively according to the officious bystander’s view109 of the intention of the parties, the court now attempted to reinforce its conclusion by hypothesising on the prior dealings and omissions of the patentee. This is intellectually unsound, as the investigation once again focuses on the patentee’s failure to specify the alleged variant in their claim. If, therefore, they had conducted experiments that included the variant and had failed to draft a claim sufficiently broadly that the variant in question fell within it then they must have had some reason for their omission: the claim is interpreted literally. Yet if they had not done any experimentation with the variant in question this would again be good reason for the patentee to be restricted to the literal meaning of their claim under the court’s reasoning. In any respect, the fact that avoidance would be easy only becomes apparent when the skilled addressee is informed of the function of the claims and the rules relating to their construction. Yet Hoffmann J ends his discussion by stating that he does not believe that the skilled man ‘is also to be assumed to be skilled in patent law’. Therefore, ‘he would . . . be entitled to think that the patentee had good reason for limiting himself, as he obviously appeared to have done, to a helical coil’.110 Whilst this conclusion may be appropriate if the claims are considered to be directed to a person interested in designing around the invention, it is less applicable to someone interested in performing it, as their perception will change depending on what they are told.

Reference to Germany In deference, perhaps, to the Protocol’s attempts at harmonisation, Hoffmann J also felt obliged to directly address the fact that the German courts in the same proceedings had come to the opposite conclusion on the matter of infringement.111 Noting the apparent inconsistency that this implied, he stated, in not so many words, that the other court was essentially wrong, and then explained why. The Dusseldorf 108

Above, n 100, at 197. Or in this case the skilled addressee’s view. Above, n 100, at 197. 111 See the discussion of the German decision in text accompanying n 113–22 in ch 7, above. As noted there, the European patent that was the subject of the proceedings Improver v Remington in the UK was also being litigated, on the same facts, in various other states. In contrast to Hoffmann J, the Oberlandesgericht found for the patentee. The German decision is reported at (1993) 24 IIC 838. 109 110

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Court of Appeal (Oberlandesgericht) had, in Hoffmann J’s opinion, failed to address the final Improver question, instead concluding its investigation after the first two issues of fact. It had therefore adopted ‘an interpretation closer to treating the language of the claims as a “guideline” than the median course required by the Protocol’.112 This is not however strictly the case for, as noted in chapter seven, above, the German court considered that the skilled addressee would interpret the claim’s reference to a coiled spring by looking at its purpose. It was not being used in the invention as a spring per se, but rather as an elastic body with gaps to trap hair.113 The German reader of the specification in question would therefore consider that the patent should be interpreted with this purpose in mind, and would think nothing more of it. Seen in this manner it is clear that the final question is not simply left out, it is subsumed within consideration of the first two stages. Therefore, to borrow the words of the Bundesgerichtshof in Cutting Knife I:114 ‘In relation to a single feature in the patent claim, what is important is whether the feature in question appears to the skilled person to be one that can be used only literally if the practical technical teaching claimed is to be followed’.115 The claim is still being interpreted by asking what the skilled addressee understands the patentee’s choice of claim language to mean. It is still reliant upon the variant having no material effect on the working of the invention. However, the question of equivalency and the skilled addressee’s presumption of the patentee’s intention operate in the opposite direction to Hoffmann J’s construction. Therefore, when it comes to the final Improver question the German courts had already completed their interpretation of the claim language. Would the skilled addressee nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention? The answer to this question is clearly ‘no’. Not if the technical teaching of the patent suggested that the claimed element could be substituted, for the purpose that the original element was included, by provision of an evident equivalent. This approach is, in fact, entirely consistent with Catnic itself: for just as ‘vertical’ was interpreted as meaning ‘vertical for all practical purposes’ in that case, so the helical spring of the Epilady device was interpreted with practical considerations in mind by the German Court. Furthermore, by this point in time, the determination of patent scope was, thanks to the efforts of the Supreme Court, sufficiently grounded in the wording of the claims to overcome bland criticism on the basis that it did not comply with the broad requirements of the Protocol.

112

Above, n 100, at 198. In Norman’s words, the ‘use of the spring in the patented invention was atypical’. Norman, n 66, above, at 249. 114 Cutting Knife I (Schneidmesser I) [2003] ENPR 309. 115 Ibid, at 318–9. 113

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Improver Accepted Notwithstanding the criticisms that can be levelled at the cases, Lord Diplock’s approach in Catnic, as reinterpreted by Hoffmann J in Improver v Remington, was rapidly adopted as the de facto test for claim construction in the British courts. The Improver formulation appears to have been first seized upon by Aldous J in Southco Inc v Dzus Fastener Europe Ltd,116 although no indication is given in his judgment of the exact provenance of three-stage test that he applies. Some ten weeks later,117 in A C Edwards Ltd v Acme Signs & Displays Ltd,118 Aldous J confirmed his application of the test, stating: ‘In Southco . . . [citation omitted] I had to consider the correct approach to construction. The parties did not suggest that the approach I adopted was wrong and I will therefore adopt the same approach in this case’.119 When the Court of Appeal came to consider both of these cases, differently constituted courts thought the approach advocated in each was correct. However, rather than adopting Aldous J’s reasoning directly, the courts preferred reference to Catnic itself, or at least to the Court of Appeal’s treatment of the decision in the interim stages of Improver v Remington.120 Indeed, it was not until their judgment in Optical Coating Laboratory Inc v Pilkington Ltd 121 that we see the Court of Appeal adopting a three-stage reworking of Catnic at all: Balcombe LJ, referring, for the first time in this court, to application of the Improver questions.122 Whilst interesting as an historical aside, the Court of Appeal’s adoption of the Improver formulation is clearly significant as it further ingrains the assumption that Catnic was the correct test to apply under the Protocol. It also obviously serves to perpetuate the narrow approach to claim construction contained within the final stage of Hoffmann J’s test. It is this final question, the real Catnic question, that provides the court with an opportunity to adopt linguistic analysis that may hardly be said to be within the spirit of the Protocol. An illustration of this point can be found in the Court of Appeal’s judgment in Daily v Berchet.123 The patent in question concerned a baby/invalid walker that, amongst other things, claimed ‘a braking arrangement associated with the rear wheels’. The defen116

[1990] RPC 587 at 606. Although the dates are somewhat confused on the reports of the cases. Southco is said to have been decided on 30 March 1990, and Edwards v Acme on 14 June 1989. However, this cannot be the case, for Aldous explicitly refers to his judgment in Southco in the Edwards case. It is probable, therefore, that Edwards was also decided in 1990. 118 [1990] RPC 621. 119 Ibid, at 633. 120 See the judgment of Purchas LJ in Southco v Dzus [1992] RPC 299, at 312, and that of Fox LJ in Edwards v Acme [1992] RPC 131, at 136. 121 [1995] RPC 145. 122 Ibid, at 158. The moniker was not, however, coined by Balcombe LJ, for it features in one previous reported case, a decision of by HHJ Ford sitting in the Patents County Court in Sundstrand Corporation v Safe Flight Instrument Corporation [1994] FSR 599, at 614. 123 [1993] RPC 357. For comment on the case see Cole,‘Purposive Construction under English Law: The Appeal in Daily v Berchet’ [1994] EIPR 455. 117

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dant produced an infant walker which had flexible suspension on the back wheels and anti-topple stops just behind them. When pressure was asserted on the back of the product, the suspension flexed and the anti-topple stops came into contact with the ground, thereby creating sufficient friction to prevent, on most surfaces at least, forward movement of the walker. At first instance, in the newly created Patents County Court, His Honour Judge Ford had concluded that there was infringement. The key element of the claim was, in his opinion, the fact that the phrase ‘braking arrangement associated with the rear wheels’clearly left open the possibility that it would extend to a braking arrangement that operated ‘in the close vicinity of the rear wheels without operating on them’.124 He found the defendant’s expert’s contention that that the wheel had to provide some of the braking force ‘altogether too narrow an interpretation in the present context’.125 The fact that the wheels themselves were not braked made no difference to the results obtained under the contemplated conditions of operation. The Court of Appeal did not agree. In overturning Judge Ford’s finding of infringement, Balcombe LJ referred explicitly to the Catnic decision and explained that this dictated that he should give the claim a purposive rather than a strictly literal construction. He then, however, proceeded to confine himself to a purely linguistic analysis, stating: A ‘braking arrangement associated with the rear wheels’to me connotes a braking arrangement which acts either directly or indirectly on the rear wheels, causing them to lock. Thus brake pads operating directly on the rear wheels, or one of them, would be an example of such a direct braking arrangement, and it is not without significance that an embodiment of the plaintiff ’s invention as described in the earlier part of his patent shows brake pads operating directly on each of the rear wheels. An example of a braking arrangement acting indirectly on the rear wheels would be an arrangement which, when activated, locked the rear axle, and thus prevented the rear wheels from turning. Accordingly on this ground alone I am satisfied that . . . [there is no infringement of] the plaintiff ’s patent.126

This quote clearly embodies Blanco White’s fears that under the Catnic approach the skilled addressee’s view of the claims will be substituted for the ‘Court’s own idea of what would then have been seen to be essential to the effective operation of the invention’.127 Balcombe LJ’s statement in the first line of the quote, that the claim limitation ‘to me connotes’ a particular construction, is clear evidence of the court eschewing an objective standard. This could be viewed as simple misapplication of the test, however it is submitted that the defect is more endemic. Nourse LJ had also adopted a strikingly similar approach to the issue of claim construction, stating that: ‘a braking arrangement can only be said to be associated with . . . [the wheels] if it operates as a brake on or through the rear wheels’.128 124 125 126 127 128

[1991] RPC 587, at 594. Ibid. [1993] RPC 357, at 361–2. Blanco White, n 11, above, at 2-104. Above, n 126, at 360.

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Of the three members of the court, only Sir Michael Kerr applied the three-stage formulation that had been adopted by Aldous J in Southco and Edwards v Acme,129 and which would later come to be described as the Improver formulation. He considered, albeit with some reservations, that stages one and two of the test would be satisfied,130 but that stage three would fail. The skilled addressee, he explained, ‘perhaps particularly if technically skilled, would be looking for some braking arrangement which operates on the rear wheels. He would say that only such a braking arrangement was intended to be included’.131 Notwithstanding the focus on the person skilled in the art, the emphasis on linguistic considerations is, again, clearly apparent. The case also demonstrates some of the difficulties of applying the test, and additionally highlights the malleability of outcome that may flow from it, depending on how closely one examines the language of the claims. In the words of Sir Michael Kerr, the final stage of the assessment: ‘is difficult to apply, since its formulation combines a negative with an intention to exclude. The draftsman of a specification would generally be more intent upon what he or she intends to include than to exclude, since non-included matters may not have been thought of at all’.132 The presumption of an intention to exclude is therefore as clearly present under the Catnic/Improver test as it is in Lord Russell’s famous dictum in EMI v Lissen that: ‘What is not claimed is disclaimed’.133 Yet the Catnic/Improver approach had been clearly endorsed by the courts under the 1977 Act, and by the mid-1990s seemed to be in an unassailable position, followed without question by all . . . or at least almost all; for towards the end of 1994 there was a brief, but as it turned out, ill-constructed, moment of rebellion.

Rebellion Instigated . . . As noted in chapter seven, above, the practice of the German courts in the Third Period had led to criticism on grounds that the scope offered by utilising the standard of the general inventive idea and detaching protection from the wording of the claims led to an unacceptable degree of unpredictability in the interpretation of claims. It was argued that modification of this principle, although adding uncertainty of its own, would actually provide no net increase in this level as the position moved to a more objective assessment overall. The German courts, in particular the Bundesgerichtshof, therefore threw themselves wholeheartedly into the process of reform. The situation in the UK was, however, rather different. To begin with, the period that passed between the passage of the new law contained in the 1977 Act and the 129

See n 116 and 118, above. In that the variant had no material effect on the way the invention worked and that this fact would have been obvious to the skilled addressee. 131 [1993] RPC 357, at 363. 132 Ibid. 133 (1939) 56 RPC 23, at 39. 130

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first cases to reach the Court of Appeal was inordinately long when compared to that witnessed in Germany.134 Furthermore, the Protocol was generally considered to add virtually nothing to the methods of construction extant immediately before Catnic,135 and certainly after.136 As Catnic had made steps, in form if not substance, towards abandonment of the literalism of the past, this cemented the national view that the UK approach must be in compliance. In addition to these factors, the single dissent that could have affected the progress of the Catnic/Improver questions was quickly and effectively crushed thereby perpetuating the, by now, settled approach. As a piece of judicial intervention, this latter factor is most significant and is something to which we will, in due course, direct our attention. However, first it is necessary to consider the nature and possible effects of the dissent in a little detail.

The Dissenting View The challenge to Catnic’s supremacy came in the shape of PLG Research v Ardon International.137 This decision of the Court of Appeal arose in the context of an action for infringement of two patents for stretched plastic netting filed under the 1977 Act.138 The relevant claims of the patents required use of a starting material that was ‘substantially uniplanar’, both parties in the case accepted that this was an essential integer of the inventions.139 The alleged infringement used material into which grooves had been cut, this was accepted not to be strictly uniplanar but had been engineered to achieve the same benefits when stretched, ie strong junctions and low waste. The question before the court was whether this could be described as ‘substantially uniplanar’ and thus fall within the claims. At first instance, Aldous J adopted the same view of claim construction as in his earlier decision in Southco, noting that he had ‘reviewed the law on interpretation under the Patents Act 1977’140 therein and, as neither party in the current case had submitted that his conclusion was wrong, he would adopt the same approach now. Therefore, applying the Catnic test, he proceeded to find the patents not infringed.141 He noted that: ‘Whether or not a material is substantially uniplanar must be a question of judgment, but the departure from uniplanarity must be insubstantial’.142 This was essentially a question of degree; the skilled addressee:

134 As noted, in text accompanying n 84 above, the interim appeal in Improver v Remington was the first case dealing with claim interpretation to reach the Court of Appeal under the 1977 Act. 135 See Jacob, n 17, above, at 67. Also the comments of Graham J in Rotocrop v Genbourne [1982] FSR 241, at 261, reproduced in text accompanying n 15, above. 136 See the comments of Purchas LJ to this effect in Southco v Dzus [1992] RPC 299, at 312, and those of Fox LJ in Edwards v Acme [1992] RPC 131 at 136. 137 [1995] RPC 287. 138 The dispute also involves a third patent for which validity was the only issue. 139 See the judgment of Millett LJ, n 137, above, at 304. 140 [1993] FSR 197, at 207. 141 He also found the patent invalid as it was anticipated by prior art. 142 Above, n 140, at 210.

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would read the patent and appreciate that the problem the invention sought to overcome was described by reference to net produced from flat sheets. He would have concluded that the departures from uniplanarity that the patentee was saying were insubstantial were the sort of departures that could occur in manufacture when working or extruding a flat sheet. Thus, using his knowledge of what was available in 1980, he would have been able to decide what was substantially uniplanar.143

With this perspective in mind, Aldous J was able to conclude that the ‘fact that the departure from uniplanarity would not affect the stretching does not mean that it would not affect the resulting structure’.144 The key factor was that the defendant’s departures from uniplanarity may have had an effect on the properties of many of the end products for which the patented articles were said to be useful.145 The result of the stretching exercise was therefore determinative of the outcome of the investigation, as, when seen in context, the skilled addressee would appreciate that the patentee had certain aims in mind when crafting the claims. A construction that contradicted, or compromised, these aims could not, therefore, have been intended. The defendant’s embodiment was thus outside of the scope of the claims. Despite the finding of non-infringement, the decision is still quite liberal in its approach to construction. By focussing on the teaching of the patent, in particular the results of the process and the end products obtained therefrom—all things that would have been in the patentee’s contemplation at the time of drafting—Aldous J’s reasoning can be seen to mark a departure from Hoffmann J’s strict perspective in Improver. Therefore, if the results of the exercise were within the contemplation of the skilled addressee in the earlier case it could be argued that this person would have realised that the coiled helical spring was not being used as a spring per se, but rather as a metonymy for a body with apertures that could operate in a tweezer-like manner when bent and rotated.As the bent and slotted elastomeric rod was an obvious equivalent for the spring at the relevant date, and as it clearly worked in the same manner, the skilled person would have considered it to be covered by the wording of the claim. In the current case, however, by examining the patentee’s focus on the use of the stretched netting, the court considered that the addressee would have understood that the claims had been drafted with a specific meaning in mind for the phrase ‘substantially uniplanar’. The Court of Appeal, whilst agreeing in the main with Aldous J’s contention146 that the problem the invention sought to overcome should be a central concern, also noted that the skilled addressee would understand that the patentee ‘had stipulated for a uniplanar starting material because he wanted to stretch it to form a uniplanar product’.147 By focussing on the function of the claimed integer in this manner, the court was able to conclude that any departure from uniplanarity would be only regarded as substantial where it had a significant effect on the behaviour of the 143 144 145 146 147

Above, n 140, at 217. Ibid, at 215. Ibid. See the statement reproduced in text accompanying n 143, above. [1995] RPC 287, at 310–1.

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material during the process of stretching. The use of the end product was therefore of no consequence, it was the process itself that was critical. Thus, in relation to one of the defendant’s products, departures from uniplanarity which occurred in part of the starting material that was not intended to stretch would be regarded as ‘simply irrelevant and therefore tolerable’.148 On this basis, infringement was clearly forthcoming. This finding, although opposite in conclusion to that of the judge at first instance, is not unusual per se. However, what marks PLG apart from the crowd is the radical departure that the Court of Appeal suggests from the, by now, settled Catnic formulation in order to get to this result. Seizing upon the problems associated with differing approaches to the construction of claims in the UK and Germany (highlighted by the litigation in Improver v Remington), the court attempted to rewrite the textbook and to move to what it considered to be a more Eurocentric approach under the direct guidance of the Protocol. Millett, LJ, giving the judgment of the court, began his discussion in traditional terms by considering the development of UK law on the matter of construction. He examined both Catnic and Improver, but then departed from what would have been considered accepted practice and embarked upon a review of German case law in this area. During this discussion he made reference to the Oberlandesgericht’s decision in Improver v Remington,149 and that of the Bundesgerichtshof in Ion Analysis,150 Heavy Metal Oxidisation Case,151 and Handle Cord for Battery,152 discussed in chapter seven, above,153 before concluding that when applying the Protocol: the German Courts, no less than ours, insist that the scope of a patent must be determined by its language; and, while the extent of protection goes beyond the literal content of the claim to cover functional equivalents it does not go beyond functional equivalents which are deducible from the wording of the claim.154

Therefore, when considering the extent of protection, Millett, LJ, stated that the test that the German courts apply is to ask whether the variant is ‘deducible’ from the ‘wording and drawings of the claims’.155 He continued; opining that this is ‘not quite the same as the third Catnic question’, but is arguably more in conformity with the Protocol, which requires a fair measure of protection for the patentee.156 Catnic, he explained, was a case that concerned the common law of patents, a law ‘replaced by the approach laid down by the Protocol’, and which therefore should be ‘left to legal historians’.157 He then warned that if the approaches under Catnic and the 148

Ibid, at 319. (1993) 24 IIC 838. 150 Ionenanalyse (1991) 22 IIC 249. Note that the report of PLG v Ardon in the RPC incorrectly cites this case as reported in the 1989 volume of the IIC. 151 Schwermetalloxidationskatalysator [1989] GRUR 205. 152 Batteriekastenschnur (1991) 22 IIC 104. 153 See text accompanying n 105–22 in ch 7, above. 154 [1995] RPC 287 at 309. 155 Ibid. This is an odd choice of phrase, and it is assumed that what was meant is that the variant is deducible from the claims read in the light of the specification and the drawings. Indeed, this is the view that the Court of Appeal takes of this passage in Kastner v Rizla [1995] RPC 585, discussed below. 156 [1995] RPC 287, at 309. 157 Ibid. 149

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Protocol are ‘the same, reference to Lord Diplock’s formulation is unnecessary, while if they are different it is dangerous’.158

Deconstructing the Dissent These arguments have a certain raw appeal. The criticism of Catnic’s continued effect is not without merit: the case was decided in the context of an application made under the old law, a law replaced by the new, watershed, Act. On its face, notwithstanding the confusing transitional provisions, s125 PA 1977, and therefore Article 69 EPC and its Protocol, did not apply to old act patents. It would be reasonable to conclude that the tests under the old law would therefore be limited to ‘old’ Act patents only, enabling a new, Protocol-centric, approach to be adopted in its wake. However, this conclusion is reliant upon one key assumption. It requires us to conclude that because the Protocol does not apply to old Act patents, the test for interpreting old Act patents could not apply under the Protocol. Despite being logical, nowhere is this officially stated to be the case. Therefore, whilst argument could be made that alternatives to Catnic/Improver would serve the purposes of the patent system better, and would be clearer and more predictable, it is another thing to cast off an approach as being inconsistent with the Protocol simply because it originated under the old law. Furthermore, the notion that the Protocol provides sufficient guidance on its wording to ensure predictable application of the law on claim construction, without more, is sadly also somewhat misplaced. This rigid view of the Protocol as demanding one, and only one, interpretative position is simply not supported on either its language or by reference to the intention of its drafters. As has been noted, it was created in order to guard against ‘extreme interpretation’ of any of the official texts,159 and cannot be viewed as doing anything else. Moreover, it is clear that the Protocol is a provision on the interpretation of Article 69 EPC and not on the claims per se.Whilst the distinction is fine, it does render the argument that it provides sufficient structure somewhat lacking. The implicit assumption in PLG, that there is a right and a wrong path under the Protocol and that as the UK’s courts err on the side of literalism they therefore contravene the requirement of showing fairness to the patentee, reads too much into the wording of the provision. Indeed, this is the very argument (albeit viewed from the opposite side) advanced by the Court of Appeal in the interim hearing in Improver v Remington, and it fails for the same reason: the Protocol is simply not that precise. Therefore, whilst it could be argued that the German approach is more intellectually honest than the British attempt at second guessing the intention of the patentee, it cannot be categorically said that it is more in line with the Protocol.

158 159

[1995] RPC 287, at 309. See Armitage, n 8, above.

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This matter aside, it is prudent to investigate the effect of the re-formulation in PLG. The argument explicit in the case is that the Catnic questions160 are not required and that rather than following Lord Diplock’s approach, the courts should simply apply the Protocol itself. However, the only guidance that is provided on this matter relates to the application of the third question. Therefore, despite expressing disquiet with the approach per se, the proposed modification retains most of the rejected test’s structure. Additionally, the alterations to the final question essentially ask whether the skilled addressee could have deduced the variant from the wording of the claims. Without further explanation, this appears to be basically a restatement of the second question: would it be obvious to the skilled person that the variant had no material effect on the way the invention worked? No further explanation was forthcoming. Moreover, the adoption of the deducible from the claims test is startlingly reminiscent of the German courts’Third Period practice of protecting the general inventive idea,161 an approach that the Bundesgerichtshof had been at great pains to change.162 The conclusions that the Court in PLG draws from the quoted passages of Handle Cord for Battery therefore represent a subtly skewed view of the case. For example, Millett, LJ, focused on the statement that ‘the average person skilled in the art would have been able to discover the [variant] . . . from the wording and literal sense of the patent claim’, as providing the test for infringement.163 Yet when the judgment in Handle Cord is read, it is clear that this phrase is used as an illustration of what is missing in the comparison between the patent and the alleged infringement in the case. Furthermore, the Bundesgerichtshof ’s statement that skilled addressee must be able to ‘identify the modified means . . . as being equally effective in the solution of the problem underlying the invention’, passes almost unnoticed.164 This latter limitation suggests a test more along the lines of the variant being ‘immediately apparent’ rather than simply ‘deducible’. Therefore, the Court of Appeal’s interpretation of the German cases is, in itself, wrong. In addition, the effect of changing the approach to claim interpretation in the manner that the court suggests at the time of the appeal would have been far more wide-ranging than Millett LJ seems to appreciate. A modification of this apparent magnitude would have represented a paradigm-shift in the enforcement of British patents. The overnight conversion to determining the scope of the claims by asking whether the skilled addressee ‘would have been able to discover’ the variant from their wording simply came too late, and from the wrong court,165 to have any chance of being accepted. One reason for this is the gravity of the change. Moving to

160

As reformulated by Hoffmann, J in Improver v Remington n 100, above. See text accompanying n 64–8 in ch 7, above. For further discussion see Pagenberg, ‘New Trends in Patent Claim Interpretation in Germany— Good-bye to the “General Inventive Idea” ’ (1988) 19 IIC 788. 163 Above, n 137, at 309. 164 Reproduced in PLG, ibid, but not emphasised in the text. 165 A similar decision of the House of Lords would clearly have been another matter. 161 162

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this position would have exploded the scope of most patents; rendering not only obvious variants, but also those that could have been deduced from the claim language, within the patent’s scope. In this sense, asking what the claims made immediately apparent at their date of creation would have been a far superior approach to adopt, given these would most likely be the things in contemplation whilst drafting the patent. However, providing the breadth of protection suggested by the Court of Appeal clearly pays no heed to the process of claim creation. It is evident from the discussion in chapter four, above, that UK patent attorneys operate with a narrow formulation in mind, as not only is this the safest style to adopt, but also from the beginning they are concerned with preventing designing around the invention. Their focus is clearly on maximising the scope of protection by other, non-interpretative, means—ie by manipulating the intrinsic scope of the patent rather than relying on ex post facto judicial intervention. This approach to claim creation necessarily results in a drafting style that is not as tight as that which would have been practiced by German patent attorneys in the Third Period, the period in which the courts extended protection to the general inventive idea. As explained in chapter seven, at this point in time the German Patent Office required the claims to be drafted in a prescribed form before it would consider them. Therefore, the German courts’ relaxed institutional claim interpretation practices can be seen to have mitigated the Patent Office’s strict approach to the claims, and vice versa. The same is true of Japan, where the practices of patentee’s and the market remedied the courts’ narrow interpretation of the patent’s scope of protection.166 In the UK, on the other hand, the lax requirements of the Patent Office relating to claim form had been effectively reined in by the courts when interpreting those claims. Departure from this approach would therefore have caused further unpredictability whilst a new status quo was reached. This in itself would not have been a problem if the PLG approach had offered to provide any benefit in terms of remedying a lack of fair protection or minimising the unpredictabilities inherent in application of the Catnic/Improver test. Unfortunately the modification of approach suggested by the Court of Appeal was evidently based on unsound reasoning and therefore substituted nothing beneficial in place of the formulation it sought to remove. Moreover, the assumption that by simply adopting the same test as another state, confluence of approach would somehow miraculously follow is, with respect, naïve. Even if the Court of Appeal’s assessment of the German position was, in fact, correct the grant is still justified on different grounds in the two jurisdictions, and this, as we have seen, informs the interpretation of the claims. Therefore, the PLG court failed to address the most problematic issue for harmonisation between the German and British approaches to claim construction: the fact that the courts’ view of the theoretical underpinnings of the grant can have so great an impact on the outcome of the construction exercise.

166

See ch 8, above.

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The court also failed to address the fact that interpretation within the Catnic test is undertaken as of publication, and additionally that the fictions and multi-layered presumptions that the courts adopt effectively mean that the issue of claim construction cannot be second guessed. Thus, not only is the position concerning pioneer inventions no different under PLG than it was before, but the most obvious unpredictabilities of the regime that it was criticising also remain unremedied. Indeed if anything, by suggesting a paradigm shift in interpretation, they are magnified. Therefore, in the area in which the patent system is most important (according to Scherer’s topology167) there is not only no net gain, but in reality a retrograde step is taken as there is no increase in fairness to compensate for the decrease in predictability.168

. . . Rebellion Quashed Less than two weeks after the judgment in PLG, Aldous J, came to consider the question of claim construction once more in Assidoman Multipack Ltd v The Mead Corporation.169 The case concerned the alleged infringement of two patents (Forrer and Oliff) relating to cartons used in packaging and the blanks for making them. The decision is critical for a number of reasons, not least because the two patents in issue were applied for under different Acts.170 In order to decide the dispute, therefore, Aldous J considered that it was ‘necessary to understand what is the correct approach to determining the ambit of the claims of the Forrer patent under the 1949 Act and thereafter decide whether that approach needs to be modified pursuant to the 1977 Act and, if so, in what way’.171 The question of infringement turned solely on construction of the claims. In relation to the Forrer patent the court was required to consider the meaning of the phrase ‘comprising a generally rectangular bottom wall . . . and a top wall lap panel’ with end flaps ‘foldably joined’ thereto. The defendant’s contended that their product did not infringe as it possessed a generally rectangular top panel foldably joined to side panels that were then foldably joined to lap panels, which when in use formed a rectangular bottom to the container.172 They submitted that by essentially turning the patented design upside-down their product was outside of the scope of the claims. In respect of the Oliff patent, the defendants contended that the way in which the claim term ‘tubular carton’ had been used in the specification had limited the scope of this term to ‘cartons to be used and only to be used in an end loading 167

Scherer, Market Structure, n 58, above, at 443–50. See also text accompanying n 48 et seq in ch 5,

above. 168

Caused both by the new test and the act of change itself. [1995] RPC 321. 170 Forrer under the 1949 Act and Oliff under the 1977 Act. 171 Above, n 169, at 328. This is the first reported decision in which the claims of an old and new Act patent were to be considered in the same action. 172 See Aldous J’s discussion of infringement, ibid, at 340. 169

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system’.173 In other words, they argued that the skilled addressee would, by reading the specification, understand that a particular meaning of the term had been intended by the patentee.

The Approach to Construction After a very brief summary of the nature of the dispute between the parties, Aldous J, directed his attention to the issue of claim construction. He noted that, despite claims being introduced by patentees to enable them to better protect their interests, they also ‘had the benefit of enabling the public to ascertain the monopoly granted’.174 This dual purpose, giving ‘protection to the patentee and at the same time . . . [giving] a reasonable degree of certainty to the public’,175 was something that the courts had always considered to be the focus of their investigation. However, due to a trio of cases in the 1960s,176 the law had lost its way and made it difficult to distil a consistent thread of reasoning. This wrong had been righted in Catnic. Lord Diplock’s new formulation was not, however, considered to have been intended to ‘depart from the principle that had underpinned our law for many years that claims need to be interpreted to give protection to the patentee and at the same time to delimit the invention with sufficient clarity’.177 This statement clearly betrays Aldous J’s feelings on the matter, and is an obvious signpost as to the direction in which the judgment was to progress. The words chosen to describe existing practice, notably that the courts have always attempted to balance protection of the patentee with providing a reasonable degree of certainty for third parties, can undoubtedly be seen as a nod in the direction of the Protocol. There was no question that the Forrer patent had to be interpreted in light of anything other than Catnic, being, as it was, a 1949 Act grant. However, Aldous J considered that the Improver questions, as an aid to purposive construction, would also need to be answered when ascertaining the width of the monopoly claimed in this grant.178 This is, again, a portent of things to come. Improver v Remington clearly arose in the context of a 1977 Act grant. The patent had originated with an application to the European Patent Office and must therefore have fallen under the influence of the Protocol. According to the separation that Aldous J was in the process of examining this would, if he had concluded that the 1977 Act provided a clean break from the old law, have meant that the decision in Improver could have had no effect on the old position.179 Needless to say, this was not the conclusion that he reached. 173

As opposed to the alternative wrap-around system. Ibid, at 349. Ibid. at 329. 175 Ibid. 176 The cases referred to are Van der Lely v Bamfords [1963] RPC 61, Rodi & Wienenberger v Showell [1969] RPC 367, and Deere & Co. v Harrison McGregor & Guest Ltd [1965] RPC 461. 177 Above, n 169, at 330. 178 Ibid, at 332. 179 This conclusion is apposite as, at the time that Assidoman was being decided, Hoffmann J’s test had only been explicitly adopted by the Court of Appeal in the context of a 1977 Act patent: Optical Coating Laboratory Inc v Pilkington Ltd [1995] RPC 145. 174

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This point aside, Aldous J also concluded that: ‘The questions suggested by Hoffmann J to guide the court require determination of what the skilled reader would understand the invention and its essentials to be. The court does not resolve doubt in favour of the patentee or in favour of a strict or literal interpretation’.180 Quite whom doubt is resolved in favour of is left unanswered, but taken in the light of some of Aldous’ other comments in this case,181 and in other decisions both pre- and post-Assidoman, it would appear that this statement was intended to provide a degree of flexibility based on the teaching of the patent. Thus, if the feature in question appears to the skilled person to be one that could be used only literally if the practical technical teaching claimed is to be followed, a narrow construction would be forthcoming.182 However, in other circumstances it would enable the court to come to the opposite conclusion depending, perhaps, on the problem that the patentee had set out to solve.183 The great benefit of this approach is that it enables the court to look to the equity of the invention when deciding what the patentee must have meant by their wording, whilst still operating within the Catnic formulation. However, it clearly requires a judge who is technically aware in order for the test to operate effectively, as it does nothing for predictability in the hands of one who is not. Herein lies its main weakness. It is also clear that Aldous’ statement subtly misrepresents the wording of the Catnic/Improver test: as noted, Lord Diplock is quite clear that the skilled addressee is operating under a presumption that the patentee has restricted themselves to a literal interpretation of their claims unless this cannot have been their intention.184 Implicit in the test, therefore, is the notion that doubt will be resolved against the patentee. This point is confirmed by consideration of Hoffmann J’s application of the test in Improver, wherein evidence that the patentee had not conducted tests into the possibility of using rubber in their depilatory device was taken to be indicative of the fact that they had chosen to limit the scope of their patent to that literally claimed. Indeed, this is the very interpretation that Sir David Kerr places upon the cases in Daily v Berchet when he states that the third Improver question is difficult to apply as it ‘combines a negative with an intention to exclude’.185 This approach is, 180

[1995] RPC 321 at 332. Of particular note is a statement made at 336 wherein Aldous J is considering Bruchhausen’s comments (Bruchhausen, n 49, above, at 228) that: ‘In cases where it is not clear, to a reader having the relevant knowledge, whether a word or a sentence in the claim is or is not intended to be restrictive. In such a case of insufficient clarity, Lord Diplock considers the reader to be entitled to assume that the patent proprietor had grounds, at the time of wording the claim, for delimiting the protection so narrowly that he intended to do so, even though later knowledge has shown that the restriction would not have been necessary’. Following this,Aldous J notes that this ‘rule’‘has not formed part of the way that the courts in this country have applied “purposive” construction under the 1977 Act. The courts have considered what would have been understood by the skilled reader from the specification and claims. No case of insufficient clarity has occurred’. 182 The reader may note that this is the same formulation as is used by the Bundesgerichtshof in Cutting Knife I (Schneidmesser I) [2003] ENPR 309, discussed in text accompanying n 114, above, and between n 143–52 in ch7, above. 183 This is essentially the approach that Aldous LJ adopts in Wheatley v Drillsafe [2001] RPC 133, discussed below. 184 See Catnic, n 21, above, at 244. See also text accompanying n 48, above. 185 [1993] RPC 357, at 363. See further, text accompanying n 132, above. 181

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once again, contractual in nature for it echoes the contra proferentem rule.186 However, as noted above, it is far from clear that a patent should be interpreted with the same principles in mind, especially given the considerations that have to be taken into account in order to comply with Article 69 and the Protocol.

Interpretation under the Protocol: Deconstructing PLG Notwithstanding the subtle twist that Aldous J’s judgment gives to the Catnic/Improver test, Assidoman’s most interesting aspect is the view that is taken of the test to be applied under the new Act. It was clear that in order to decide whether there had been infringement of the Oliff patent, Aldous J would have to consider whether the principles applied under the 1949 Act also extended to 1977 Act patents, and if not, what the correct approach should be. This investigation brought him directly into the territory so recently redeveloped by the Court of Appeal in PLG. Rather than attacking the PLG decision head-on, Aldous J first assessed the lay of the land. He looked at the relationship between the provisions on infringement within s60 PA 1977 and those on claim interpretation, noting where Article 69 EPC and the Protocol came into play. He then stated that the correct approach under the Protocol was to arrive at a middle ground between strict literalism and using the claims only as guidelines, so as to provide fair protection and reasonable certainty. The first blow was then landed: ‘It cannot be disputed that “purposive” construction, as suggested by Lord Diplock in the Catnic case, fits squarely within the guidelines of the Protocol’.187 A second followed closely behind: the Protocol demanded a middle position to be taken: ‘That, of course, has been the aim of the courts in the past and was the reason for invoking the doctrine of “pith and marrow” ’.188 Moreover, Catnic was of benefit as purposive construction ‘provides a structured way to determine the ambit of the invention claimed’.189 Therefore, following reference to a long list of decisions, Aldous J was content to state that: ‘the Court of Appeal have until recently, without exception, concluded that “purposive construction” along the lines enunciated by Lord Diplock in the Catnic case accorded with the provisions of the Patents Act 1977’. He concluded: ‘I believe that is now binding upon this court’,190 and then turned to PLG itself. Millett LJ’s judgment was dispassionately dissected to consider the merits, or otherwise, of the approach advocated therein. In particular, the Court of Appeal’s derisory treatment of Hoffmann J’s statement that he considered himself bound by the decision of the Court of Appeal in the interim proceedings in Improver v Remington, came in for stern rebuke. ‘It is true that Dillon LJ’s observations were 186 ie the rule that a contract should be interpreted against the person who seeks to benefit from it. See the discussion of the rule in Lewison, n 53, above, at 7.07. 187 Above, n 169, at 333. 188 Ibid. 189 Ibid. 190 Ibid, at 334.

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made at the interlocutory stage, but that should not mean that they should be disregarded nor does it mean that they do not bind this court’. He added: ‘Also those observations have been accepted to be correct by this court and the Court of Appeal in the many patent actions that have been decided over the past 14 years’.191 The message was clear, there was no confusion or room to argue, the question of which position to adopt under the 1977 Act had already been decided. Catnic had been approved as a test that toed the broad line advocated by the Protocol and that was the end of the matter. Turning his attention to the Court of Appeal’s discussion of the German cases, Aldous J remarked that he ‘had not thought that the courts in Germany asked “whether the variant embodied in the disputed device is one which is deducible by persons skilled in the art from the wording and drawings of the claim” ’.192 Such is clearly correct, as is apparent from direct consideration of the decisions utilised by Millett LJ in the case itself. As already noted, the test actually applied in Germany at this time was in fact more in line with Aldous’ own formulation than with that advanced by the Court of Appeal in PLG. However, even if the latter’s view of the German cases was correct, Aldous still considered that it was difficult to understand how such a test could be more in conformity with the Protocol than the prevailing tests in the UK, as in order to support this statement a comparison must be made. The different conclusions reached by the German and English courts in Improver v Remington did not necessarily imply that one was right and one was wrong on application of the law: ‘the conclusion in one of the courts could have been wrong, even though the principles of law applied were right’.193 Additionally, although not expressly mentioned in the case, it is clear that the language of the Protocol is simply not prescriptive enough to rule out the possibility of more than one correct interpretation within it. The Court of Appeal had therefore fallen into error. This said, there was still one minor problem that confronted Aldous J in his criticism of the Court of Appeal’s approach: it was the Court of Appeal, and therefore held precedence over his own court. Adopting, perhaps, the sort of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge,Aldous J focussed upon Millett LJ’s statement in PLG that the use of the word ‘substantially’ in the claim: imports a degree of flexibility which precludes an exact and literal construction, and makes it unnecessary to consider whether Lord Diplock’s purposive construction was an accurate if proleptic application of the Protocol.194

This, Aldous explained, demonstrated that the Court of Appeal considered their observations on the applicability of Catnic under the 1977 Act to have been obiter. He was therefore not bound by them. However, notwithstanding the foregoing, it is 191 192

Ibid, at 335. Ibid. For the Court of Appeal’s discussion of this point in PLG see text accompanying n 154–6,

above. 193 194

Above, n 169, at 335. Ibid, at 337, referring to PLG v Ardon, n 137, above, at 309.

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perhaps Aldous J’s comment that he would be ‘loathe to discard 14 years of case law unless it is certain that “purposive” construction is not the correct approach under the Act’, that really cuts to the heart of the matter.195 The great unpredictability that would have been engendered by a shift of the magnitude that PLG suggested was simply too much to contemplate at this point in time. Furthermore, regardless of the actual effect that the change of test would have had, the perception was that adoption of PLG would have marked a significant departure from the British way of doing things. It was this perception that mattered. Moreover, the approach under Catnic/Improver was perceived to be in line with the Protocol anyway, as indeed had the doctrine of pith and marrow before it. Thus, criticism of the established position, in the manner in which it was undertaken, was a non-starter in any case. In contrast to Germany where the Bundesgerichtshof ’s swift action had concentrated the uncertainties that inevitably result from such sweeping change into a period of transition under the new Act, a period where uncertainty would be expected in any case until things became established, the British courts and industry had grown used to the settled approach. To adopt the recommendations of the Court of Appeal in PLG would have meant enduring the turmoil 17 years late. Moreover, this turmoil would have been all the more bitter as the fortuitous (or unfortunate, depending on which view is taken) timing of the Catnic decision had effectively precluded transitional disorder on this matter in the first place. This is the essential point on which any rational decision must have been based. Thus, when combined with the weakness inherent in the PLG approach, the fact that it suggested fundamental departure from existing principles that had, until this time, been consistently affirmed by the Court of Appeal, meant that following the decision was simply not an option. The unpredictability that embedding PLG’s flawed reasoning, only for it to be overturned by a subsequent Court of Appeal judgment in the area because it did not fit with the accepted picture of the law, was sufficient to justify the approach taken in Assidoman by itself.

Assidoman Accepted Aldous J was not alone in his feelings for PLG, for in Beloit Technologies Inc v Valmet Paper Machinery Inc,196 the next case to come before the High Court concerning claim construction, Jacob J made no hesitation in proclaiming his belief that Catnic did indeed ‘represent the via media called for by the Protocol’.197 Therefore, even if Aldous J had been wrong in his conclusion that Millett’s reinterpretation was obiter, the odds were stacking against the decision. The final blow, however, came less than seven months after the original decision when, in Kastner v Rizla,198 the newly pro195

Above, n 169, at 337. [1995] RPC 705 197 Ibid, at 720. 198 [1995] RPC 585. Discussed by Cole,‘Kastner v. Rizla: A Historic Decision on Equivalents?’ [1997] EIPR 617 (Cole,‘Kastner v Rizla’), and Oliver,‘Kastner v Rizla: Too Far, Too Fast’ [1996] EIPR 28. 196

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moted Aldous LJ was able to confirm, with the full backing of the rest of the court,199 that the approach he had taken in Assidoman was correct.200 The Kastner v Rizla decision concerns the alleged infringement of a machine for the production of interleaved cigarette papers. The patentee had claimed, inter alia, a ‘reciprocating knife’ and a ‘pusher plate which moved with the knife in both directions’. The defendant’s machine contained a crescent shaped rotary blade and a pusher plate which operated with an ‘up and over action’ in place of these elements. Argument before the Kastner court had attempted to establish that, rather than concentrating on what Millett LJ had incorrectly stated the position in Germany to be, effect should instead be given to his intended meaning.201 In other words, the decision should be treated as though Catnic had been laid to one side in favour of asking ‘whether the variant was deducible from the words of the claims read in the light of the specification and drawings’. This approach was clearly, and unambiguously, rejected: the Court of Appeal in PLG had not, in fact, decided that the Catnic test was inappropriate,‘as they found it was unnecessary for them to come to a conclusion on that matter’.202 On the issue of claim construction, therefore, the Catnic test, as reinterpreted by Hoffmann J in Improver, was applied in order to determine whether the defendant’s machine infringed the patent. Concerning the interpretation of this test, Aldous LJ noted that whilst the scope of a claim should be interpreted without reference to the alleged infringement or the prior art, the ‘test requires the court to see whether a variant is excluded from the ambit [of the claims]. Thus in practice the court has to have in mind the context in which the dispute arises’. He also noted that there was no room for over-rigid application of the third Improver question as this would ‘lean away from the middle course to which the Protocol directs’.203 Thus, once again, the purpose of the invention and the background against which the inventor had created their product were considered to be essential to the assessment. Just as in his judgment in PLG at first instance, Aldous therefore looked at the results of the variance in order to determine whether infringement had taken place. He noted that the essence of the invention was not, as had been found by His Honour Judge Ford in the Patents County Court, the mechanically simple way of mounting and moving the pusher plate, but was rather the interleaving and severing assemblies. The ‘sole purpose of the pusher plate was to push complete packets of cut strands laterally and that the variant did, albeit in a different way’.204 The skilled reader would therefore understand that ‘some means was necessary to remove the cut 199 Otton LJ simply concurred without more, but Balcombe LJ issued a statement (ibid, at 605) that left no doubt on the matter: ‘I agree with my Lord’s comments on the dicta contained in the judgment of the court in PLG Research . . . [citation omitted]. I agree with his judgment in Assidoman . . . [citation omitted], as followed by Jacob, J, in Beloit [citation omitted], that the Catnic purposive approach does truly represent the via media called for by the Protocol on the Interpretation of Article 69 of the E.P.C’. 200 See [1995] RPC 585 at 594. 201 The irony of arguing for a purposive construction of the words of a judge attempting to do away with purposive construction was apparently lost on counsel. 202 Above, n 200, at 594. 203 Ibid, at 595. 204 Ibid, at 598.

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strands and that in the apparatus of the invention that was done by the pusher plate; but he would not understand that the way the pusher plate was mounted was an essential requirement of the invention’.205 This is a most significant turn in the analysis, as the court demonstrates that an ex ante obviousness test is being incorporated into the assessment. Therefore, it utilises the fact that the purpose of the pusher plate could obviously be achieved by other means, as evidence that the patentee must have intended their claim to cover them. In other words, despite the claims being clear on the mechanism of the apparatus, the court was willing to adopt clear a equivalence analysis. Whilst laudable in one sense, as clearly protecting the inventor’s contribution to the art, the fact that it was not specifically identified as a departure from, or extension to, the status quo is regrettable as it impacts upon the ex ante predictability of the approach. Furthermore, as Cole explains, Aldous’ LJ reasoning demonstrates that the court is ‘prepared to substitute its own technical analysis of the proper scope of the invention for that provided in the main claim’.206 It is hard to see where this fits in with the original Catnic approach to construction. The irony is, therefore, that by using the obviousness of a substituted element as an indicator of the interpretation that should be placed on the claim, the court in Kastner adopts reasoning more in line with the German approach to construction than the Court of Appeal’s overt attempts in PLG (which Aldous had so roundly condemned) could manage. Moreover, construction of the claim based on consideration of what the skilled addressee would understand had been made obvious in light of the patent’s teaching provides an eminently predictable approach to claim construction. However, the benefits of such a move are offset by the fact that the departure from conventional wisdom was not made explicit in the judgment. By concealing the change within apparent adherence to the word of Catnic the court demonstrates only that in certain cases it may be willing to substitute its own understanding of the technology for the distinct wording of the claims. This does nothing for the predictability of the approach as it does not create anything approaching a rule for others to follow. The decision therefore adds to the problems experienced under British claim interpretation: it appears that the tests applied can be bent to any shape that the court desires by manipulation of the relevant features of the skilled addressee and by hindsight determination of what they ‘must have known’ at the date of publication. In Catnic it was the level of the skilled addressee that enabled Lord Diplock to provide the categorical interpretation of the claim term ‘extending vertically’ so as to catch the defendant’s infringement. In Improver, the fact that the patentee had not experimented with rubber rods provided evidence that they had therefore intended the claim to exclude variants. In PLG at first instance, Aldous J had used the fact that the defendant’s departure from uniplanarity could have affected the end products of the extrusion process to back up his finding of non-infringement. 205 206

Above, n 200, at 600. Cole,‘Kastner v Rizla’, n 198, above, at 623.

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Yet, in all of these cases the courts could have come to the opposite conclusion by taking a different view of the teaching of the patent, as indeed the Oberlandesgericht did in its decision in Improver v Remington. Without firm guidance on the approach that should be taken under the Catnic formulation to rein in these differing interpretational perspectives, unpredictability reigns. Indeed, Lord Hoffmann hints at this deficiency in the test he helped shape when he states: Courts make two kinds of attempt to escape from the rigidity if structures like . . . [the Improver questions]. One is to explain and elaborate them. . . . The other way of escape is to cheat. That, on the whole, is what the English courts did. . . . One sometimes felt that they pretended to apply the Improver-questions but had really made up their minds [already].207

However, as noted, the fault is not entirely with the courts; the problem is inherent within the questions themselves, but is exacerbated by an apparent confusion within the philosophical guidance on the resolution of ambiguity.

So Catnic Lives on . . . The years following the decision in Kastner v Rizla are relatively empty of substantive claim interpretation cases at the appellate level. Catnic/Improver had clearly been accepted, in form if not exactly substance. Therefore, the cases that we do see in which construction was discussed are, in the main, straight applications of the test and are consequently of little interest to our investigation. The silence on substantive examination of the provisions was broken, however, by the appeal in Wheatley (Davina) v Drillsafe,208 a decision to which we now direct our attention. The case is notable not only for the fact that it opened up the debate and re-branded the questions (Catnic/Improver became the Protocol questions), but also because it represents another subtle shift in the degree of protection accorded to the patentee.

Improver Begets the Protocol Questions The patent in Wheatley v Drillsafe disclosed and claimed an improved method of forming a threaded hole through a metal plate. It was intended to be used to create apertures in petrol tanks and other tanks containing flammable liquids. The invention’s advantage over the prior art was that it used a method of anchoring the cutting ring that did not require a central drill-bit, and therefore avoided the problems associated with ‘pre-penetration’ of the tank; notably sparking and the consequent risk of explosion. The patent claimed use of a ‘centre-less hole cutter’, and the question before the court was whether this was infringed by the defendant’s use of a 207 208

Hoffmann, n 98, above, at 731. [2001] RPC 133.

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retractable probe, or spindle, within the cutting tool. The spindle was utilised as an anchor only until the cutting ring had a good enough grip not to wander, after this, and before the tank’s skin had been breached, the spindle was withdrawn so that the cutting ring itself was the first thing to penetrate the tank. The decision therefore revolves around the interpretation of the phrase ‘centre-less hole cutter’ within the claims. The issue proved to be divisive, with Aldous LJ in the minority, considering that the defendant’s method did fall within the patent’s claims, and Sedley and Mance, LJJ, coming to the conclusion that it did not. Despite this difference of opinion, the majority accepted that Aldous’ exposition of the law as accurate; they simply doubted the reasoning he used to get to his conclusions.

A Radical Approach? Aldous LJ began his judgment by referring to the problems that the patented invention set out to solve, thereby placing the grant firmly in context.209 He then looked to the alleged infringements. The defendants had employed three methods. The first (method 1) was accepted by all parties to fall within the contested claim, as the cutting apparatus was centre-less in the literal sense of the word. Method 3, on the other hand, employed a guiding drill of the type disclosed by the prior art and therefore shared its spark-related problems; this was clearly outside of the claim. However, it was method 2, outlined above, utilising a retractable guiding probe, that presented the main point of contention: was this within the scope of the patent as interpreted? Moving to examine the applicable law, Aldous LJ began by considering the British provisions on infringement, namely ss60 and 125 of the 1977 Act, before turning his attention to Article 69 EPC and the Protocol. He summarised the effect of the latter by stating that it ‘outlaws what can be termed strict literal and also liberal interpretation using the claims as a guideline. The correct approach is to achieve a position between those extremes’. In pursuing this goal: ‘So far as the patentee is concerned it is important that the claim should be interpreted in accordance with his intention’.210 He continued, stating that the Improver questions, ‘better called the Protocol questions’211 can be utilised as an aid in the process of assessing objectively what meaning the words of the claim were intended to convey. Whilst this rebranding exercise is interesting, it simply reflects the accepted view that the Improver formulation did indeed toe the middle line advocated by the Protocol. It is therefore easily dismissed as little more than a PR exercise. The same cannot, however, be said of Aldous LJ’s next statement, which pulls together various strands of argument that 209

Indeed, the structure he adopts clearly points to a finding of infringement from the very begin-

ning. 210 211

[2001] RPC 133, at 141, paras 19 & 21 of the judgment. Ibid, at 142, para. 21.

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he appears to have been slowly developing in his judgments since Southco. The result is altogether more radical. Therefore, in what probably forms the most significant statement in the case, Aldous LJ proclaimed that: It is reasonable to infer, absent express words to the contrary, that the patentee intended to include within his monopoly what can be termed immaterial variants, in the sense that they were not material to the way the invention worked. . . . However, third parties have to be considered and, therefore, they should not be held to infringe if it was clear that such a variant was not intended to be within the ambit of the monopoly, either because of the words chosen or because it would be seen to have materially affected the way the invention worked.212 (emphasis added)

Thus, whilst adhering to the form of the Protocol (nee Catnic/Improver) questions, Aldous LJ, provides a subtle shift in the focus of protection. As noted above,213 the restriction on the objective view of the intention of the patentee laid down in Lord Diplock’s original test provides one of the main grounds for criticism of the decision. The precise logic of presuming that the patentee must have meant to exclude all variants unless this cannot have been their intention, as was the position under both purebred Catnic and Improver tests, was never entirely clear. Aldous J’s statement in Assidoman that: ‘The court does not resolve doubt in favour of the patentee or in favour of a strict or literal interpretation’,214 can now be seen to find its feet as the interpretative presumption is removed. Any doubt that could have arisen is therefore reduced to a question of whether the teaching of the patent covers the alleged infringement. This doubt is resolved, as a question of fact, when answering the first Protocol question: Does the variant have any material effect on the way in which the invention works? This cements the change in focus established in Kastner and, although still not explicitly advanced as a change of direction, allows us to see that we see what could, and perhaps should, have been done overtly by the Court of Appeal in PLG. For, rather than removing the comfort of the Catnic/Improver formulation, a tried-andtested favourite of the judiciary, simple alteration of the presumptive burden within the test enables a more benevolent interpretation to be adopted. Modification of this burden also radically changes the focus of the questions, front-loading the assessment onto the first two and relieving the third of much of its impact. Therefore, the teaching of the patent becomes critical, as the key element in the test is now whether the variant has a material effect on the way in which the invention operates. As Aldous notes, echoing Hoffmann J’s comments in Improver, the answer to this question ‘depends on the level of generality at which one describes the way the invention works’.215 However, whereas Hoffmann J had then used this fact to promote the importance of the final question, in his opinion the only one to raise the issue of construction, Aldous utilised it to shift focus onto the first question. 212 213 214 215

Ibid, at 142 para. 23. See text accompanying n 48 et seq above. Above, n 169, at 332. Above, n 208, at 144, para 34.

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Therefore, he considered it necessary to construe the claim in order to determine what it told the skilled addressee about the way in which the invention worked. Utilised in this manner, the final question then simply becomes window-dressing which enables the court to demonstrate why the findings that it made in relation to the first issue of construction were correct. This conclusion is plainly evident when Aldous’ application of the test is considered. Whilst accepting that the defendant’s probe design did not correspond to the literal meaning of ‘centre-less’, he thought that the skilled addressee would nevertheless believe it to fall within the scope of the patent. He reasoned that all of the patent’s teaching was directed to overcoming the problem of pre-penetration of the tank. This much was clear from the description’s summary of the benefits of the invention: ‘By using a centre-less hole cutter (that is a hole-cutter not having a drill for forming a pilot hole), . . . early opening of the tank is obviated.’216 Claim 1 was not therefore ‘concerned with wandering. In general terms it sets out the basic invention, namely cutting in situ with an inert atmosphere’.217 Thus, it would have been inappropriate to have read ‘pilot hole’ as including a blind hole that did not penetrate the tank, as to do this would be to make ‘nonsense of the sentence’.218 When read in this manner with the focus on preventing pre-penetration, Aldous LJ considered that,‘at the appropriate level of description method 2 works in the same way as the invention’.219 The only alternative, as he had already noted, would have been to interpret the words ‘centre-less’ literally. Whilst this would mean that there was no infringement, it was also a position that Aldous considered had been outlawed by the Protocol and which could not, therefore, be adopted.220 As the defendants had taken the basic idea of the invention, ‘namely cutting in situ using an inert surround without pre-penetration of the tank’,221 they had produced a variant that worked in the same way and the first Protocol question could be answered in the negative. In relation to the second, the respondents had conceded that if the answer to the first question was ‘no’ then the fact it had no material effect would have been obvious to the person skilled in the art. Therefore, moving on to the final question, whilst accepting that the ‘centre-less hole cutter’ was an essential feature of the claim, Aldous was not of the opinion that this provided an answer in this case.‘Of course the centre-less hole cutter is an essential feature of the claim, but the issue is whether the words “centre-less hole cutter” should be construed so as to include the probe.’222 He considered that they should: The . . . skilled reader would interpret the claim as excluding anything that penetrated the tank lid before cutting had been completed. The words “centre-less hole cutter” are not

216 217 218 219 220 221 222

Above, n 208, at 143, para 28. Ibid, at 144, para 35. Ibid, at 143, para 28. Ibid, at 144, para 35. Ibid, at para 31. Ibid, at para 30. Ibid, at para 37.

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terms of art. They have been used by the patentee to distinguish the conventional cutter . . . and the prior art.223

However, as noted, this had effectively been presaged by consideration of the first question. The issue of construction had therefore moved. This conclusion is reinforced by Aldous LJ’s classification of the Protocol questions as simply ‘an aid to the decision which requires the claims to be interpreted to give fair protection and reasonable certainty.’Applying the Protocol directly, therefore, he stated that the patent disclosed a method of creating a hole in a tank in situ with a cutter and a tap with no pre-penetrating parts. ‘Fair protection would enable the patentee to monopolise just that . . . That would also give reasonable certainty.’224 This approach to the problem is interesting, as it reveals primary recourse to the Protocol’s directions in order to determine the ambit of the claim. Therefore, a literal interpretation is identified and the construction the court adopts is then moved away from this position. The change of direction from Improver is thus complete, for under this formulation it is not acceptable to ask the final question—‘Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention?’—as the primary, literal, meaning is abandoned. This said, the formula is still used. As well as raising questions concerning the point of applying the Improver/Protocol questions when construction is so clearly undertaken outside of their influence, this approach also raises a small issue of interpretation of the Protocol itself. The view taken, that a literal construction is outlawed, is not strictly correct, as the language used simply refers to acontextual interpretation, ie without recourse to the description and drawings, being prohibited. This still leaves open the possibility that the specification could be clear that a literal approach was intended. The position is not quite as clear-cut as Aldous LJ suggests. However, taking the teaching of the patent so clearly into account is an admirable step towards an objective and predictable approach, which avoids the presumptive pitfalls inherent in Hoffmann J’s original reinterpretation of Catnic.

The Majority View Despite deferring ‘entirely to the exposition of the law given by Aldous LJ’,225 the majority of the Court of Appeal disagreed with his conclusions on whether there was, in fact, infringement of the patent. Sedley LJ, considered that ‘the critical question is in the end one of first impression: is the appellants’ device a centreless holecutter?’226 As it had a central drill as its locating device, he concluded that was not. 223

Ibid, at 145, para 37. Ibid, para 38. 225 Per Sedley LJ, ibid, at 151, para 68. Mance, LJ, issues a similar statement at the beginning of his judgment (para 70) on the same page. 226 Ibid. 224

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Mance LJ gave the issue far lengthier consideration, but came to the same conclusion: there was no infringement. Utilising reasoning very similar to that of Hoffmann J in Improver, Mance focussed on the fact that the patentee had apparently not considered other ways of anchoring the rig that also avoided prepenetration. Thus: when conceiving and describing their invention, the appellant patentees did not contemplate the introduction of any central device, serving to centre the hole cutter. Either the idea of a centring device which did not pierce the integrity of the tank did not occur to them or, if it did, they put it aside for reasons which must have seemed good at the time. . . . If the appellants had seen this possibility, and intended to cover it, as a worthwhile development, I have no doubt that they would have expressed themselves differently and made that intention clear.227

Therefore, despite accepting Aldous LJ’s interpretation of the law, Mance LJ, seems to consider that the absence of specific reference to central anchoring was sufficient to suggest that they had not intended, for whatever reason, to include variants of the type employed by the defendant within their scope of protection. Consequeltly we return to the position under Improver wherein the presumption that Aldous had so clearly stated should be exercised in favour of the patentee, and that Mance had agreed was an accurate statement of the law, is reversed in application. Thus, the fact that the defendant’s variant was not within the strict language of the claim was taken to be evidence that the patentee had intended to exclude it. Welcome to literal interpretation. Turning to the Protocol questions, Mance LJ noted that they were ‘no more than aids to assist to arrive at the proper purposive construction’228 before concluding that the first two should be answered in the patentee’s favour. The result to the third, however, was tainted by the fact that the appellants: did not realise or consider that there was any or any workable solution, involving the use of a centrally positioned centralising drill or device, which would resolve the problem of penetration into the tank while at the same time avoiding the problem of wandering. . . . The applicants’ inventiveness involved, but was limited to, the recognition that penetration could usefully be achieved by the annular cutter.229

As Dunlop states, the ‘majority on the Court of Appeal believed that the patentee’s failure (which the court interpreted as being a matter of choice) to claim some broader formulation was the overriding consideration’.230

Comment The appeal in Wheatley v Drillsafe provides clear illustration that even where a single court considers a patent, and therefore all of those presiding over the issues have 227 228 229 230

Per Sedley LJ, ibid, at 155, paras 83 & 85. Ibid, at 156, para 88. Ibid, at 157, para 90. Dunlop,‘Court of Appeal gets to Grips with the Protocol’ [2003] EIPR 342, at 345.

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access to the same expert witnesses and agree on the same legal tests, differences of opinion can still arise. The majority’s approach is, however, somewhat lamentable, especially given Aldous LJ’s benevolent formulation of the main legal points; however, given the British courts’ past practice, it is far from surprising. Aldous LJ’s reversal of the presumption of intention, endorsed by the rest of the court, is most significant. It can be seen as a final gathering together of the strands laid down in his earlier judgments, in PLG, Assidoman and Kastner in particular, concerning the approach that should be taken to limitations in the claims. By examining the invention’s contribution to the art, the skilled addressee is able to work out what these limitations mean, and is then able to determine if the defendant has produced something that falls within the scope of the claims. This provides a more intellectually satisfying way of interpreting the patent than simply asking whether the court considers that the skilled addressee would understand the patentee to have intended strict compliance with the primary meaning of the words used to be an essential requirement of the invention. It also reduces the unpredictabilities inherent in asking the court to guess how this hypothetical person would interpret the claims, by providing guidance on what their thought processes should be. The problem, however, is that by front-loading the interpretation and asking what the patent teaches before moving on to the first Protocol question, the claims effectively need to be interpreted before being put into the formulation that is supposed to be used to interpret them. Therefore, the Catnic/Improver/Protocol formulation is, in reality, a sham used to justify the construction that has already been arrived at. Seen in this manner, Aldous LJ’s direct application of the Protocol is perhaps the more honest method of supporting the conclusion that has been reached. By adopting an investigation that centres on the teaching of the patent and the inventor’s contribution to the art, Aldous LJ effectively manages to align English and German practice in a manner that is far more acceptable than the Court of Appeal’s incomplete formulation in PLG. By adopting a clear structure to the investigation, looking at what the patent discloses to the skilled addressee and mapping this on to the claimed subject matter, the test allows the patentee to create an exclusive territory that is linked to their contribution to the art. As Aldous LJ noted in relation to the disclosures in Wheatley, the patent claimed a manner of creating a hole in a tank with a cutter and a tap with no pre-penetrating parts: Fair protection would enable the patentee to monopolise just that. . . . That would also give reasonable certainty. A skilled reader would realise that method 2 used the inventive idea disclosed in the patent. . . . Thus, he would realise that he was using the patentee’s invention, which he had sought to claim in words chosen to distinguish his cutter from what was conventionally used and the prior art mentioned in the patent.231

This approach acknowledges the impossibility of catering for every eventuality at the point of creation, and accepts that the claims’ language does not necessarily need to be tightly constrained in order for a construction to be predictable. The 231

Above, n 208, at 145, para 38.

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claims are still the manifestation of the patentee’s intention, and still form the boundary of protection; an interpretation contrary to their wording, or that entirely vitiates a claim element cannot be accepted. However, the skilled addressee evidently interprets the claims based on the teaching of the rest of the specification. Therefore, the patentee should only be restricted to the primary meaning of the wording used where a more benevolent interpretation is clearly inconsistent with their expressed intention. This application represents a truly purposive construction: looking at the patent from the point of view of the problem that is to be solved and protecting the inventive concept as bounded by the claims. However, to borrow Franzosi’s phrase, even if the courts were to adopt this approach across the board, we should not expect ‘uniformity because of that’.232 Mance LJ’s approach, for example, whilst adhering to the bones of Aldous LJ’s exposition of the law, clearly follows the orthodox route. His judgment discusses fairness in the context of certainty, so that the appellant’s ‘inventiveness’ is seen to be limited to that which, in the court’s opinion, was explicitly asked for—in this case hole cutters without a central spindle.233 The implicit argument here seems to be that to expand the patent’s effect beyond this point would be to add an uncertain degree of protection, and that this would not be fair to the patentee or to third parties. Therefore, the monopoly shadow cast by the patent should be limited to that explicitly claimed, and no more. In this context Mance LJ notes that: ‘if the appellants had seen [the possibility of a non-penetrating centre spindle] . . . and intended to cover it, as a worthwhile development, I have no doubt that they would have expressed themselves differently and made that intention clear’.234 Thus, whilst deferring to Aldous LJ’s account of the law, the majority appear to believe that, as this was an invention in a mature field of technology, the patentee235 could easily have conceived that there might be different methods of achieving the main innovative aim, ie avoiding pre-penetration of the tank, and that these should have been explicitly claimed. Mance LJ’s approach therefore comes perilously close to assessing the invention with hindsight and asking why the claims did not expressly include such an obvious variant within their scope of protection. Whilst it is accepted that this is essentially the same path as was trodden by Hoffmann J in Improver, it views the failure to claim as being a matter of choice which simply cannot be correct. It also leads us, as Dunlop points out, to a question that is critical to some of the most recent judgments: ‘What if the draftsman could not possibly have envisaged the variant at the time of filing?’236 Thus, despite the court’s acceptance of Aldous’ modified version of the law potentially marking a significant advance in the manner in which a patent is to be 232 Franzosi,‘Three European Cases on Equivalence—Will Europe Adopt Catnic?’ (2001) 32 IIC 113, at 123. 233 The reader will note the parallels between this approach and the comments of those patent attorneys adopting what was described as the ‘traditional view’ in ch 4, above. See text accompanying n 25 therein. 234 Per Mance, LJ, in Wheatley v Drillsafe, n 208, above, at 155, para 85. 235 Or at least the person drafting the patent. 236 See Dunlop, n 230, above, at 345.

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interpreted, Wheatley still demonstrates that the outcome of the interpretative exercise is essentially in the lap of the gods. This is stark illustration that the exact formula used has less of a bearing on the outcome of the case than the courts’ attitude to the patent grant itself. Formulas can be manipulated and tests applied in subtly different ways to achieve completely disparate ends; real conformity only occurs when the philosophical and theoretical underpinnings of the grant are aligned. Therefore, just as in chapter four, above, where the patent attorneys’ perception of their role, as architects or hired guns, affected the latitude they thought should be accorded to the claims they had drafted, so too must a judge’s view of the grant alter their perception of its interpretation. This, in itself, is sufficient to create significant unpredictability in the outcome of any given dispute. A system wherein success or failure is determined based on the subconscious bias of the judge determining the issue does not provide either the fairness or certainty demanded by the Protocol, neither party really knows where they stand.

Systemic Change Despite having reigned supreme for so long, cracks were starting to appear in the Catnic façade. The split in the Wheatley court emphasises the disparate means that were being used to get round its formulaic constraints. In many respects, and in many cases, it appears that the court had actually made up its mind long before the reasoning had been worked through, and had then bent application of the test to fit. If a narrow interpretation was thought appropriate then the fact the patentee had not investigated an area, or had investigated it and had still not claimed it, or had drawn a distinction somewhere in the specification could be used as evidence that a strict construction had been intended. On the other hand, if a benevolent approach was thought fitting then the teaching of the patent, the choice of the skilled addressee, or analysis of the specification would inevitably reveal this to be appropriate. The same set of facts could therefore provide wildly differing outcomes depending on the judge’s view of the function of the patent grant. This was clearly not a new problem at the time of Wheatley, yet by following the formula of Catnic/Improver the courts were able to state that they were adopting a position sanctioned by the Protocol, which trod the infamous middle line between the cliffface of literalism and the chasm of using the claims only as guidelines. Such was comfortable, if nothing else. However, such comfort was clearly ebbing, as is evident from both Aldous and Mance LJJ’s comments that the Protocol questions were simply aids to assist arrival at the proper purposive construction. Therefore, given the split in philosophies that can be detected within the Court of Appeal in Wheatley, and the fact that Aldous’ new approach favoured an up-front construction effectively requiring interpretation of the claims before they could be fed into the Protocol questions, it was really only a matter of time before the courts began to eschew them entirely. Unsurprisingly it was Aldous LJ who led the charge.

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Thus, in Pharmacia v Merck,237 a case concerning a patent for a non-steroidal antiinflammatory drug, he declared that whilst ‘The Protocol questions are normally a useful tool to arrive at the middle ground required by the Protocol. . . . [T]his is a case where the difficulties in application outweigh the advantages’.238 In providing his judgment, he therefore chose to refer directly to the combination of fairness and certainty laid down in the Protocol itself. The claims of the patent in this case referred exclusively to the hydyoxy, or enol, form239 of the active pharmaceutical compound, however the compound was tortomeric240 and had another form (called the keto form)241 that was inevitably produced when the compound was placed in solution. Aldous LJ accepted that this did not fall within the primary meaning of the claims, however, he was of the opinion that, in order to provide the fair protection demanded by the Protocol, it was reasonable to take into account the actual use of the product and what this would entail. Thus, the skilled addressee would appreciate, utilising their common general knowledge, that the inevitable result of actually taking the enol form was the creation of the other tautomer in solution. This conclusion was appropriate notwithstanding the fact that third parties would see that the keto form was not specifically mentioned in the claim, as they would know that the enol would exist in interconvertible equilibrium with the keto form. Aldous LJ reasoned that if, as had been suggested by the defendants, the claim were restricted to the tautomer specifically mentioned, ‘then claims to chemical compounds would have to be construed using literal interpretation outlawed by the Protocol’.242 In this case, once more, the wording of the Protocol is subtly mistreated in order to arrive at this conclusion. The Protocol simply outlaws an acontextual reading based on the words’ dictionary definitions, and not a literal interpretation per se. However, the point is clear; common sense is preferred to strict logic. Arden LJ came to the same conclusion and found infringement, although her path was more conventional in that she followed the Protocol questions. Her approach takes the presumptive burden that Aldous laid down in Wheatley to heart, as she noted of the third question that: she did ‘not agree with the judge’s holding that “the natural conclusion” to draw is that constituents not mentioned were expressly excluded. That cannot be a general rule. It would mean that the terms of a patent could never include an unspecified variant’.243 237

[2002] RPC 775. Ibid, at 796, para 40. 239 A form of the compound that contains the unsaturated alcoholic group CH=C(OH) (where the = is a carbon-carbon double bond). 240 A tautomer is the word used to refer to ‘each of two or more isomers of a compound which exist together as interconvertible forms in equilibrium, owing to the reversible migration of an atom or group within the molecule’. See ‘Tautomer’ in Trumble & Stevenson (eds), Shorter Oxford English Dictionary, (Oxford, OUP, 2002; 5th Ed). 241 Here the hydrogen atom at the end of the—OH group in the enol form migrates to the first carbon atom therefore forming the saturated group CH2C=(O) (where = is now a carbon-oxygen double bond). 242 Above, n 237 at 797, para 47. 243 Ibid, at 833, para 176. 238

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Whilst interesting in respect of the court’s willingness to abandon an apparently clear claim limitation (enol was a term of art understood by all) in order to avoid a manifestly unfair result, the outcome of Pharmacia is nothing new. As noted in chapter one, above, the English courts had clearly demonstrated such an approach under pith and marrow with the appeal in Henriksen v Tallon.244 However, the move away from the constraints of the Improver formulation is far more significant a development. This approach was continued in Warheit v Olympia,245 a case concerning a patent for self-adjusting utility pliers. Here the Court of Appeal thought the issue of construction to be straightforward enough on the facts to proceed without using the Protocol questions. Giving the only judgment,Aldous LJ was of the opinion that the defendant’s pliers clearly infringed the claims. His reasoning may be distilled to the fact that holding the patentee to an interpretation of the phrase ‘slidable and pivotable fastening means’ which excluded a composite structure made up of a number of parts would not have provided the fair protection required by the Protocol. Given the obviousness of the substitution involved in the alleged infringement, the requirement of certainty was additionally considered to be satisfied. Seen in this context, the Catnic formulation was rapidly being sidelined by Aldous’ fixation on direct application of the Protocol, adopting a judgment based on what would provide a mix of fairness and certainty. This approach appears to require consideration of what was made obvious by the patentee in their specification, bearing in mind the elements dictated in the claim, and can be seen to have moved claim interpretation in a new direction. Thus the obviousness of a variant, or even in the case of Pharmacia a direct substitution, was determinative of the end result. Whilst this, in and of itself, may be seen to provide a welcome step in the predictability and transparency of the grant, it also actually exacerbates the degree of freedom that the court inherited under the Protocol questions to decide the outcome of the case and then to rationalise it later. In addition, it adds a question of reward to the justifications for the grant, yet never expressly embraces this position. This leads to conflicting messages being issued in relation to the interpretation of claims which actually reduces the predictability of the grant, for as we have seen the direction from which the patent is approached has significant bearing on the level of protection that is rational under it.246 The approach adopted in Pharmacia also returns us to a position wherein we consider the literal interpretation of the claims and then extend outwards from this point to enable the patentee to gain fair protection. Indeed, in those of Aldous LJ’s decisions that we have discussed since Wheatley he can be seen to consistently refer to the literal approach and then distance himself from it. Whilst this is laudable in one sense, as clearly attempting to ground interpretation in the contextual view of the claims, notwithstanding the fact that it subtly misrepresents the Protocol’s demands, it also suggests a two-stage assessment is being undertaken wherein the 244 245 246

[1965] RPC 434. [2002] EWCA Civ 1161. See the discussion of scope in relation to the theories of protection advanced in ch 5, above.

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literal meaning of the claims is augmented by recourse to the teaching of the patent. Admittedly Aldous LJ’s approach is provided in the context of asking how the skilled addressee would interpret the claim based on the teaching in the specification and their own common general knowledge, but the effect is the same.Although adoption of a two-stage test may be considered acceptable if undertaken openly, it is another matter where it appears, as here, to be adopted by stealth. Furthermore, by focussing on the obviousness, or otherwise, of the variant/ substitution in question at the date of publication, we once again find difficulties arising where the alleged infringement is in some way inventive over the claimed product or process. In such a case we face similar problems to those experienced under the Catnic/Improver/Protocol questions, notably an apparent inability to find infringement of pioneer inventions. The problem occurs, as Dunlop explains, because by anchoring construction of the claim at the date of its publication, the question of obviousness ‘poses a hypothesis in which the later variant is viewed through the eyes of the skilled person at an earlier date’.247 This then raises the question of exactly how much this person should be told about the operation of the variant to enable them to assess whether it utilises the principle of the claim. Are they, for instance, told that it works in the first place, or is this left for them to deduce on their own on the basis of common general knowledge available at the time? Moreover, identification of the fact that the variant works in the same way, or utilises the patent’s inventive concept, is dependent upon the level of generality with which the working of the invention is described in the claim. This is significant, for not only does it mean that pioneer advancements 248 will be at a disadvantage because at the time of their creation techniques in the area would, by definition, have suggested only narrow routes down which to progress, but also there may be a perception at this time that a particular avenue, obvious in hindsight, would not work. Therefore the very inventions that most need the patent system for their existence are paradoxically the ones that still, even under Aldous LJ’s apparently broadening formulation, gain the least protection under it. This, in essence, is what occurred in Kirin-Amgen.249

Kirin-Amgen to the Court of Appeal The appeal in Kirin-Amgen concerned a patent for the manufacture of erythropoietin (EPO), a polypeptide that functions to regulate the production of red blood cells. The technology involved was complex, as can be deduced from parties’ agreement that the notional addressee would consist of a team of people, including three 247

Dunlop, n 230, above, at 346. ie those inventions that Scherer categorises as displaying a ‘spectacular technical contribution’. Scherer, n 58, above, at 448. 249 Kirin-Amgen v Transkaryotic Therapies Inc [2003] RPC 31 (CA). See ch 10, below, for discussion of the House of Lords’ judgment in this case. 248

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PhDs with several years experience in gene technology, molecular biology and cell biology, respectively. It would also include two laboratory technicians well acquainted with gene technology and biochemical techniques.250 The method described by the patentee entailed production of the protein utilising genetic engineering techniques whereby the DNA sequence encoding EPO was isolated and cloned outside of the host cell before being inserted into it for production. The alleged infringement utilised very different means to achieve the same result. Rather than isolating the DNA sequence, it used a process known as gene activation. Starting with a cell in which the EPO gene was already present but dormant,251 switched off by a negative regulatory element (NRE), the defendants’ technique introduced a nucleotide sequence that effectively overrode the NRE and switched on the gene. This caused the cell to produce EPO.252 Due to the complexity of the technology, the first hurdle to overcome was in understanding what exactly the patentee claimed to have invented, and therefore what the alleged variant was. At first instance, Neuberger J, as he then was, considered that the patent’s claims did not literally cover the defendant’s process as the ‘fundamental difference’ between the techniques used by the parties lay ‘between isolating and cloning an encoding exogenous sequence and transfecting a host cell with it, and inserting an exogenous promoter and facilitating sequences into a host cell to “switch on” the endogenous coding sequences’.253 The Court of Appeal agreed, but noted that to stop the analysis here ‘hid the real difference between the invention and the . . . [defendant’s] technology’.254 In other words, simple identification of the reason that the defendant’s product did not fall within the literal scope of the claims did not, in this case, identify the variant. Therefore, when Neuberger J, had referred to the ‘fundamental difference’ between the claim and the alleged infringement, and from that had concluded that the variant in the defendant’s process was that ‘the EPO-encoding DNA has not been isolated and the encoding DNA is not in a “host cell” ’255, he had not gone far enough. In reality, according to the senior court, the variant was found in the fact that whilst the patent claimed a DNA sequence suitable for expressing EPO when introduced into a host cell, the defendant had used an endogenous sequence which was activated in situ by the introduction of a construct to switch the gene on. When applying the Protocol questions, Neuberger J had concluded that the first question—whether the variant has a material effect on the way in which the invention works—should be answered in the negative. ‘In each case, one has . . . an “identical string of DNA”, namely the encoding regions of the EPO gene, expressing 250 All in all, a long way from Lord Diplock’s builder. See the first instance judgment of Neuberger J [2002] RPC 1, at 45–6, para 143. 251 This is the case in the majority of human cells, and for the majority of genes. 252 The reader will appreciate that this is a very basic description of the relevant techniques. For a more in-depth discussion see; n 249, above, at 39-50, para 12 of the judgment, discussing the discovery and production of EPO; 57-9, para 36, for a discussion of the defendants’ technique. 253 Above, n 250, at 161, para 612. 254 Above, n 249, at 62, para 49. 255 Above, n 250, at 163, para 619.

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EPO in the conventional and natural (albeit artificially massaged) way’.256 Therefore, at this level of generality, the invention and the variant worked in the same way. The Court of Appeal disagreed, noting that the correct level of generality with which the invention should be viewed is that with which it is described in the claim of the patent. Viewed at this level, the court thought it clear that whilst the heart of the invention was the discovery and sequencing of the gene that produced EPO, the claim was directed to an ‘exogenous DNA sequence suitable for expressing EPO when introduced into a host cell’.257 Therefore the variant was the fact that the DNA sequence was endogenous. With this interpretation of the patent there was no way in which the patentee could succeed in their infringement action. As a matter of fact, the claimed integer and the variant, as interpreted, worked in very different ways. However, as Neuberger J had noted when considering the identification of the variant and discounting this particular interpretation, this manner of looking at the claim seems ‘to concentrate more on the teaching of the patent in the specification, and not on what the relevant claims assert’.258 He had therefore chosen to concentrate on the language of the claimed disclosure alone. Yet, as explained above, the Court of Appeal’s approach is simply an extension of what Aldous had been doing since at least his judgment in PLG. The essential consideration had shifted and could now be seen to focus not only on the wording of the claim but also on the technical contribution that the patentee was seen to have made. However this had evidently not been clearly articulated and confusion over this point can be seen to have damaged the predictability of the grant. The Court of Appeal had therefore come to the conclusion that as the techniques worked in different ways, the defendant could not be said to have infringed. Having answered the first Protocol question in this manner, the court stated that it was ‘not necessary to go on and consider the second question on the assumption that the answer to the first question should be in the negative’. However, as a ‘considerable length of time was spent considering the judge’s approach to . . . [the second] question’, it decided to comment anyway. The court stated that, when answering the second question, it was important to bear in mind that it is ‘designed to secure a reasonable degree of certainty for third parties’.259 The judge had erred in viewing the way in which the invention worked in too broad a manner, so that the differences between the techniques were excluded from consideration. The skilled addressee had to be told of the allegedly infringing process at the date of the patent and from this vantage point would consider whether it obviously worked in the same way. The essential point here was that in 1984 (the filing date of the patent) the skilled addressee would not have realised that the allegedly infringing technique would work at all, let alone in the same way. Therefore there could be no infringement in any case. 256 257 258 259

Above, n 250, at para 621. Above, n 249, at 62, para 52. Above, n 250, at 164, para 622. Above, n 249, at 63, para 57.

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After concluding that there could be no infringement, the Court of Appeal considered whether this outcome was consistent with the middle line demanded by the Protocol. It concluded that it was: The patentee could not monopolise the gene per se as that existed in nature. The patentee therefore monopolised the DNA sequence encoding for EPO when isolated and in that respect was suitable for use to express EPO in a host cell. As of 1984 such a monopoly would have seemed to give fair protection. To seek to monopolise use of the sequence when not isolated by inserting a construct into a human cell would provide a monopoly not properly supported by the description in the specification. We also believe that third parties could reasonably expect that if they did not use a DNA sequence for insertion into a host cell, there would be no infringement.260

Conclusion Use of the filing date as the point at which the assessment for the Protocol questions is made is an interesting development in the Court of Appeal’s thinking. As noted above in relation to Catnic, assessment as of the publication date made no real sense when the aims/functions of the patent grant were taken into consideration. Therefore, in one respect, the Court of Appeal’s insistence on the filing date is a positive step, as it aligns determination of scope with the incentive function of the patent. However, although on a stronger intellectual footing than interpretation at publication, assessment at this date can still be seen to unfairly prejudice the pioneer innovator. By definition, things that could not have been considered to work at the date of application but which utilise the teaching of the patent (and are later shown to work) cannot infringe under the purposive construction.Yet perversely they may do if they fall within the literal meaning of the claims. Moreover, the shift brought about by Aldous LJ’s comments in Wheatley and the resultant modification of the presumptive burden will simply not assist those cases in which the assessment fails at the first or second question. Furthermore, the flexibility of the Court of Appeal’s approach, which allows it to both narrow and expand the construction of the claim depending on its perception of the teaching of the patent, is significant. Therefore, whilst advocating interpretation at the priority date it demonstrates a tendency to adopt a hindsight determination of the contribution of the patent when identifying the technical advance it represents in the art. This has a large effect on the issue of scope. As Neuberger J stated, here the patentee had made a breakthrough:‘he cloned the DNA responsible for the manufacture of EPO’,261 and this was important. Therefore at the time of the patent the advance was huge. It was only later when more subtle and efficient techniques became available that the contribution made by the patentee can be seen in 260 261

Ibid, at 63, para 60. Above, n 249, at 21, para 11.

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context, as the first step on a longer journey. The court therefore appears to be doing one thing whilst saying another. Interpretation is apparently undertaken at the date of priority and yet subsequent dealings evidently can be seen to influence the outcome of the interpretative investigation. The fact that the technological follower has utilised techniques obviously equivalent at the time of infringement to profit from the patentee’s teaching is seen to devalue and restrict the initial advance. However, the fact that someone else has done the same thing with equivalent means does not necessarily alter the value that the initial advance actually represents. This point brings us back to the justifications for the patent system, discussed in chapters three and five, above. In terms of providing incentives or rewards for innovation, the extent of protection should either relate back to the original advancement or should extend to cover techniques made obvious in its light. However, there is a palpable feeling that in the context of pioneer advances, such as in Kirin-Amgen, the court primarily views the patent as a barrier to the free operation of others in the field. Perhaps the view taken by the Court of Appeal in Kirin-Amgen can be justified on the basis that where others take the teaching embodied in the grant, then they have unfairly profited from the work of another and should be stopped. Yet, if only the inspiration has been taken there can be no infringement. Seen in this light, this aspect of the patent system bears a striking resemblance to copyright’s ideaexpression dichotomy. If the teaching of the invention, as identified by the court, is taken then there is infringement, however, if it is only the idea or inspiration that has been relied upon then this is outside of the patent’s scope. This approach to the claims would, however, have been easier to swallow if the principles were clearly articulated rather than being dressed up as adherence to what had now become outmoded application of the Protocol questions. This point aside, interpretation as of application (if actually applied) does, as Dunlop notes, appear to be consistent with Biogen v Medeva,262 where the House of Lords held that the date at which the sufficiency of the disclosure should be assessed is the priority date. This is because ‘a variant cannot fall within the scope of the claim if such scope would not have been supported by the description at the filing date’.263 However, whilst this is one interpretation that can be placed on the information function of the patent, it fails to take into account the fact that the specification continues teaching long after it is filed. This is significant if it is accepted that one of the justifications of the system is that it encourages disclosure of information that may otherwise be kept secret.264 Isolating this teaching and effectively freezing the information that the patent contains at the priority date may therefore be argued to represent a wholly unrealistic approach which fails to appreciate the impact that subsequent developments may have, particularly on the scope of pioneer inventions. Yet none of the economic or theoretical arguments concerning the patent grant, which may have helped navigation of this quagmire, were entertained in the case. 262 263 264

[1997] RPC 1. Dunlop, n 230, above, at 349. See further, text accompanying n 130 et seq in ch 3, above.

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Furthermore, the effect of the decision is to perpetuate a separation of literal from purposive construction and to essentially return to the two-stage assessment that had been prevalent under pith and marrow. However, rather than embracing this distinction overtly, the Court of Appeal, or more specifically Aldous LJ over a series of judgments, adopted it by stealth. The literal assessment of the scope of the claims is simply utilised to give light to an interpretation that should not be applied under the Protocol. Therefore, if there is no literal infringement, the court will consider the second approach and give the claims a purposive construction. The subtle shift in the assessment of the Protocol questions had also moved the elements of construction to an earlier point in the proceedings. Looking at the Court of Appeal’s analysis in Kirin-Amgen it is clear to see that the interpretation of the claims actually occurs in the background when the teaching of the patent is considered in order to identify the variant in question. On one construction, the essential element of the invention, around which the issue of interpretation can be seen to revolve, lies simpliciter in the discovery of the sequence for encoding EPO. Yet on another, the claim relates to the identification of an exogenous sequence suitable for expressing EPO when introduced into a host cell. Therefore, even before the Protocol questions have been asked, the claim has been construed. The combination of these elements had reduced the interpretation of the claims to another lottery. Not only could the Protocol questions themselves be manipulated in order to achieve whichever particular result that the court saw fit, but additionally the outcome was now dependent upon the manner in which the court interpreted the teaching of the specification and assessed its impact upon the wording of the claim. Predictability was suffering due to the fact that there was no key rationale that can be seen to underpin the judgments at this time. Reward and incentive theories competed for dominance, and it appears to have been entirely at the whim of the court whether a particular advance was seen as valuable enough to protect. Furthermore, in some cases, such as Warheit, the questions were being abandoned entirely as the issue of infringement was ‘clear’. Therefore, rather than providing a construction of the claim and working out infringement from the point of view of whether the defendant had trespassed within this exclusive territory, the courts were essentially making it up as they went along and then rationalising their decision later. Ironically, by eschewing the formulaic Improver approach and adopting a more free-flowing and direct application of the Protocol, Aldous LJ’s judgments in the period approaching his retirement embody exactly the same principles that the Court of Appeal in PLG had tried, but failed, to implement. However, whereas the assault launched in PLG was honest and overt, even if ultimately based on unsound principles and misunderstanding of the German position, Aldous’ preretirement attack was far stealthier. Constant reinterpretation dressed as ‘restatement’ of the essential elements of the investigation had changed the focus of the grant and introduced reward considerations into the mix. Therefore, whilst the wording of the claims still dictated the extent of protection, the invention’s contribution to the art was given added, but ex ante unquantifiable, significance and the

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issue of equivalence was approached by asking if the teaching of the patent rendered variants immediately apparent. By manipulating the prejudices and standards within the investigation, and by concentrating on what the court perceived the invention’s contribution to the art to be, Aldous LJ’s machinations were revealing the Protocol questions, as he had rebranded them, as an elaborate smokescreen used to justify a construction that the court had already arrived at by other means. However, he had also revealed the potential for a philosophical split between those that saw the patentee’s contribution as determinative of the degree of protection they deserved, and those that instead focussed on a more literalistic interpretation of the outlines drawn in the claims. To the latter, construction was a matter of ‘first impression’,265 whereas the former may be seen to concentrate more intently on the fact that the problem to be solved, and the inventive contribution that the patentee had provided as a solution, flavours interpretation of the claims. Thus, in reality, the extent of protection at this time may have been seen to depend almost solely on what the court believed the skilled addressee should be told about the significance of the claim wording itself, which in turn was almost exclusively reliant on the make-up of the court that heard the case. Predictability had been lost. Uncertainties inherent in the original Catnic and Improver formulations had therefore been substituted for an approach that was even more volatile. Seemingly the only guidance being given at this point related to how the patent should not be interpreted, ie literally, and even this was based on subtle misinterpretation of the Protocol’s language.Any other position appears to have been fair-game as long as it stayed within sight of the claims. The patents’ scope of protection outside of its literal incarnation was therefore difficult, if not impossible, to determine without a trip to court. Yet all of the covert reinterpretation of Lord Diplock’s original formulation that had been undertaken had been performed in the name of the Protocol, and was deemed to be in line with its demands. However, this is not the end of the matter, for the parties in Kirin-Amgen were granted leave to appeal to the House of Lords, and appeal they did.

265

See, eg, the comments of Sedley LJ, in Wheatley v Drillsafe [2001] RPC 133, at 151, para 68.

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10 Kirin-Amgen and Beyond Cast Adrift on an Sea of Uncertainty? The British courts have dealt effectively with colourable evasion, but they have failed to deal satisfactorily with the question of equivalents and it is in that respect that the new European law needs careful study. Beton & Heimbach,‘Claim Drafting and Significance—An Anglo-German Industrial View’, in Kemp (ed) Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983), at 43–4.

Introduction With the appeal in Kirin-Amgen 1 pending before the House of Lords, patent claim interpretation in the UK was in disarray. The inadequacies of the original Catnic 2 formulation had been perpetuated and magnified, with some additional problems thrown in for good measure. Decisions twisted and turned. In particular, Aldous LJ’s judgments post-PLG 3 demonstrate a meshing together and reinterpretation of the provisions laid down in Catnic which, by the time of his decision in KirinAmgen, can be seen to be taking the law in a new direction. By continually restating the provisions, each time in subtly expanded or altered form, and by manipulating the application of the tests that had been laid down, judicial freedom had been substituted in place of consistency. Moreover, direct application of what the Protocol was considered to demand of the determination of scope 4 had effectively led to a two-stage test being adopted wherein a literal interpretation was augmented by recourse to a purposive construction. Yet none of this had been made clear or explicitly acknowledged as a change of direction. Conflicting messages abounded. 1 Kirin-Amgen v Transkaryotic Therapies Inc [2003] RPC 31 (CA), discussed in text accompanying n 250–60 in ch 9, above. 2 [1982] RPC 183. The House of Lords’ decision in the case is discussed in text accompanying n 31–64 in ch 9, above. 3 [1995] RPC 287. Aldous’ judgments following this case are discussed in text accompanying n 169 et seq in ch 9, above. 4 Whether this is a strictly correct interpretation of the Protocol is another matter, see the discussion in text accompanying n 224 in ch 9, above.

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In addition, it was unclear under the prevailing tests whether the patent was to be viewed primarily as something that deserved reward or whether it should instead be viewed as a barrier to the free operation of others in the field. Indeed, there is significant confusion on this point within Aldous’ own judgments; in Kirin-Amgen for example, the patent appears to be treated as a barrier, perhaps due to its pioneering status, whereas in Wheatley there is clear evidence of a reward-based determination of scope. The criteria underpinning the choice of which approach to adopt was never made explicit in these, or indeed any other, decisions. The patentee, therefore, and equally their competitors, was left with an intractable problem of attempting to second-guess the approach that the court would take. Predictability was compromised. The House of Lords’ acceptance of the appeal in Kirin-Amgen was therefore most timely.

In the Interim However, in the period between the appellate courts’ judgments in Kirin-Amgen, a differently constituted Court of Appeal, without Aldous at the helm, had the opportunity to consider issues of construction in the context of an altogether simpler dispute. The appeal in Technip France SA’s Patent 5 concerned an application for revocation combined with a counterclaim for infringement of a patent related to laying flexible pipes offshore. When considering the question of infringement, Jacob LJ began by reminding himself, and the court, of the main principles that underpinned this area of the law. He produced an eleven point list of what he believed to be the central points.6 The list begins with a gentle reminder that the ‘overarching principle’ when considering a patent’s construction is, in fact, found within Article 69 EPC, which dictates that the extent of protection is to be determined by the terms of the claims.7 The Protocol simply forms a gloss to this key provision. Article 69, dictates that the claims must be interpreted in light of the description and drawings that accompany them: ‘In short the claims are to be construed in context’.8 When interpreting the claims in this manner, the inventor’s purpose is divined from the rest of the specification.9 ‘It further follows that the claims must not be construed as if they stood alone’;10 purpose is vital to a sensible construction. However, it has to be remembered that the inventor may have several different, and competing, purposes depending on the level of generality of his invention. It is the core inventive concept 5 6 7 8 9 10

[2004] RPC 919. The dispute is also known as Rockwater Ltd v Technip France SA. The list is provided in para. 41 of the judgment. Ibid, at 950-3. Ibid, at 950, para 41. Point a) in the list. Ibid, point b). Ibid, point c). Ibid, point d).

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(or the generalised concept of the invention) and not necessarily any of the specific embodiments that provides the purpose for construction of the claims.11 If another embodiment, or concept of the invention, is chosen,‘one is in danger of being unfair to the inventor’. Jacob LJ explains this point by making reference to his earlier judgment in Tickner v Honda Motor Co Ltd,12 in which he stated that: You learn the inventor’s purpose by understanding his technical contribution from the specification and drawings. You keep that purpose in mind when considering what the terms of the claim mean.You choose a meaning consistent with that purpose—even if that involves a meaning which, acontextually, you would not ascribe to the word or phrase. Of course in this exercise you must also be fair to the patentee—and in particular must not take too narrow a view of his purpose—it is the widest purpose consistent with his teaching which should be used for purposive construction.13

By explicitly laying out the core provisions as he understood them, Jacob, LJ, was clearly attempting to begin a tidy-up of the loose ends left post-Kirin by the Court of Appeal; he was laying the cards on the table. Indeed, it is apparent that by adopting this style of judgment, Jacob is far more cautious about the process of claim interpretation than Aldous had become in the approach to his retirement. However, the statement that fairness to the patentee means providing the ‘widest purpose consistent with his teaching’ is significant in its effect. By interpreting the patent in this manner, Jacob appears to be clarifying the distinctions implicit in Aldous’ more recent judgments. Therefore, the skilled addressee is to interpret the purpose of the patentee’s claims by examining the teaching of the patent, to enable them to see what has been disclosed. Thereafter, the actual interpretation of the wording used in the claims must be considered in light of this purpose. However, where there is a degree of ambiguity as to the construction, the benefit of the doubt should be given to the patentee as they would logically have wished for the broadest possible scope that was consistent with the principles they teach. If, on the other hand, a broad interpretation to the extent of the teaching cannot be upheld on the language of the claims then it must have been the patentee’s intention to confine their protection more narrowly.14 Therefore the suggestion is that the path required by the Protocol towards interpretation of Article 69 EPC is, once again being trodden. However, this time, the line taken is slightly clearer. Of course, this still does not answer the question of when the claims are to be interpreted, and nor does it cope with the issue of after-arising equivalents,15 or entirely eradicate the potential for sleight-of-hand manipulation of outcome, but it is a step in the right direction in that it makes the courts’ thinking more explicit. Jacob LJ did not, however, stop here, for the list continues. Therefore, ‘if the patentee has included what is obviously a deliberate limitation in his claims, it must 11 12 13 14 15

Ibid. point e). [2002] EWHC 8. Ibid, para 28. Above, n 5, at 951, para 41, point f) in the list. Nor could it on the facts.

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have a meaning. One cannot disregard obviously intentional elements’.16 This may potentially have a narrowing effect on the patent’s scope of protection, as it again invites the question ‘if it was so obvious then why didn’t the patentee claim it directly?’ In addition, the courts’ ability to provide a clear answer on this point once more depends upon the direction from which it approaches the patent grant; whether as reward or restriction. Point h) on Jacob’s list, the statement that: ‘where a patentee has used a word or phrase which, acontextually, might have a particular meaning (narrow or wide) it does not necessarily have that meaning in context’,17 adds nothing significant to the discussion, as it is simply a restatement of the principles already espoused in point b)—the claims must be construed in context. However, the example that is provided to illustrate this point again demonstrates adherence to the principle that it is the widest purpose consistent with the patentee’s teaching which should be used for purposive construction. Referring to Catnic he noted that in this case the word vertically meant ‘ “vertical enough to do the job” (of supporting the upper horizontal plate)’,18 and not ‘geometrically vertical’. Thus fitting in with what the patentee’s advance in the art was seen to have been. It is at this point in his discussion that the Improver/Protocol questions also get their first mention. They are classified as being of particular value when considering the difference of meaning between a word or phrase out of context and that word or phrase in context. However, as Jacob LJ asserts, once the word in context has been focussed upon, the questions do not assist in resolution of the ultimate inquiry: ‘what does the word or phrase actually mean, when construed purposively?’ As, by its very nature, this latter question is only possible to satisfy when the language is read in context, the meaning that could be ascribed to a word out of context should never be the focus of the court. Indeed, given the investigation within Article 69 must always be directed to what the claim term means to the skilled person taking into account the description and drawings, the issue of what any particular word may mean somewhere else simply never arises. Jacob had voiced concerns over ascribing an acontextual meaning to the words used in the claim and then moving on from this position when writing extra-judicially in 2003. His view on previous Court of Appeal decisions in which this sort of approach was habitually adopted was clear; such analysis was ‘pointless since Art 69 is aimed at the contextual meaning’19 and nothing more. Thus described, the Protocol questions were simply an aid in placing the variant in context. The question that remained, however, was whether the holistic purposive test could be considered to provide protection as a doctrine of equivalents or whether it was better understood as relating to mere colourable evasion of the claim. Jacob’s next point referred directly to this question: 16 17 18 19

Above, n 5, at 951, para 41, point g) in the list. Ibid, point h). Ibid. Jacob,‘Last Word: Comment from Justice Jacob’ [2003] Patent World 155, at 155.

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It further follows that there is no general ‘doctrine of equivalents’. Any student of patent law knows that various legal systems allow for such a concept, but that none of them can agree what it is or should be. Here is not the place to set forth the myriad versions of such a doctrine. For my part I do not think that Art 69 itself allows for such a concept—it says the extent of protection shall be determined by the terms of the claims. And so far as I can understand, the French and German versions mean the same thing. Nor can I see how the Protocol can create any such doctrine.20

Thus, a doctrine of equivalents was placed firmly outside of the scope of the Protocol’s influence. The construction of a claim could, however, still lead to the conclusion that ‘technically trivial or minor’ differences between it and the corresponding elements of the alleged infringement fell within its scope of protection; but this would have to be based on a purposive interpretation and not on the basis of equivalency per se. In other words, minor differences could be covered ‘because that is the fair way to read the claim in context’.21 Nothing, however, was said of previous cases, such as Kastner v Rizla,22 where skilful manipulation of the patent’s teaching had enabled the court to overcome potentially problematic deviation from the claim terms, and which could easily be described as importing a doctrine of equivalents by the back door. Thus, by simply shutting out explicit reference to any doctrine that extended protection outside of the wording of the claims, the court perpetuated the uncertainties created by prior decisions. Furthermore, it is clear that, in order to work out if a variant is ‘technically trivial or minor’, it is necessary to understand what the wording of the claim means out of context, as otherwise the triviality of a deviation cannot be apparent. Assuming, that is, that the variant still lies within the teaching of the patent, as otherwise it could not be treated as a variant at all. Therefore in essence, despite Jacob’s earlier comments about the irrelevance of ascribing an acontextual meaning to the wording of the claim, his later statements can be seen to reinstate the importance of obtaining this definition. Thus, we return to a two-stage pith and marrow test wherein a literal construction is augmented by the fact that ‘technically trivial’, perhaps better referred to as ‘inessential’, differences can still fall within the patent’s scope of protection. On the other hand, however, if a word has clear meaning in the context in which it is used then the court is not able to go against that meaning . . . Unless, of course, as in the Pharmacia23 decision, discussed in chapter nine above,24 the court views context as more important than the precise language chosen. Notwithstanding the foregoing, we see that this could still be the case under Jacob LJ’s direction as the patent must be construed in light of ‘the widest purpose consistent with [its] . . . teaching’. The test appears, therefore, to have moved full-circle so that we are still in a position where, to misquote Humpty Dumpty: when the

20 21 22 23 24

Above, n 5, at 951, para 41, point i). Ibid, point j). [1995] RPC 585, discussed in text accompanying n 198–207 in ch 9, above. Pharmacia v Merck [2002] RPC 775. See text accompanying n 237–44 in ch 9, above.

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patentee uses a word, it means just what the court chooses it to mean, neither more nor less.25 Jacob LJ ends his list by noting that ‘Purposive construction leads one to eschew what Lord Diplock in Catnic called . . . “the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge”. Pedantry and patents are incompatible’.26 However, the difference between a pedant’s view of the claims and the courts’ determination of whether an element is deliberate limitation is not entirely clear. In the end it probably depends upon which side of the bench you are sitting.

Comment As far as tidying up the law in this area, Jacob LJ’s attempts in Technip are somewhat lacking. Whilst the points in his list are clearly accurate statements of the positions that can be adopted, they do not really deal with much of the insecurity and unpredictability that the Court of Appeal’s constant restatements of the law in previous cases had caused. Additionally, the tension inherent in requiring a position to be adopted that, on the one hand, appears to invite a construction based on the ‘the widest purpose consistent with [the patentee’s] . . . teaching’, whilst, on the other, demands a hunt for ‘technically trivial or minor differences’ before protection will be granted, is also not adequately dealt with in the judgment. The former statement appears to elevate us to a position wherein the purpose of the teaching is promoted over the objective assessment of what the claims mean to the person skilled in the art, yet the latter again concentrates on elements made essential by those claims and suggests application of pith and marrow by another name. However, whilst colourable evasions are adequately provided for, equivalents are, once again, left out in the cold. As Beton and Heimbach stated when writing about the British tradition of claim interpretation just after the passage of the 1977 Act; ‘The British courts have dealt effectively with colourable evasion, but they have failed to deal satisfactorily with the question of equivalents and it is in that respect that the new European law needs careful study’.27 The outright rejection of equivalency as a means of determining infringement in Technip demonstrates that this view of the British system was just as applicable in 2004 as it was 20 years earlier. Moreover, the purposive approach advocated in Technip demonstrates the same potential for malleability as the Court of Appeal’s previous attempts at reexpression under Aldous LJ’s guidance. Therefore, despite an ex post analysis of the outcome of the case appearing satisfactory, due to what appears to be simple application of the accepted law, ex ante predictability of result was still low. Whilst the 25 The original quote reads:‘ “When I use a word,” Humpty Dumpty said in a rather scornful tone,“It means just what I want it to mean, neither more nor less.” ’ Lewis Carroll, Through the Looking Glass, (Bloomington, 1st World Library, 2005 (reprint)) ch 6. 26 Above, n 5, at 951–2, para 41, point k) in the list. 27 Beton & Heimbach, ‘Claim Drafting and Significance—An Anglo-German Industrial View’, in Kemp (ed) Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983), at 43–4.

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overall approach was settled, the underlying principles upon which that approach was based had still not been made apparent in any coherent manner. Unification and clarification was urgently required.

A Protocol Remastered However, at this point in time, other factors can also be seen to be vying for attention. At a Diplomatic Conference of the (then) 20 Member States of the European Patent Convention, held in Munich in November 2000, the text of the EPC was amended. The new text, imaginatively called the EPC 2000, was finally accepted by the Administrative Council of the European Patent Organisation on 28 June, 2001.28 This text was to enter into force not more than two years after the 15th Contracting State (of the then 20) had deposited its instrument of ratification.29 In June 2002, seven weeks before the Court of Appeal’s decision in Kirin-Amgen, the European Patent Office issued a statement suggesting that the ratified text was expected to enter into force at some point between mid-2005 and mid-2007.30 The ratification criterion was finally fulfilled when Greece deposited its instruments on 13 December, 2005.31 The EPC 2000 will therefore enter into force at some point on, or before, 13 December 2007. Under the new text, Article 69 and the Protocol were amended. Notably, paragraph 1 of the former now simply states that the extent of protection conferred by a European Patent shall be determined by the claims, as interpreted by the description and drawings. The contentious reference to terms/inhalt/teneur 32 of the claims was expunged by the Diplomatic Conference. The Protocol, however, underwent more radical alteration. It was split into two Articles, the first of which, entitled ‘general principles’, remains primarily unchanged from the previous formulation. It now reads: Article 69 should not be interpreted as meaning that the extent of the protection conferred by a European patent is to be understood as that defined by the strict, literal meaning of the wording used in the claims, the description and drawings being employed only for the purpose of resolving an ambiguity found in the claims. Nor should it be taken to mean that the claims serve only as a guideline and that the actual protection conferred may extend to 28 See originally, http://www.european-patent-office.org/epo/dipl_conf/pdf/em00003a.pdf. The European Patent Office has recently published a special edition of the Official Journal of the EPO, which includes the full text of the EPC 2000, implementing regulations and transitional provisions. Available at: http://www.european-patent-office.org/epo/pubs/oj007/01_07/special_edition_1_epc_2000.pdf . 29 See Art 8 of the Act Revising the Convention on the Grant of European Patents (available online at: http://www.european-patent-office.org/epo/dipl_conf/pdf/em00003a.pdf). 30 See http://www.european-patent-office.org/news/info/2002_06_07_e.htm. 31 A table showing the status of accession and ratification to the new text of the EPC can be found online at http://patlaw-reform.european-patent-office.org/epc2000/status/index.en.php. 32 In, respectively, the English, German and French versions of the original document. See the discussion in text accompanying n 10–13 in ch 7, above.

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what, from a consideration of the description and drawings by a person skilled in the art, the patent proprietor has contemplated. On the contrary, it is to be interpreted as defining a position between these extremes which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties.33

Barring cleaning up some of the relatively convoluted language of the original wording, the only major changes in this new incarnation are to be found in reference to the patent proprietor (rather than the patentee) and clarification that the middle ground advocated should combine both fairness and legal certainty. This latter point is worthy of short mention as it stresses that it is the application, and not necessarily the exact wording, of the test that is important. Indeed, as long as the outcome is predictable, it is difficult to see how it could be anything other than legally certain. Article 2 of the Protocol is, however, entirely new. The original proposal debated at the Diplomatic Conference had suggested the following sub-paragraphs: (1) For the Purpose of determining the extent of protection conferred by a European patent, due account shall be taken of means which at the time of the alleged infringement are equivalent to the means specified in the claims. (2) A means shall generally be considered as being equivalent if it would be obvious to a person skilled in the art that using such means would achieve substantially the same result as that achieved through the means specified in the claim.

However, the wording finally adopted by the Administrative Council is considerably tamer in its effect. It reads: For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.

The retreat from the originally proposed wording is lamentable, especially given the UK’s general reticence over adopting an interpretative regime that provides effective protection for equivalents. In terms of harmonisation potential there is also a significant difference between merely having to take due account of the vague notion of elements equivalent to those specified in the claims and actually defining what is meant by the term. The lack of any reference to the date of interpretation adds to this problem as it enables perpetuation of the discrepancy between the UK’s insistence on publication as being the relevant time for construction and the German courts’ utilisation of priority.34 As noted in chapter seven, above, it is critical that a harmonised European approach to claim interpretation is found, and this means more than simply aligning the language of the tests that are to be applied. It is therefore irrelevant that Germany has begun to adopt a Catnic-like construction, or the UK may be seen to be moving towards providing broader protection based on the technical teaching of the patent, if the underlying rationales of protection are left untouched. The orig33 34

The underlined words represent changes from the original text. See Cutting Knife I (Schneidmesser I) [2003] ENPR 309, at 320.

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inal revised text of the Protocol went far further towards achieving this aim of harmonisation than the accepted, watered-down, version. It therefore most regrettable that the original amendments were considered unacceptable to the member states at the Administrative Council. This said, the new language of the Protocol does at least go some way towards identifying common threads of harmonisation that still need to be effected. Explicit mention of protection for equivalents is a notable example that it may have been hoped should provide the impetus for British reconsideration of this topic. It is therefore with the impending changes to Article 69 EPC and the Protocol in mind that we turn our attention to the House of Lords’ decision in Kirin-Amgen itself.

Kirin-Amgen in the Lords The reader will recall that the outcome of Kirin-Amgen at first instance35 was a finding of infringement. Neuberger J considered that the fact that both the defendant and claimant’s cells had ‘an “identical string of DNA”, namely the encoding regions of the EPO gene, expressing EPO in the conventional and natural (albeit artificially massaged) way’36, was determinative of the issue. Therefore, the EPO gene sequence itself was considered to be the invention, and applying the Protocol questions led to the conclusion that the defendant’s method fell within the scope of the claims. In the Court of Appeal, on the other hand, Aldous, Hale and Latham LJJ overturned the judge’s finding of infringement, reasoning that he had viewed the invention at the incorrect level of generality and had therefore fallen into error when concluding that the claimed element and the variant worked in the same way. The appellate court considered the focus of the patent to be the production method, the exogenous isolation and insertion into a host cell of the EPO sequence, on which the defendant’s variant, activation in situ, had a material effect. However, the case represents more than just a difference of opinion between courts as to the precise interpretation placed on the claims.As can be seen from consideration of the case law leading up to the House of Lords’ decision,37 high-level attention to the issue of claim interpretation was long overdue. The appeal in KirinAmgen was the first substantive patent claim interpretation case to come before their Lordships since Lord Diplock had issued his judgment in Catnic almost a quarter of a century earlier. This fact alone rendered it of critical importance. However, adding to the case’s significance is the disarray that the law in this area can be seen to have slipped into, caused in no small measure by the Court of Appeal’s constant restatement and manipulation of the existing tests.

35 36 37

[2002] RPC 1. Discussed in text accompanying n 249, et seq in ch 9, above. Ibid, at 163, at para 621. See ch 9, above.

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In what has been described as a ‘characteristically broad-ranging review of the law’,38 Lord Hoffmann, originator of the Improver questions that had been used (and abused) as a basis for claim construction for almost 15 years, gave the only substantive judgment in the case.

Of Article 69, the Protocol and the Function of the Claims Lord Hoffmann began his discussion by considering the background to the invention and the terms of the claims before briefly mentioning the context of the appeal and then turning his attention to the statutory provisions. Much as Jacob LJ in Technip, his Lordship considered that ‘For present purposes, the most important provision is article 69 of the EPC’,39 which, he explained, follows what had ‘long been the law in the United Kingdom’,40 namely to identify the claims as functioning to clearly delimit the scope of monopoly that the patentee is to enjoy. This, he noted, was in stark contrast to the position prevalent in the Netherlands and Germany in the period before the passage of the EPC wherein the claims were simply viewed as a point of departure, and did not constrain the scope of protection in any way. The approach mandated by cross-state adoption of Article 69 consequently made it important to set clear limits on the ambit of the claims. This was vital not only for the benefit of third parties, who must be told of the area within which they are trespassers, but also because the interests of the patentee dictate that he ‘needs to be able to make it clear that he lays no claim to prior art or insufficiently enabled products or processes which would invalidate the patent’.41 Lord Hoffmann then explained that, despite adopting the UK’s principle of using the claims to provide the outer boundary of protection, the perception that the UK’s traditional methods of claim interpretation sometimes led to ‘unduly narrow and literal construction’ meant the EPC’s Contracting states were unwilling to go all the way and also adopt British interpretative methods as the model for all. Therefore, the Protocol was created to embody a compromise between extremes; on the one hand to avoid ‘legal technicalities’ of the kind embodied by the perceived British approach, and on the other to prevent states from simply looking to the essence of the invention and disregarding the actual claim terms. It was, however, erroneous, to conclude that the Protocol was concerned with representing a compromise between approaches on the construction of claims per se. Lord Hoffmann therefore reminds us, as Jacob LJ had done before, that ‘It is a protocol on the interpretation of article 69, not a protocol on the interpretation of claims’.42 His Lordship then proceeded to dissect the Protocol to substantiate this point. He explained that whilst its first sentence does deal with the interpretation of claims, and rejects giving the words their natural and ordinary meaning based on standard 38 39 40 41 42

Rich & James,‘Case Comment—Patents: Claim Construction’ [2005] EIPR N42, at N42. Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667 at para 19. Ibid, para 20. Ibid, para 21. Ibid, para 25.

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dictionary definitions, syntax and grammar, in favour of viewing them in context, the second does not deal with interpretation at all. ‘Instead, it makes clear that that one cannot go beyond the claims to what, on the basis of the specification as a whole, it appears that “the patentee has contemplated” ’.43 The Protocol’s last sentence therefore demands that, when assessing the scope of protection according to the content of the claims and avoiding literalism, a middle ground should be trodden that combines fair protection with reasonable certainty. All of this is uncontroversial. The Protocol, as explained in chapter seven, above, was intended to go some way towards aligning the disparate practices of the Contracting States evident in the period preceding adoption of the EPC, and to guard against ‘extreme interpretation’ of any of the official texts.44 In doing so, it paints a parodied picture of the historical approaches of these countries to the issue of claim construction and suggests a balance to be adopted on the issue of scope. However, the line that it draws is vague. As Armitage explains,‘The Convention has been able to express only the broad lines and it remains now for court jurisprudence to fill in the details’.45 He continues, noting that all Article 69 and the Protocol make clear is that ‘a stretched interpretation should not “do violence” to the language of that claim as read [in context]’.46 Returning to the case: Lord Hoffmann then turned his attention to ‘what used to be the principles (at any rate in theory) [utilised] by an English court construing a legal document’47 in order to divine the meaning of the Protocol’s first sentence. As part of this exercise, he entered into brief discussion of the history of the English rules of construction. This tour of past decisions and principles alighted first at Lord Porter’s classic statement in EMI v Lissen 48 that ‘If the claims have a plain meaning in themselves, then advantage cannot be taken of the language used in the body of the Specification to make them mean something different’.49 This was the position that the Protocol was intended to avoid. However, by the time the EPC was actually signed, English courts had rejected such rigid interpretations in favour of adopting a more purposive approach, which took into account the meaning of the claim terms in context.

Of Purpose and Context However, purpose and context were not everything. The claims would typically have been chosen by the patentee on skilled advice50 to delimit the scope of their 43

Ibid, para 25. ie the German, French or English language versions. See Armitage, ‘Interpretation of European Patents (Art 69 EPC and the Protocol on the Interpretation)’ (1983) 14 IIC 811, (Armitage, ‘Interpretation of European Patents’) at 814. 45 Ibid, at 815. 46 Ibid, 47 Above, n 39, at para 27. 48 (1939) 56 RPC 23. Although the report of Kirin incorrectly states this as (1938). 49 Ibid, at 57. 50 Above, n 39, at para 34. 44

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invention and to mark a clear boundary to separate their exclusive territory from the prior art. As such, Lord Hoffmann reminded the court that ‘the language [the patentee] . . . has chosen is usually of critical importance’.51 He continued, explaining that the conventions of language, word-meaning, and syntax, enable the expression of meanings with great accuracy and subtlety. The skilled man, he said, will understand this and ‘will assume that the patentee has chosen his language accordingly’.52 Therefore, as Hölder neatly summarises, according to Lord Hoffmann ‘The purpose of a patent specification is to describe and delineate the invention for the person skilled in the art. The patentee is responsible for the words since he can freely choose them’.53 Whilst in many ways this is an elegantly simple and attractive argument, which at first impression appears to be so self-evident as to be a statement of the obvious, it does have the slightly perverse effect of promoting an acontextual interpretation of the claims, as the patentee is now presumed to have been using words in their accepted fashion. Therefore, despite Lord Hoffmann’s acceptance that the first sentence of the Protocol rejects giving the words their natural and ordinary meaning based on standard dictionary definitions, syntax and grammar, in favour of viewing them in context.54 And notwithstanding acknowledgement that ‘the patentee is trying to describe something which, at any rate in his opinion, is new; which has not existed before and of which there may be no generally accepted definition’55, the assumption appears to be that a literal interpretation will be forthcoming unless this cannot have been the drafter’s intention. However, this view is never made express. Thus, the contradiction inherent in these divergent approaches inevitably causes confusion as it is now unclear which is to take precedence. Moreover, the outcome under any could also depends on what the skilled addressee is told about the manner in which the claims are to be construed, and what the patent’s primary purpose is understood to be. This confusion is further enhanced by conflicting statements on the purpose of the specification.At one point his Lordship explains that the person skilled in the art ‘reads the specification on the assumption that its purpose is to both describe and to demarcate an invention’56, whilst at another he volunteers that the ‘purpose of the specification . . . is no more nor less than to communicate the idea of the invention’.57 There is a gulf of difference between the skilled addressee being told that the specification they have in front of them for interpretation fulfils one or the other of these purposes. The former suggests an approach akin to the traditional British view where the claims mark the outer boundaries of protection, yet the latter is 51

Above, n 39, at para 34. Ibid. 53 Hölder,‘Exogenous Equals Endogenous? Claim Construction After the Amgen Decision’ (2006) 37 IIC 662 at 664. The first sentence of this quote closely parallels Lord Hoffmann’s words in Kirin, n 39, above, at para 33. 54 Above, n 39, at para 25. 55 Ibid, at para 34. 56 Ibid, at para 33. 57 Ibid, towards the end of the same para. 52

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essentially what the Germans traditionally understood by the term general inventive idea. Indeed, Lord Hoffmann himself recognises this point earlier in his judgment when he states that the old, pre-EPC, German approach was to treat the claims as a ‘point of departure . . . in determining the extent of protection, for which the criterion was the inventive achievement . . . disclosed by the specification as a whole. . . . What mattered [at this point in time] was the . . . inventive concept’.58 Therefore, despite the fact that we are told that ‘purpose and meaning are different’, and that the skilled addressee is employed as a standard to determine what the patentee would be understood to mean, this meaning, under the purposive interpretation disclosed in Kirin-Amgen, is heavily influenced by what the addressee is told of the purpose of the specification itself. In addition, at one point Lord Hoffmann states there is ‘no presumption about the width of the claims. A patent may, for one reason or another, claim less than it teaches or enables’.59 However, when combined with his Lordship’s later assertion that ‘a conclusion that [the patentee has] . . . departed from conventional usage obviously needs some rational basis’60, and the statement that the skilled addressee is aware of conventions of syntax, grammar and word-meaning and will assume that the patentee has chosen his wording accordingly,61 we see that the effect of the judgment is the very opposite of what is being said. We therefore may deduce that, in stark contrast to the position advocated by the German courts, Lord Hoffmann is viewing the patent as a restriction on the free-operation of others in the inventive area in question. However, this is never explicitly stated to be the case. Nevertheless, again we arrive at the feet of Lord Diplock’s statement that: persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside of the monopoly claimed, even though it could have no material effect on the way the invention worked . . . [unless it is clearly] apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants62 (emphasis added)

In this context, Lord Hoffmann therefore disagreed with Jacob LJ’s statement in Technip that, in order to be fair to the patentee, one must use ‘the widest purpose consistent with his teaching’.63 Noting that this seemed to confuse the ‘purpose of the utterance with what it would be understood to mean’.64 However, this is precisely 58

Ibid, at para 22. Ibid, at para 33. 60 Ibid, at para 35. 61 Ibid, at para 34. 62 Catnic Components v Hill & Smith [1982] RPC 183 at 243. 63 Technip, above, n 5, at 950, para 41. Point e) in the list. Discussed in text accompanying n 11–4, above. He did, however, brand the rest of Jacob’s list an ‘admirable summary of the law’. See Kirin, n 39, above, at para 33. 64 Above, n 39, at para 33. 59

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what the purpose allows the skilled addressee to divine. His Lordship clearly requires that the wording of the patent is to be interpreted in context; therefore purpose and meaning are inseparable unless context is ignored. The problem is that by shying away from adopting presumptions over the width of the claims based on the purpose of the utterance, the scope for returning to a literal, acontextual analysis of the words is increased. We return to Lord Porter’s analysis wherein if the language used is clear the court has no freedom to depart from it, as the meaning takes precedence over the purpose to which the language was put.After all,‘a conclusion that [the patentee has] . . . departed from conventional usage obviously needs some rational basis’.65

Of Protection for Equivalents This rational basis could, perhaps, have been provided by explicit acceptance of a doctrine of equivalents within English law, and it is to this topic that Lord Hoffmann now directed his attention. His Lordship’s discussion began with consideration of some of the historical factors which could have led the courts to consider such a doctrine was necessary. In particular he explained that: ‘At the time when rules about natural and ordinary meanings were more or less rigidly applied, United Kingdom and American courts showed understandable anxiety about applying a construction which allowed someone to avoid infringement by making an “immaterial variation” in the invention as described in the claims’. ”66 Therefore, the need to apply a doctrine that expanded protection outside of the wording of the claims was linked very firmly with the rigid interpretative practices of the past. In the UK, escape from the straightjacket of language was achieved by recourse to pith and marrow; whilst in the US, the same effect had been produced by explicit acceptance of a doctrine of equivalents. This is not, however, strictly an accurate summary of the birth of the doctrine of equivalents in the US, for it was first established under central definition theory in the case of Winans v Denmead.67 At this point in time, it was not used as an adjunct to supplement the literal scope of protection, but was in fact the primary tool used in the determination of scope. In addition, in cases like Westinghouse v Boyden Power Brake Co,68 the doctrine of equivalents had been utilised to restrict protection by limiting infringement to only some of the structures within the claims’ literal meaning. This method of limitation was based on a sufficiency of disclosure argument, its justification being that the patent could only validly cover the subject matter that the inventor had actually disclosed and equivalents thereof. Therefore, simply recounting the argument that the doctrine of equivalents tempers ‘unsparing logic’,69 and stating that it was ‘born of despair’,70 does a subtle disservice to the

65 66 67 68

Above, n 39, at para 35. Ibid, at para 36. 56 US 330 (1853, Supreme Ct). See text accompanying n 31–9 in ch 6, above. 170 US 537 (1898, Supreme Ct).

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true historical mantle. This point aside, it is not disputed that recent decisions in the US have shown the doctrine of equivalents to be a very powerful tool in expanding protection outside of the claims. Additionally, it is clear that the mess that the courts there have gotten themselves into concerning the limitations placed upon operation of the doctrine by file-wrapper estoppel is due, in no small part, to concerns over the runaway nature of this expansion. However, to take this as the inevitable outcome of explicitly adopting separate protection for equivalents is scaremongering of the highest order. It is interesting to note, for example, that the Japanese and German incarnations of the doctrine were not also highlighted for criticism; presumably because they did not conform to the picture that was being painted. Therefore, by choosing the worst-case scenario and labelling it as the paradigm, Lord Hoffmann engages in conceptual gerrymandering to further his cause. The doctrine of equivalents is therefore proposed as an antidote to literalism, rather than a method for ensuring that proper protection is given to the equity of the invention. Seen in this manner, it is but a short step to conclude that ‘If literalism stands in the way of construing patent claims so as to give fair protection to the patentee, there are two things you can do. One is to adhere to literalism in construing the claims and evolve a doctrine which supplements the claims by extending protection to equivalents. . . . The other is to abandon literalism’.71 Thus, Lord Diplock’s statements in Catnic, concerning adoption of a principle of construction that provided fair protection under a single-stage test, are utilised to give substance to the argument that opening the door to equivalency is an unnecessary step to take. Moreover, in Lord Hoffmann’s opinion, Article 69 ‘firmly shuts the door on any doctrine which extends protection outside the claims’.72 However, again this is to take a very narrow view of the effect of the language in Article 69 EPC. The text itself simply states that: ‘the extent of protection conferred by a . . . patent . . . shall be determined by the terms of the claims. Nevertheless, the description and drawings shall be used to interpret the claims’. As explained in chapter seven, above, the use of the word ‘terms’ in this sentence was a conscious attempt by the drafting committee of the Strasbourg Convention on the harmonisation of substantive patent law, Article 8 of which was adopted in practically unchanged form as the basis for Article 69 EPC,73 to avoid a purely literal construction being accorded to the claims. This policy decision is made manifest in the records of the drafting Committee, which state that the wording ‘seeks to lay down a principle for interpreting claims which is somewhere between the system in which claims may be interpreted strictly according to the letter and that in which they do 69 Per Lord Hoffmann in Kirin, above, n 39, at para 38, echoing the statement of Justice Learned Hand in Royal Typewriter Co v Remington Rand, 168 F.2d 691 (1948, Circuit Court of Appeals, Second Circuit), at 692. 70 Ibid, at para 41. 71 Ibid, at para 42. 72 Ibid, at para 44. 73 See Armitage,‘Interpretation of European Patents’ n 44, above, at 813.

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not play a decisive part in defining the limits of protection’ (emphass added).74 The Protocol’s guidance on the interpretation of Article 69 is almost an exact replica of the drafting Committee’s statement; requiring that literalism should be abandoned and that the claims should not serve merely as guidelines. Neither Article 69 nor the Protocol actually says anything about outlawing interpretation outside of the claims, as long as the extent of protection is still determined by their terms. The two concepts are clearly not, as Lord Hoffmann implies, necessarily synonymous. Whilst the word ‘determined’ can be recognised as relating to an exact boundary, it can also be understood to describe a position wherein a conclusion is reached via reasoning or investigation, in other words, where it can be deduced.75 Under the latter interpretation the claims still play a decisive part in the determination of protection. Notwithstanding these problems and questions over the correctness of this approach, Lord Hoffmann’s comments make it clear that if a variant is not expressly claimed, then the court will not be prepared to indulge the patentee by giving him ‘equivalents’ protection for an element that does not directly fall within the claim language.

Of the New Protocol and the Protocol Questions Despite being of the (erroneous) opinion that Article 69 EPC rendered it impossible to extend the scope of protection outside of the language of the claims using arguments about equivalents, Lord Hoffmann was not of the opinion that equivalency was entirely irrelevant to the determination of scope. He referred to Article 2 of the revised Protocol76 stating that, as a matter of common sense, ‘there is no reason why [equivalents] . . . cannot be an important part of the background of facts known to the skilled man which would affect what he understood the claims to mean’.77 In other words, the known equivalency of an element could be determinative in persuading the relevant addressee that the particular words used in a claim were simply a form of synecdoche or metonymy denoting a class of things that included the variant. In this context, the three Improver/Protocol questions ‘have been used by English Courts for the past fifteen years as a framework for deciding whether equivalents fall within the scope of the claims’.78 Therefore, despite being classified as ‘only guidelines, more useful in some cases

74 Quoted from Armitage, ‘Interpretation of European Patents’ ibid, at 814. See also Armitage, ‘Origins of Relevant Provisions of the Munich and Luxembourg Conventions’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983) (Armitage, ‘Origins’ in Kemp) at 7–15. 75 See ‘Determine’ in Trumble & Stevenson (eds), Shorter Oxford English Dictionary (Oxford, OUP, 2002; 5th Ed). 76 Reproduced in text accompanying n 34, above. 77 Above, n 39, at para 49. 78 Ibid, at para 52.

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than in others’,79 the Protocol questions were stated to have value in guiding the court in its equivalents analysis. However, this value should not be overstated. Lord Hoffmann is clearly of the opinion that the primary consideration is the notion of purposive construction: this forms the ‘bedrock of patent construction, universally applicable’.80 The Protocol, on the other hand, is a ‘protocol on the interpretation of article 69, and not on the interpretation of claims’.81 The questions are therefore not considered to form a legal rule. They are intended to be used as guidance in appropriate cases, but would only be of assistance in certain cases.As Curley and Sheraton state: ‘In particular, when dealing with patent claims relating to new technology, they might be inappropriate and lead to a wrong result, as had happened at first instance in the Amgen case’.82

Claim Construction on the Facts Turning now to the facts of the case, Lord Hoffmann began by discussing the approach to construction undertaken at first instance, noting that Neuberger J had fallen into error by suggesting that his initial construction of the claims had revealed the ‘ “primary, literal or acontextual meaning”. The judge’s construction could not possibly be described as acontextual. It was entirely dependent on context and reflected the evidence of how the claim would have been understood by men skilled in the art’.83 Therefore, application of the Protocol questions to an already contextually interpreted claim had led the court into error. ‘ “Acontextual meaning” can refer only to the conventional rules for the use of language, such as one finds in a dictionary or grammar’.84 However, given Lord Hoffmann’s earlier comments that conventions of language, word-meaning, and syntax, enable the expression of meanings with great accuracy and subtlety and that the skilled person will understand this and ‘will assume that the patentee has chosen his language accordingly’,85 the distinction may not always be clear. Nevertheless, the notion of strict compliance is stated to ‘sit most comfortably with the use of figures, measurements, angles and the like, when the question is whether they allow for some degree of tolerance or approximation’.86 This was, according to Lord Hoffmann, the case in Catnic. However, ‘In such cases, the contrast with strict compliance is approximation and not the rather pretentious figures of speech mentioned in the Protocol questions’. His Lordship continued:‘No doubt there are other cases, not involving figures or measurements, in which the question is whether a word or phrase was used in a strictly conventional or some looser sense. 79 80 81 82 83 84 85 86

Ibid. Ibid. Ibid at para 25. Curley & Sheraton,‘The Lords Rule in Amgen v TKT’ [2005] EIPR 154, at 156. Above, n 39, at para 63. Ibid, at para 64. Ibid. Ibid, at para 65.

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But the present case illustrates the difficulty of applying the Protocol questions when no such question arises’.87 The combination of these statements is a little confusing. To begin, Catnic was not concerned with figures, numbers, or strictly angles: the term was ‘extending vertically’. ‘Vertical’ is not an angle,88 and its use in the claim was clearly not the same as if the patentee had specified ‘extending at 90° from’. In addition, if the Protocol questions are simply ‘guidelines for applying [the principle of purposive construction] . . . to equivalents’89, as Lord Hoffmann states, then what is the equivalent of a number in a claim? As noted in chapter seven, above, the standard approach of the English courts is to treat numbers as being accurate to two significant figures90 unless this was clearly not the patentee’s intention.91 Therefore, any degree of tolerance is usually fixed. This conclusion is further compounded by Lord Hoffmann’s earlier comments that the conventions of language, word-meaning, and syntax, enable expression with great accuracy and subtlety, and therefore the addressee will understand this and ‘will assume that the patentee has chosen his language accordingly’.92 Therefore, given the exact nature of a numerical range, and the fact that extension outside of the claims is expressly prohibited, there is actually no room for approximation. For example, a concentration of 10–15 g/dm3 of an ingredient in a given solvent would directly cover concentrations in the range 9.50–15.49 g/dm3 because, to the degree of specificity laid down in the patent, this is 10–15 g/dm3. No approximation is involved. Therefore, beyond the conventional meanings there can be no further tolerance that will fall within the language of the claims. This confused argument aside, the point is relatively clear: where there is no question of whether a word used in the claim has been utilised in a strictly conventional or somewhat looser sense, the Protocol questions are liable to lead their user into error. In Lord Hoffmann’s view this was exactly what had happened to the judge at first instance in Kirin-Amgen. As there was no suggestion that the phrase ‘an exogenous DNA sequence for encoding EPO’ could have a broader meaning which would encompass the defendant’s activation of an endogenous sequence, the Protocol questions were irrelevant. By the time the reader had considered whether the patent was claimed at a level of generality that would make it immaterial whether the sequence was exogenous or not, the question of construction had been answered. His Lordship therefore favoured the Court of Appeal’s approach. He explained that, rather than viewing the invention as the discovery of the sequence of the EPO

87

Above, n 39, at para 66. When expressed as the contraposition to horizontal then it may be used to denote an angle, but there is no reason to limit the term in this way. It is just as sensible to use the word vertical to denote direction when a baseplate is sloped as when it is horizontal in the strict sense of the word. 89 Above, n 39, at para 52. 90 Pumfrey J in Halliburton Energy Services v Smith International [2006] RPC 25, at para 91. 91 See Aldous LJ’s statement in Lubrizol Corp v Esso Petroleum [1998] RPC 727 at 748 that: ‘The notional skilled man would read the claim and the specification using conventions adopted by scientists, one of which was that numbers are given to the number of figures that are significant’. 92 Per Lord Hoffmann in Kirin, n 39, above, at para 34. 88

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gene,93 it had ‘thought that the invention was a way of making EPO’.94 Seen in this light, it was apparent that a process for making EPO that worked in a different way could not have fallen within the scope of the claim. Lord Hoffmann agreed, stressing once more that there was really only one essential question to ask: ‘what would a person skilled in the art have understood the patentee to have used the language of the claim to mean? Everything else, including the Protocol questions, is only guidance to a judge trying to answer that question’. However, he then cautioned that there is no point in attempting to utilise these questions if they could only sensibly be answered by first construing the claim to find out what it means.‘In such a case— and the present is in my opinion such a case—they simply provide a formal justification for a conclusion which has already been reached on other grounds’.95

Of New Technology However, before expressing a firm conclusion on the issue of claim construction, Lord Hoffmann first discussed the impact of new technology on the case. He summarised the patentee’s argument as inviting an interpretation of the claim that included ‘any DNA sequence, whether exogenous or endogenous, which expresses EPO in consequence of the application to the cell of any form of DNA recombinant technology’.96 In other words, they had attempted to claim any way of making EPO by recombinant gene technology. The patentee alleged that this was justified for, at the time of the invention, they had provided the only way of making EPO in this fashion; it was only later that technology had moved on and other pathways had been made available. If the claim was limited to the single pathway used, and could not be construed in sufficiently general terms to include methods unknown at the priority date, then the value of a patent would be destroyed as soon as any new manner of reaching the same result was invented. In reply to this, Lord Hoffmann stated that he ‘did not dispute that a claim may, upon its proper construction, cover products or processes which involve the use of technology unknown at the time the claim was drafted. The question is whether the person skilled in the art would understand the description in a way which was sufficiently general to include the new technology’.97 There was considered to be ‘no difficulty in principle’with the possibility of interpreting general terms in the claims to cover embodiments that were not known at the time of drafting. This was, in Lord Hoffmann’s words, something ‘One frequently does in construing legislation’.98 As Cole notes,99 this is clearly illustrated 93

As had been the case at first instance. Above, n 39, at para 68. 95 Ibid, at para 69. The reader will note that this is exactly what appeared to have been happening in respect of the Court of Appeal’s judgments in the years leading up to Kirin. See further, ch 9, above. 96 Above, n 39, at para 78. 97 Ibid, at para 80. 98 Ibid, at para 80. 99 Cole, Fundamentals of Patent Drafting (London, Chartered Institute of Patent Attorneys, 2006), at 100. 94

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by comments of Lord Bingham in R (ex parte Quintavalle) v Secretary of State for Health,100 where he states: The court’s task, within the permissible bounds of interpretation is to give effect to Parliament’s purpose. So the controversial provisions should be read in the context of the statute as a whole, and the statute as a whole should be read in the historical context of the situation which led to its enactment. There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking. If Parliament, however long ago, passed an Act applicable to dogs, it could not properly be interpreted to apply to cats; but it could properly be held to apply to animals which were not regarded as dogs when the Act was passed but which are so regarded now. . . . A revealing example is found in Grant v Southwestern and County Properties Ltd [citation omitted], where Walton J had to decide whether a tape recording fell within the expression ‘document’ in the Rules of the Supreme Court. Pointing out . . . that the furnishing of information had been treated as one of the main functions of a document, the judge concluded that the tape recording was a document.101

Therefore, as Cole explains:‘It will be apparent that when construing statutes, the UK courts are prepared both to give words figurative rather than literal meanings . . . and to depart from specific wording. . . . Their willingness to do so is greater for newly developed circumstances than it is for circumstances existing when the statute was enacted. Purposive construction of patents could in principle give similar results’.102 However, cases in which this has been done are very rare. Lord Hoffmann’s comments in Kirin-Amgen are unlikely to change this. Returning to the decision in hand: despite having dismissed the Protocol questions as ‘merely guidelines’ that were ‘more helpful in some cases than others’, and not at all helpful where there was no word capable of being interpreted in a narrow or loose manner, the issue of whether new technology falls within the scope of the claims was stated to be ‘linked to a dispute over the meaning of the second Protocol question’.103 Lord Hoffmann explained that the problem revolved around whether the skilled addressee, when assessing if it would have been obvious that the variant worked in the same way, should be told that the variant worked at all. He noted that, depending on the type of invention under consideration, this piece of information could in itself be determinative of the investigation. Therefore if a claim referred to a second medical use of a specified compound and the question was whether this could be interpreted to cover derivatives of that compound, to ask the skilled addressee whether, assuming that the derivatives worked, they worked in the same way (ie had the same effect) would have been to beg the question.104 All this inves100 [2003] 2 AC 687. This case is also referred to by Lord Hoffmann in Kirin-Amgen, n 39, above, at para 80. 101 Ibid, at 695, paras 8–9. 102 Above, n 99, at 100–1. 103 Above, n 39, at para 81. 104 This is a condensed version of the facts of American Home Products Corporation v Novartis Pharmaceuticals UK Ltd [2001] RPC 159, referred to by Lord Hoffmann in Kirin-Amgen, ibid, at para 82.

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tigation did was to once again highlight the inadequacies of the Protocol questions themselves. It was therefore conceded that ‘perhaps a better answer to the dispute over the second Protocol question is that new technology is another situation in which the Protocol questions may be unhelpful’.105 When considering whether the claims encompass such variants the skilled addressee must, therefore, without further guidance or recourse to a doctrine of equivalents, answer the question of whether the description was, at the priority date of the patent, general enough to enable newly invented technology to fall within the scope of the claims. In practical terms, this presents a problem that is almost inevitably answered in the negative. In many cases the addressee’s viewpoint is tainted by the simple fact that at the priority date of the patent they would not consider it obvious that something not yet invented actually worked at all. Therefore, in cases of truly groundbreaking technology, we see a strange phenomenon being perpetuated. The context of the patent is viewed with hindsight in order to determine what the patentee has, at a later date,106 been seen to have invented. This hindsight assessment is then used in order to calculate the scope that the skilled addressee would, at the date of the patent (whether publication or priority), have interpreted the claims to provide for the patentee. This scope is not capable of expansion under a doctrine of equivalents so that the inventor may receive reward commensurate with their contribution to the art, as this would be to extend protection outside of the claims. The addressee may, however, consider that new technology could fall within the scope of the claims if the language used is sufficiently general to allow this. Yet bearing in mind the date of assessment, this is unlikely. Therefore, by adopting a single-stage test for the interpretation of claims, not only must the inventor of a pioneer advance contend with the spectre of Biogen insufficiency,107 but due to the lack of obvious variants at either priority or publication dates, they will also be tied to a narrow interpretation of their claims. Justification for adopting this approach appears to be drawn from perception of the patent as a monopoly right; its grant an exception to an otherwise outright prohibition.108 However, this is never expressed in as many words. The closest we come to a statement of this policy is found within the dictum of Chadwick LJ in Dranez Anstalt v Hayek:109

105

Above, n 39, at para 84. ie the time of the trial. Following from the decision of the House of Lords in Biogen v Medeva [1997] RPC 1, this describes the situation wherein the patentee has effectively claimed more than they have disclosed in their specification. Although lack of support is not specifically, in itself, a ground of revocation under s72 PA 1977, their Lordships stated that in such circumstances the patent could be revoked under s72(1)(c) for insufficient disclosure. For fuller discussion see Cripps, ‘Recombinant DNA Technology—A Patent Case in the House of Lords’(1997) 56 Cambridge Law Journal 262. 108 As intoned by s6 of the Statute of Monopolies, discussed in text accompanying n 111–3 in ch 2, above. 109 [2003] FSR 561. 106 107

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The grant or registration of a patent confers a monopoly. The statutory monopoly can be justified on the grounds that it is necessary (for a limited time) in order to encourage inventors, and those who fund them, to apply their skills and resources in developing products and processes from which the public will benefit.110

Whilst somewhat lacking as full justification for the adopted approach, this may help shed some light on the general perception of the patent right in the UK. Patents on pioneer advances, by definition inventions that make a spectacular technological contribution, pose significant problems when faced with this viewpoint. At the time of their priority the distance between patent and prior art is great. Additionally, at this point in time, the patentee’s contribution to the art, which may include the fact that the result can be achieved or that the invention works at all, may be massive. It could be expected that these factors would conspire to produce a broad interpretation. However, when faced with fear of monopoly, the opposite conclusion is forthcoming. The patentee’s actual contribution therefore takes second place to the rest of society’s apparent right to operate unencumbered. Whilst in one sense this is clearly admirable as a concept, it must not be forgotten that but for the patentee’s contribution the public would not be operating in that area at all:111 this is especially the case where a pioneer advance is concerned. Yet the perceptual prejudice that flows from viewing the grant as an exception to be closely restrained can be seen to colour the courts’ view of the claims, resulting in a warning to the patentee: don’t claim too broadly or you’ll get something that you didn’t disclose. It also sets up a preference for narrow interpretation when it comes to infringement. In considering these restrictions, timing is important. The discussion of whether the patent is broad or narrow is invariably undertaken in the light of subsequent events, notably the fact that another way to do the same thing has been invented or discovered. However, at the point of the invention the inventor’s way was the only way, this is why it was pioneer. The patentee is therefore sandwiched between opposing forces that squeeze the grant and render reward based on their contribution to the art inapplicable. The irony is that the first person to disclose the pathway that others follow may actually be seen to have revealed far more at the time that they made their original breakthrough than would be the case in hindsight. However, it is the latter factor, the fact that someone else has come up with another way of doing the same thing as the patentee that will inevitably be in the mind of the court when considering issues of scope. Thus, despite claiming otherwise, the grant will always be viewed with hindsight bias. The fact that someone else has later done the same thing using new (and now equivalent) techniques is used to demonstrate that the inventor’s contribution to the art was not as great as they thought it was at the point of their invention. However, the problem with this assessment is that the contribution of the first person to view something in a particular way is not always easy to quantify after the

110 111

[2003] FSR 561, at 571, para 25. Or at least not at as early a point in time as they are doing.

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event. When new becomes old, and old becomes accepted, the contribution of the pioneer often gets swallowed in the race to advance. If there is clear policy reason why the system should prejudice against such innovations then this should really be explicitly voiced, otherwise it is failing an important, and wide-ranging, field of invention. Despite superficially addressing the issue of infringement by after-arising technology, the appeal in Kirin-Amgen does not remedy this defect. In this case, Lord Hoffmann was of the opinion that there was no infringement. To interpret the patentee’s reference to ‘exogenous’ as including ‘endogenous’ would, to borrow Armitage’s phrase,112 have done violence to the contextual language of the claim.

Comment on Kirin-Amgen Let us be clear: there are many positive points about the results of the House of Lords’ investigation of the issues in Kirin-Amgen. The clarification of the Protocol questions’ status as guides, to assist in answering the overall question of what the skilled addressee would understand the claim wording, assessed in context, to mean, is welcomed.After all, one of the main criticisms raised of the approach of the Court of Appeal in the string of cases leading up to the Lords’ judgment in KirinAmgen was that the classic three-element test was simply being used as a manner of officially justifying a conclusion reached by other means. Therefore, the decision can be seen to have made significant steps towards tidying the loose-threads left in the wake these earlier cases and their constant restatement of the law. The approach advocated by Lord Hoffmann is also arguably more easily intelligible than that applied before: there is less of a smoke and mirrors feel about the investigation as a whole when the question is laid bare. Reduction of the assessment to a simple question of how the claim terms would be understood by the suitably skilled addressee is clearly a beneficial step. Indeed, when the decision is analysed it is evident that the vast majority of Lord Hoffmann’s comments are individually sensible: of course the claims determine the scope of protection the patentee is to enjoy, is that not what Article 69 EPC demands? Of course we must adopt a position wherein the resultant interpretation is externally verifiable and reproducible. To approve any other approach would be to invite capriciousness and unpredictability. Of course we must look at the issue of claim construction through the eyes of an objective viewer, versed in the technology in question, who will then reveal what the language used by the patentee actually communicates. As Meier-Beck indicates, this is a position without alternative.113 To do 112 Armitage,‘Interpretation of European Patents’, n 44, above, at 815. The quote referred to is reproduced in text accompanying n 46, above. 113 Meier-Beck, ‘The Scope of Patent Protection—The Test for Determining Equivalence’ (2005) 36 IIC 339 at 341.

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otherwise would not provide an objective assessment. If objectivity is eschewed in favour of asking what the patentee actually intended a term to mean, then without insight into the private thoughts of the patentee and their advisors this would be a hiding to nowhere. Of course the skilled person must know of conventions of syntax, word-meaning and grammar. How else would we interpret what the patentee is communicating? Of course the scope of the claims should be clear; if they are not, then neither patentee nor their competitors would benefit as both need a degree of legal certainty. However, the end result of this house-keeping exercise has inevitably created a narrower interpretative position than was previously the case. Lord Hoffmann himself implicitly acknowledges this position when he discusses the trial judge’s decision, noting that he construed the claims and then applied the Protocol questions which led him to the erroneous conclusion that there had been infringement. By removing these questions, the court will no longer be able to read variants into the claim where the addressee would not understand the patentee to be claiming them explicitly. Moreover, Lord Hoffmann’s decision also contains a number of subtle extensions of the universally acceptable principles that function to narrow the interpretation further. For example, we are told that the requirement of clarity is of paramount importance as the patentee needs to make it clear that they lay no claim to the prior art.114 Whilst the requirement of clarity is, undoubtedly, of importance, it is not immediately evident why it should be of paramount importance—especially in light of the reason given. Is the fact that the patentee would not want to claim the prior art not assumed from the fact that they are applying for a patent in the first place? If a construction could be placed on the claim that would invalidate it then surely the skilled addressee would appreciate that the patentee could not possibly have intended it to be interpreted in this way. Acontextual interpretation of the claims is also rejected—this is what the Protocol tells us to do—but is then reinstated via a series of reasonable, but ever advancing presumptions. Therefore, there is ‘no presumption about the width of the claims’,115 but the skilled addressee knows of conventions of grammar, wordmeaning and syntax, and ‘assumes that the patentee has chosen his language accordingly’.116 Despite the specification being a unilateral statement by the patentee in words of their own choosing,‘the words will usually have been chosen upon skilled advice’.117 Furthermore, the ‘practical life of a patent agent reduces the scope for a conclusion that the patentee could not have meant what the words appear to be saying’.118 The same sort of approach is then used to dismiss the question of whether we have a European doctrine of equivalents. To begin, equivalents protection is (incor114 115 116 117 118

Above, n 39, at para 21. Ibid, at para 33. Ibid, at para 34. Ibid, at para 34. Ibid, at para 35.

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rectly) identified as having grown out of despair with the literal approach to claim interpretation.119 It is painted as an alternative pathway to pith and marrow. The problems of allowing the patent’s scope of protection to escape from the terms of the claims are then discussed. It is here that the sleight of hand occurs; blink and you may miss it. The American picture of protection ‘unbounded by the patent claims’ distracts the reader’s attention from what has just been said:‘once the monopoly has been allowed to escape from the terms of the claims, it is not easy to know where its limits should be drawn’.120 The implication is that as soon as equivalents protection begins to allow deviation outside of the wording of the claims the patent’s scope immediately becomes unbound by them. This is simply not correct. Moreover, nor is the conclusion that Article 69 ‘firmly shuts the door on any doctrine which extends protection outside the claims’.121 To adopt this position is to take a very narrow view of what it can mean to ‘determine’. Finally, it is evident that the road to equivalency need not inevitably end in disaster. It is simply illogical to argue that the US system entertains a doctrine of equivalents ergo the doctrine of equivalents is responsible for the state of the US system. As any scholar of US patent law will tell you, the doctrine of equivalents is just one of many concerns. Furthermore, would it not be possible to learn from another’s mistakes even if this were the case? There is also confusion in the judgment. Confusion, for example, about what the purpose of the specification and the claims is: at one point the person skilled in the art ‘reads the specification on the assumption that its purpose is to both describe and to demarcate an invention’122, whilst at another its purpose is ‘is no more nor less than to communicate the idea of the invention’.123 As noted above, there is a gulf of difference in the patentee being told either one or the other of these as functions of the communication that they are asked to interpret. However, it is Lord Hoffmann’s pre-emptive strike at the amendments (not yet in force) to the Protocol that provides perhaps the most concerning aspect of the Kirin-Amgen decision. The problem arises from the repercussive effects that these comments have on other elements of the patent system directly related to scope.

Repercussive Effects For the majority of this work, we have considered the issue of claim construction almost entirely in the context of infringement, for it is here that the influence of Article 69 EPC and the Protocol are of supreme importance. However, it is clear that this is only half of the story, for under the current approach it is accepted without question that the same core interpretation must be adopted for the purposes of both infringement and validity. Indeed, if the situation were otherwise, the logic of 119 Whilst it can function in this manner, its roots demonstrate a different lineage. See text accompanying n 31–9 in ch 6, above. 120 Above, n 39, at para 39. 121 Ibid, at para 44. 122 Ibid, at para 33. 123 Ibid, towards the end of the same para.

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applying the Gillette defence,124 for example, would be lost. With this in mind, Lord Hoffmann’s requirement that equivalency be taken directly into consideration when determining the common general knowledge of the skilled addressee presents a problem. Whilst it is perfectly acceptable for the addressee to utilise their common general knowledge when deciding what a claim, read in context, would mean for the purposes of assessing infringement, it is another matter entirely to do this when considering generic validity per se. The reason for this is that a clear distinction must be drawn between novelty and inventive step. Section 2 Patents Act 1977 (the 1977 Act) clearly defines an invention to be new if it does not form part of the state of the art, whilst s3 states that an invention involves an inventive step if it is not obvious in light of the same. However, the whilst the core of the state of the art is defined by s2(2) of the 1977 Act as comprising ‘all matter . . . which has at any time before the priority date of that invention been made available to the public . . . by written or oral description, by use or in any other way’, there is a supplementary definition that applies for novelty only. Therefore, s2(3) adds that the state of the art also includes matter contained in previously filed but, at the priority date of the later application, unpublished, patents.125 As noted, this is only for the purposes of novelty, s3 expressly disregards prior art falling within s2(3) from consideration for the purposes of inventive step. In the vast majority of cases, the distinction between novelty and inventive step will be of relatively little importance, for the prior art in question will fall under the definition in s2(2) and it will be possible to attack the patent under both heads. However, in a small proportion of actions, such as the House of Lords’ most recent pronouncement in the area of novelty Synthon v SmithKline,126 the distinction is critical. In this case, the element of prior art that was alleged to anticipate the patentee’s claims fell under s2(3), in that it was a prior unpublished application at the point at which SmithKline applied for their grant. As such, the attack on the later patent’s validity had to be conducted solely on the basis of a lack of novelty. Inventive step could not be an issue.127 By adopting the Kirin-Amgen approach to the construction of claims, the House of Lords in Synthon exposes the problem with treating equivalents as falling within the contemplation of the skilled addressee under a single-stage test. The reason for this is that it would traditionally be perceived that obvious equivalents of the prior art should fall to be considered under the heading of ‘inventive step’ and not under novelty per se. In the words of Sachs LJ, in General Tire v Firestone,128 quoted with 124 A defence first laid down in Gillette v Anglo-American Trading (1913) 30 RPC 465 wherein the patentee is placed on the ‘horns of a dilemma’ between arguing for a broad enough construction to catch the defendant’s conduct and trying to avoid such a construction if it will lead to a counter-claim that the patent is invalid. 125 Including applications for which, providing they went at least as far as publication. 126 [2006] 1 All ER 685. 127 See s3 of the Act which clearly states that: ‘An invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art by virtue only of section 2(2) above (and disregarding section 2(3) above)’. 128 [1972] RPC 457.

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approval by Lord Hoffmann in Synthon,129 in order for the novelty of an invention to be successfully compromised the ‘prior inventor must be clearly shown to have planted his flag at the precise destination before the patentee’. ‘A signpost, however clear upon the road to the patentee’s invention will not suffice’ (emphasis added).130 Lord Hoffmann in Synthon continues stating that this means that ‘matter relied upon as prior art must disclose subject-matter which, if performed, would necessarily result in an infringement of the patent. . . . But the infringement must not be a possible or even likely consequence of performing the invention disclosed by the prior disclosure. It must be necessarily entailed’.131 If it is not then, evidently, the flag has not been planted. By adopting such an infringement test within the examination for the disclosure element of the novelty investigation, there is in any case significant danger of conflating questions of whether an invention is new under the definition provided in the Act, or whether it is, in fact merely an obvious extension of the prior art. However, by taking obvious equivalents into account as part of the skilled addressee’s common general knowledge when looking at the interpretation to be placed upon the patent’s claims, the court is, in effect, subsuming the test for inventive step under that for novelty. To illustrate this point, let us suppose, for example, the patentee claimed the use of a nail to secure elements within the invention and this was accepted as forming an essential part of that invention. Let us also suppose that in the alleged prior art the elements are secured with a screw and that this is the only difference between them. The prior art therefore teaches the skilled addressee explicitly to use a screw and nothing more. Substitution of the screw for equivalent means relates to a question to obviousness and not novelty per se. Therefore, under Sachs LJ’s guiding advice in General Tire, the prior art forms a signpost (albeit a very clear one) on the way to the invention and does not plant a flag at the point the patentee claims to have invented. However, whilst new, the patentee’s creation is clearly not inventive as the substitution for the nail is an obvious one to make. However, if we take into account obvious equivalents at the point of construing the patent’s claims, and ask whether the prior art would infringe, then the question of obviousness or novelty does not arise. The patent in this case clearly claims fixation with a nail, but under Kirin-Amgen the skilled addressee would be entitled to consider, based on their common general knowledge, that it also encompassed obvious equivalents thereof and that the word was therefore being used as a synecdoche for fixing means in general. Obviousness is subsumed under the heading of novelty via interpretation of the claims and the tests are in danger of being run together. Therefore, far from being a quick-fix to the problem introduced by the amended text of the Protocol, by effectively stating that the current legal position need not be amended as the law on claim construction already takes the new position into 129 130 131

Above, n 126, at para 21. See General Tire, n 128, above, at 486. Above, n 126, at para 22.

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account, the judgment in Kirin-Amgen places a conceptual spanner in the works at another stage in the proceedings. Clearly more attention needs to be paid to this matter.

Post Kirin-Amgen: Adrift on a Sea of Uncertainty? Despite the statement that the Protocol questions may be more useful in some cases than in others, it is clear that the effect of the decision in Kirin-Amgen has essentially been to remove them from circulation completely. In the first case to come before the courts after the House of Lords decision, Roger Wyand QC, sitting as deputy High Court judge in Mayne Pharma v Pharmacia Italia stated: after Kirin ‘it could be dangerous to use the Protocol questions . . ., even as a check’.132 So we may ask whether the destruction of the Protocol questions has left interested parties ‘cast adrift on a sea of interpretative uncertainty’,133 as Lord Hoffmann proclaimed it might when he removed them of their prominence. The answer to this inquiry is a firm no for it appears that as one set of questions has exited via one door, a different structured approach has entered through another. Lip service has certainly been paid to the most prominent aspects of the Kirin-Amgen judgment, but if it was Lord Hoffmann’s intention to remove rigid analysis and replace it with a softer approach to the question of construction, then this has clearly failed. Some cases immediately following Kirin simply asked the one compulsory question and left it at that—this is, for example, what Lewison J did in Smith International Inc v Specialised Petroleum Services Group Ltd.134—however, the common position appears to be slightly different. Therefore, whilst paying due respects to Lord Hoffmann’s statements, Jacob LJ in Mayne Pharma v Pharmacia Italia,135 one of the Court of Appeal’s first judgments in this area post-Kirin, referred to his summary of the principles laid down in Technip, noting that these had been ‘approved . . . (save for one minor matter)’ by the House of Lords.136 Therefore, as a ‘practical working guide’, he considered it would be generally sufficient to use this summary,‘stripped down to the bare essentials’. Thus: (a) The first, overarching principle, is that contained in Art 69 itself. (b) Art 69 says that the extent of protection is determined by the terms of the claims. It goes on to say that the description and drawings shall be used to interpret the claims. In short the claims are to be construed in context. (c) It follows that the claims are to be construed purposively—the inventor’s purpose being ascertained from the description and drawings.

132 133 134 135 136

[2004] EWHC 2458, at para 16. Above, n 39, at para 71. [2005] EWHC 686. [2005] EWCA Civ 137. Ibid, at para 5 of the judgment.

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(d) It further follows that the claims must not be construed as if they stood alone—the drawings and description only being used to resolve any ambiguity. Purpose is vital to the construction of claims. (f) Nonetheless purpose is not the be-all and end-all. One is still at the end of the day concerned with the meaning of the language used. Hence the other extreme of the Protocol—a mere guideline—is also ruled out by Art 69 itself. It is the terms of the claims which delineate the patentee’s territory. (g) It follows that if the patentee has included what is obviously a deliberate limitation in his claims, it must have a meaning. One cannot disregard obviously intentional elements. (h) It also follows that where a patentee has used a word or phrase which, acontextually, might have a particular meaning (narrow or wide) it does not necessarily have that meaning in context. (i) It further follows that there is no general ‘doctrine of equivalents’. (j) On the other hand purposive construction can lead to the conclusion that a technically trivial or minor difference between an element of a claim and the corresponding element of the alleged infringement nonetheless falls within the meaning of the element when read purposively. This is not because there is a doctrine of equivalents: it is because that is the fair way to read the claim in context. (k) Finally purposive construction leads one to eschew what Lord Diplock in Catnic called . . .‘the kind of meticulous verbal analysis which lawyers are too often tempted by their training to indulge’.137

The adoption of this framework as a de facto test guide the court appears to have been made complete with Pumfrey J’s decision in Halliburton Energy Services v Smith International.138 In this case he referred directly to Jacob LJ’s list of points laid down in Technip, stating that he would ‘set out that useful list of applicable principles’. However, he then took ‘responsibility for modifying principles (e) and (f) slightly to take account of the single criticism that Lord Hoffmann makes of this list’. Points (e) and (f) were therefore amended to read: (e) When ascertaining the inventor’s purpose, it must be remembered that he may have several purposes depending on the level of generality of his invention. Typically, for instance, an inventor may have one, generally more than one, specific embodiment as well as a generalised concept. But there is no presumption that the patentee necessarily intended the widest possible meaning consistent with his purpose be given to the words that he used: purpose and meaning are different. (f) Thus purpose is not the be-all and end-all. One is still at the end of the day concerned with the meaning of the language used. Hence the other extreme of the protocol—a mere guideline—is also ruled out by Art 69 itself. It is the terms of the claims which delineate the patentee’s territory.139

137 Ibid. Note that there is no point (e) as in Jacob LJ’s original list this was the one point that became subject of Lord Hoffmann’s criticism. See text accompanying n 53, above. 138 [2006] RPC 25. 139 Ibid, at 55, para 68 of the judgment.

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This approach was continued in Ranbaxy UK Ltd v Warner-Lambert Co,140 where Pumfrey J again applied Jacob LJ’s judgment in Technip and ‘by inference’ also the slightly different judgment in Mayne Pharma v Pharmacia.141 Other members of the Patents Court had also by this time seized upon Pumfrey J’s reformulation of the Technip test laid down in Halliburton, and this appears to have become somewhat of a standard. Therefore, in Ferag AG v Muller Martini Ltd,142 Lewison J after paying due deference to Lord Hoffmann’s new approach went on to adopt Pumfrey J’s modification of Jacob LJ’s earlier test. In the appeal in Ranbaxy v Warner-Lambert,143 Jacob LJ, stated that: ‘There was no issue as to how the claim is to be construed’.144 Pumfrey J’s summary at first instance had been unchallenged. More recently, however, Kitchin J can be seen to have adopted the general principle espoused in Kirin-Amgen without modification. In Merz Pharma GmbH v Allergan Inc 145 he stated that: ‘The key question is what the person skilled in the art would have understood the patentee to be using the language of the claim to mean; and that meaning must be determined from the claim in the context of the specification as a whole’.146 Therefore, we see an eclectic mix of cases wherein the ‘one compulsory question’ is sometimes applied without further guidance and sometimes supplanted by the modified version of Jacob LJ’s list from Technip. As an observer, the current approaches to determination of scope seems to rely less on the smoke and mirrors tactics of the past. However, whilst the principles appear clearer this could simply be because the tools of manipulation are better hidden under Kirin-Amgen’s apparently open question.

Conclusion So has a clear position been adopted? The divergence of approaches in the lower courts suggests that not all are happy with the lack of structure left in the wake of Kirin-Amgen. As far as investigations go, asking what the skilled addressee considers the claims to mean speaks volumes in terms of common sense. However the lack of expression of the guiding principles or underlying rationales for the adopted position147 could legitimately be argued to have a disruptive effect on the predictability of outcome. By providing the tribunal with more power to come to its 140

[2006] FSR 209 at 218–9, para 10 of the judgment Above, n 134. 142 [2006] EWHC 225. 143 [2007] RPC 65. 144 Ibid, at 71, para 7 of the judgment. 145 [2006] EWHC 2686. 146 Ibid, at para 107 of the judgment. 147 Those principles that are expressed in Kirin appear, at many points within the judgment, to have been abused or contradicted in practice. See the discussion of this point in text accompanying n 114–23, above. 141

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own, essentially unguided, conclusion, we return to Blanco White’s fears that under Catnic the skilled addressee’s view of the claims will be substituted for the ‘Court’s own idea of what would then have been seen to be essential to the effective operation of the invention’.148 If anything, this danger is greater under Kirin than before. However, this degree of flexibility appears to be an inescapable consequence of entrusting questions of interpretation to a hypothetical person. Yet the alternative, asking what the words mean acontextually, is a highly artificial and unfair process, notwithstanding the fact that it is expressly disavowed by the Protocol. Equally, reduction of the assessment to a series of essential points and presumptions does not really assist in making things clearly accessible, especially when those presumptions are wrapped in layers and sub-layers of unexpressed principle. Individual elements of Jacob LJ’s list from Technip (as amended) can be seen to pull the investigation in different directions based on how the court appears, but never says, it views the grant.Although certainly clearer than Aldous LJ’s subversion of the Protocol questions, the potential for sleight-of-hand manipulation is still significant. Moreover, if the convoluted structure of the three Protocol questions has merely been replaced by an 11 point checklist, then simplification of approach has not really been achieved. This is especially galling when it appears that the Technip formulation adds essentially nothing to Article 69 EPC and the Protocol’s own demands for interpretation.149 The claims still must be construed in context, in light of the description and the drawings, and in a manner that treads the delicate border between fairness and certainty. However, there is essentially nothing in any of the decisions that we have looked at that overtly considers the principled question of where this border should lie. We have discussion in Lord Hoffmann’s judgment in Kirin-Amgen itself about the dangers of an over-broad interpretation and the need for certainty from the point of view of both patentee and third parties, but there is relatively little that distinguishes this from bright-line arguments advocating literalism of approach. From the point of view of providing for free competition, it is self-evident that the border should be as clear as possible, however, as Meier-Beck explains,‘the most clearly visible border is not identical with the optimum border’.150 Therefore, departing slightly from the views of Lord Hoffmann on this point, as Armitage notes, in order to secure fair protection for the patentee it may be necessary for the claims to be ‘stretched in interpretation so as to correct forgivable drafting oversight (no draftsman of claims is perfect) or failure to foresee possible variants of the claimed invention (no draftsman is omniscient)’.151 In other words, in economic terms there must be considered to be a trade-off between the opposing constraints of fairness and certainty. This principle balance is required to be struck by Article 69 EPC and the Protocol; however, in addressing the issue we expose these provisions’ greatest weaknesses—their own imprecision. 148

Blanco White, Patents for Inventions (London, Stevens & Sons, 1983; 5th Ed) at 2-104. Notwithstanding, of course, the fact that the Protocol is classified as having a bearing on the interpretation of Art 69 and not on the interpretation of the claims per se. 150 Meier-Beck, n 113, above, at 340. 151 Armitage,‘Interpretation of European Patents’ n 44, above, at 815. 149

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Therefore, because the language used in Article 69 and the Protocol is itself capable of being interpreted with varying levels of literalism, different standards can be applied when operating under the same test. As Lord Hoffmann himself has stated, ‘No one has ever made an acontextual statement’, yet this principle seems to have passed him by when considering interpretation of these provisions of the EPC. By taking a literal view of the meaning of ‘determined’ within Article 69, for example, he was able to conclude that it ‘firmly shuts the door on any doctrine which extends protection outside the claims’.152 However, looking at the purpose of the provision it would have been perfectly possible to come to precisely the opposite conclusion; to understand it as being satisfied providing the patent’s extent of protection is deducible from the claim terms. Indeed, failure to realise that Article 69 EPC and the Protocol are not acontextual statements any more than the terms of a patent’s claims could be argued to be, opens up the latter’s construction to disharmony within a European system in which the purpose of the grant is viewed differently in different states. Ironically, therefore, Lord Hoffmann’s own dedication to purposive construction helps to illustrate why his comment that there is essentially no difference between the German and English treatment of equivalents (‘When Dr Peter Meier-Beck very kindly sent me comments on a draft of the Amgen [decision] a couple of years ago and explained the German approach to equivalence, I told him that the only difference there seemed to be between us was that I was brought up on the 1960s Oxford philosophy of language and he was brought up on Hegel’.153) is incorrect. As noted in chapter seven, above, the interpretative traditions lying behind the practices of the English and German courts are so disparate that it is sufficient to doubt the integrity of any apparently harmonised, yet objectively unpoliced, common position. Therefore, whilst there was a time when both the German and British states had the absolute right to self-determination on issues patent, and neither one’s approach could have been said to be any more right, or wrong, than the other, this is no longer an accurate statement to make. Both are wrong unless they conform to each others’ models. As justice is inextricably linked with the legitimate expectations of the parties it is not sufficient for a construction to appear to be the same on the surface if the foundations are different. The problem is that a European centralised application and grant process now gives rise to an expectation of a European centralised interpretation, and this is something that the current incarnation of the EPC does not adequately provide for. Therefore, as stated in chapter seven, either the underlying rationale of protection must be harmonised or there must be conformity mandated from above. Whilst it could be argued that the House of Lords comments in Kirin-Amgen have enhanced the clarity of the UK’s approach to the interpretation of claims, the decision has not gone any way towards remedying the pre-existing gulf in interpretative freedom between the ‘1960s Oxford philosophy of language’and ‘Hegel’. Yet in order to achieve harmonisation in Europe, this is precisely what needs to occur. 152 153

Above, n 39, at para 44. Hoffmann,‘Patent Construction’ [2006] CIPA Journal 727, at 731.

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11 A Summary ‘“When I use a word,” Humpty Dumpty said in a rather scornful tone, “It means just what I want it to mean, neither more nor less.”’ Lewis Carroll, Through the Looking Glass, ch 6.

The Journey So Far It has been the objective of this study to explore some of the issues connected with the determination of patent scope in the UK. During the course of our discussion we have searched for the purpose of the patent system, the bricks upon which it is built and against which it may be justified. Within part one of this work we looked at the historical factors that led to the current British position and the possible roots of an anti-monopolistic sentiment within the courts. The historical account is interesting for a number of reasons, not least in highlighting the fact that patents played a significant part in transforming English industry during the reign of Elizabeth I. Therefore, in historical fact we find the first, and perhaps most important, reason for why we (as society) may wish to allow the grant of a time limited monopoly to the creator of a new manufacture: in order to secure teaching of those skilled in the craft within the Realm. This is the reason that the patent system was instigated, and it continues to be an important factor in its utility. When first created, however, the custom of patent grants (for it could not yet be called anything more) was very different to that in existence today. To begin with, the system did not discriminate between true inventions (in the modern sense of the word) and those manufactures imported from abroad: indeed, it was the latter that were specifically targeted. The small number of patents and the clear connection with Crown also made policing a far simpler affair. Moreover, the consideration for the grant was a great deal more straightforward: the Crown simply required that the invention be ‘worked’ within the Realm. The price of a patent has therefore always been disclosure, but at the genesis of the system it was provided in very different form to that required today. It was only when the nature of invention changed so that new manufactures were conceived, rather than ‘borrowed’, by the British that we see a shift in the degree of protection sought by the patentee, and so the specification made its appearance. Therefore, in the period just before the Industrial Revolution, Nasmith and his ilk

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made the first tentative steps towards a modern grant in which the invention is described and the scope of protection demarcated by the patentee themselves. The historical account of patents in England also enables us to see some of the problems that have dogged the system since its inception. Therefore we noted the odious monopolies granted in Elizabeth’s Reign, and the continuation of abuses under James I, that lead to the Statute of Monopolies. As we have seen, the Statute was enacted in response to some of the more problematic grants of the day and declared all monopolies to be contrary to the law and utterly void.1 Patents for invention were excused from the rigours of this ban,2 but it is clear to see where the view that they must be narrowly construed as an exception to an otherwise outright condemnation of monopolies originates. The intense debate that surrounded the mobilisation of the anti-patent movement in the mid- to late-nineteenth century provided the backdrop for a discussion of some of the classical justifications of patent protection. This period in time was one of intense dissatisfaction with the operation of the system; patents were expensive, unreliable and often seen as a barrier to the progress of industry. The debate therefore provides a valuable snapshot of a point at which the grant had to be justified in order to maintain its existence. In addition, it provides evidence of a view that rendering temporary monopoly to the creators of new things may actually inhibit the progress of technology by providing a disincentive to invent, due to fear of litigation. It therefore enables us to see the other side of the coin, and begin to appreciate the effects that patent protection may have on downstream innovation. Therefore, in seeking rationalisation of the grant, two distinct views are seen to be in evidence by the end of the nineteenth century. The first is that of the patent as a tool of commercial leverage, as reflected in the works of Smith, Bentham, Mill and others, and upon which most of the modern theory can be seen to be based. The second is that of the patent as a constraint on trade, the old monopoly argument, demonstrated by Macfie, Rogers, Grove and the other abolitionists. What is clear from the progress of the debate is that an unregulated market was seen by the majority on both sides of the argument to be unsuitable for the fostering of inventive activity. Where the views differed, however, was in the choice of the best arrangement for that encouragement. At this point in time the legal system was ill equipped to deal with property in the intangible, and therefore restricted it as one would restrict title deeds to land; requiring the invention to be defined accurately and precisely. This sentiment is reflected in the words of Lord Russell in his famous dicta in EMI v Lissen when stating ‘[w]hat is not claimed is disclaimed’.3 However, the underlying justifications for providing monopoly protection remained constant; patents were a method of safeguarding inventors from the pressures of competition in order that an economic reason to invent (whether it be incentive or reward) and to disclose that invention could be found. 1 2 3

s1 of the Statute of Monopolies. See text accompanying n 111 in ch 2. By s6 of the Statute of Monopolies. (1939) 56 RPC 23 at 39.

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The nature of the patentee, and invention itself, had, however, undergone significant changes by the end of the anti-patent debate. The image of the lone inventor was fading, replaced by a new corporate structure of research and development. Therefore, whilst the overriding justification for the patent system can historically be seen to be the idea of individual encouragement, this was changing. In essence the justificatory theories were becoming more abstract; there was a move away from focussing on invention towards innovation. As a consequence of this shift, and also due to increasing numbers of patents, the specification had assumed a far more central role in the grant. Thus, s5(5) of the Patents Act 1883 introduced a requirement that the patentee explicitly claim what they consider to be their invention. The topic of the claims was picked up in chapter four when we considered the process of drafting the specification and gained insight into some of the reasons for seeking protection in the first place. Therefore, we looked at factors that determine the intrinsic scope of the grant, and saw the problems that face the patent attorney when creating the document. The discussion highlighted the fact that the traditional view of the patent may not provide an accurate measure of its effect. In particular, it emphasised that the grant is often sought for purely economic reasons connected with getting innovation onto the balance sheets. Therefore, it was perhaps misleading to ask what the purpose of the patent system is before examining its effect. In other words, rather than asking what the system aims to do, the key question may well be what does the system actually do? The answer to this question clearly has an impact on the scope that should be accorded to the grant, for it focuses attention on the dominant justifications for protection. This issue was discussed in chapter five, when we considered the effect of the patent grant by examining some of the simple economics of supply and demand. In addition, we looked at the patent as monopoly argument, and were able to conclude that, despite providing monopoly power, the grant is far from what may be called an economic monopoly. However, such misbranding of the effects of the patent add to the prejudice with which it is viewed. Thus, in the same way that the monopoly rhetoric was utilised so effectively by the abolitionists in the ant-patent debate, it still finds use today to apparently justify a narrow scope of protection. Following on from our discussion of the monopoly theory of patent protection we examined some of the modern rationales that have been advanced to justify extending patent protection to new and innovative technology. At this point, Scherer’s topology of invention was introduced as a method of assessing the effects of various post-classical theories of patent protection. However, it was noted that, far from providing any sound appreciation of the purpose or effect of the patent system, the various economic constructs are all lacking in certain aspects. In particular, they all appear to be theoretical without practical applicability, based, as they are, on a small number of non-randomly selected cases. The most modern theories can be seen to have moved on to consider the effects of portfolios and clusters of patents rather than individual grants. This is clearly important from the point of view of explaining patentee behaviour and demonstrating what can be considered to add value to the patent bundle; however, these theories, which almost

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by definition concentrate on the ex post use of granted patents, offer precious little to assist in ex ante justification of the system. Therefore, whilst they do provide a platform for further consideration of a model in which strength of numbers can dramatically outweigh a simple aggregation of the value of individual grants, even this approach to the patent system gets us little further than the point at which we left the classical theories. Therefore, by the end of our consideration of chapters three, four and five (Patents within the Market Economy), it was clear that the patent system’s primary purpose is as a commercial tool and thus finds justification based on maintenance of the status quo. This is not to say that the other theories play no part in the provision of patent protection, but rather that once a system is in operation it is actually impossible to say whether it operates to the net benefit or detriment of the state. Therefore, the question of scope should cease to be one of finding the best level of protection given the justification of the grant, and move to be more a matter of personal choice, based on what best suits the current technological standing of the nation. With this in mind, it is clear that the one size fits all approach of harmonisation, in which developing countries have developed states’ IP systems imposed upon them, lacks intellectual rigor. In part two, we moved to consider the manner in which a patent’s scope of protection is determined in three of the world’s main Patent Office centres—namely the US, Japan and Europe (picking Germany and the UK as the states for comparison). In a far more graphic manner than the more theoretical chapters, these comparative studies highlighted the patent cannot be viewed in isolation; it must be seen in the institutional and administrative environment in which it operates. In this context the Japanese experience is particularly enlightening as it proves that significant progress can be made in the face of, or perhaps because of, narrow protection. The patent clusters that were prevalent in Japanese practice before reforms expanding the scope of protection often operated to the detriment of the foreign patentee. However, the process of incremental advancement that the narrow grant made possible was one of the key factors in Japan’s technological explosion. Just as early British grants encouraged importation of foreign ideas, so too the Japanese system survived on the assimilation of overseas pioneer inventive effort. In contrast, both the German and the US patent systems traditionally provided rather broad protection; the latter by way of the doctrine of equivalents, and the former by utilising central definition theory and protecting the general inventive idea. However, in both cases there are restrictions on the degree of latitude with which the claims are to be interpreted. In Germany, this came from the Patent Office’s strict requirements for the form in which the claim was to be drafted, and in the US it comes from the application of restrictive doctrines such as prosecution history estoppel. In neither case does a beneficial construction of the claims render the interpretation too uncertain for the underlying principles of the patent system to operate as long as the rules relating to construction are known. This really is the vital point evident throughout the foregoing discussion: predictability is the key. The patent system can only achieve its desired aims and

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objectives, whatever they may be, if the process is transparent. Institutional practices surrounding the grant can, and do, operate to gain the maximum benefit from whatever principles are currently utilised to mark the bounds of protection. In chapter four, for example, we saw that the majority of patent attorneys interviewed in connection with this work approached the claims assuming that they would be interpreted in a literal sense. This has to be correct from their perspective, as it would be negligent of them (if nothing more) to rely on a beneficial interpretation somewhere later down the line to justify cutting corners. However, this bright-line approach is not necessarily one that provides the optimum degree of protection. As Armitage states, in order to secure fair protection for the patentee it may be necessary for the claims to be ‘stretched in interpretation so as to correct forgivable drafting oversight (no draftsman of claims is perfect) or failure to foresee possible variants of the claimed invention (no draftsman is omniscient)’.4 A balance must therefore be struck that provides for the underlying rationale of the grant, protecting its utility as an item of commerce and yet also ensuring that the historical virtues of the system in encouraging and rewarding innovation and disclosure are not undone. Predictability is therefore key.

Of Fairness, Certainty and Harmonisation The main trend that can be seen to flow through this work is therefore that predictability or transparency of approach has a value that, in many cases, is far higher than vague notions of fairness and certainty. Indeed, it is clear that fairness in particular causes significant problems as it can only really be understood with reference to what is ‘unfair’. This is not, in and of itself, a term of art, as it has everything to do with the expectations of the parties involved. The narrowest possible interpretation of a patent’s claims is therefore perfectly ‘fair’ if that is what everyone is expecting. Equally, a broad protection of the general inventive idea is also fair (and indeed certain) if background experience has rendered this method of construction predictable. Indeed, as Lord Hoffmann states in Kirin-Amgen:‘The claims must be construed in a way which attempts, so far as is possible in an imperfect world, not to disappoint the reasonable expectations of either side’.5 Fairness is therefore based on what, in turn, is reasonable. As such, we are locked inside a second definitional conundrum of what reasonable expectation actually is, and when it must be determined. Logically, parties that bring infringement actions no doubt consider it unreasonable, at that point in time, that the other party is operating within what they believe to be their exclusive territory. Parties that resist an infringement action, on the other hand, logically think it unreasonable that the 4 Armitage,‘Interpretation of European Patents (Art 69 EPC and the Protocol on the Interpretation)’ (1983) 14 IIC 811, at 815. 5 Kirin-Amgen v Transkaryotic Therapies Inc [2005] 1 All ER 667 at para 47.

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other party has charged them with infringement. The reasonable expectation of each is that they will win; otherwise the case would be settled.6 However, this circularity only applies when there is no objective standard against which to measure reason: in other words, where the underlying purpose of protection is not made clear. This is the essential problem with the Protocol’s approach: whilst mandating a pathway that must be trodden when interpreting the degree of latitude that should be given to the interpretation of Article 69 EPC, it does nothing to align the Contracting States’ underlying approaches to the treatment of the patent. Therefore, the point from which the patent is viewed, whether as legitimate reward or as obstruction to free operation of others, is objectively unpoliced. In terms of progressing towards a centralised European position, the British approach to claim interpretation has come a long way from the pseudo-literal constraints of the House of Lords’ decision in EMI v Lissen,7 wherein acontextual interpretation ruled. Catnic itself played a large part in this modernisation of approach, however, as noted, it also created a suspect legacy of narrow tests and dubious presumptions that hindered development of the law. The subsequent discussion of Lord Diplock’s test in Improver v Remington8 served not only to reformulate the questions, but also to highlight some of their most restrictive criteria. Subsequently, however, under what Turner describes as ‘the guise of loyalty to Catnic’9 it is possible to detect a subtle shift in the courts’ interpretation of the patent towards more liberal construction. In this manner, the advances made by Aldous LJ in the string of cases running from Kastner v Rizla10 to Kirin-Amgen11 in the Court of Appeal were, in one aspect at least, fulfilling the policy of patent protection as the patentee’s reward saw the prospect of being increased by more liberal interpretation. Unfortunately, however, this came at a cost: unpredictability. As we saw in chapters two and three, the essential historical justification for the patent system is that it is an efficient form of advancing the technological standing of the state. However, this fundamental rationale can only be effective, indeed will only remain true, when the justification for providing that level of protection is clear; unfortunately the ground-shifting that had occurred in the Court of Appeal’s judgments under Aldous LJ, was not. The modifications that were instituted, which allowed the judge more flexibility in deciding the outcome of individual cases by extolling an inventive step requirement as the focus for construction, had been undermining the traditional view of the patent as incentive. With this view weakened, and reward considerations entering the equation, the objectivity of the interpretative exercise was also damaged as it was no longer clear which, if any, justification was to maintain precedence. A position was reached wherein it was uncertain whether the patentee’s contribution would be deemed such that protection 6 7 8 9 10 11

Barring, of course, extended wars of attrition. (1939) 56 RPC 23. [1989] RPC 69 (Court of Appeal, Interim); [1990] FSR 181 (Hoffmann J, substantive hearing). Turner,‘Purposive Construction—Letter’ [2001] EIPR 118 at 118. [1995] RPC 585. [2003] RPC 31.

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based on the technical teaching should be forthcoming, or whether the wording of the claims themselves would hold dominance. The apparent liberalisation that Aldous LJ’s approach had engendered by consideration of the invention’s technical contribution thus fails on two grounds. First, on the ground of predictability: it had introduced further uncertainty into the equation when determining the variables that affected the way the claim was to be viewed and ultimately interpreted. Second, on the ground of fairness: where the legitimate expectations of the patentee at the date of the invention were different to those of competitors at the date of the infringement action. In addition, by muddying the justifications for the patent grant it had removed the definitional certainties of what constitutes a reasonable expectation in the first place. Under Kirin-Amgen at least this one layer of unpredictability has been swept away with clarification that there is only one compulsory question: what does the skilled addressee consider the language of the claim to mean? However, the decision still leaves many things unsaid; fundamental points of policy that we must pick over the case’s carcass to discern. When this process of forensic examination is undertaken, it is apparent that Lord Hoffmann’s judgment actually does much to retreat from the advances that had already been made towards Anglo-German harmonisation on the issue of claim scope, whilst proclaiming that there was never a difference in the first place. The subtle creep back towards literalism is clear from the tests and presumptions that the case introduces; although none of these are expressly recognised as such. This is a significant problem, that alone provides the fundamental explanation as to why there cannot be harmonisation in Europe without a Common Appeal Court. States simply advance upon the issue of construction from different sides. Notwithstanding that the Protocol questions were abused to provide ex post justification for a construction reached on other grounds, their utility as a comparative tool had been advanced since the German courts’ adoption of a substantially similar enquiry. The Schneidmesser 12 questions, by taking their form from Hoffmann J’s (as he then was) reinterpretation of Catnic in Improver v Remington,13 therefore provided an opportunity to compare the approach to claim interpretation in the two jurisdictions and to highlight discrepancies when using a common construct. Following this, it is clearly evident that different principles were at play. Given the manner in which Kirin-Amgen has altered the UK’s approach to claim construction, moving back and providing an arguably tighter, more literal approach, the separation between German and English courts’ is now even wider. Under a harmonised system such as that in Europe, this is deeply regrettable.

12 Referring to the case of Cutting Knife I (Schneidmesser I) [2002] GRUR 515. English translation available in [2003] ENPR 309. The case is discussed in text accompanying n 144–53 in ch 7, above. 13 [1990] FSR 181.

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So Where Now? This study has highlighted that various approaches to claim interpretation can provide the stability and predictability of outcome that services the patent system’s underlying historical purpose: to promote technological improvement within a state. In relation to the construction of claims, the Japanese system graphically illustrates that breadth of protection is essentially irrelevant if the outcome of the interpretative exercise is predictable. Consideration of this experience also allows exploration of the dangers to the domestic market of imposing a foreign legal standard relating to the patent’s extent of protection before that state is technologically ready to accept it. In the same manner as the British system was allowed to grow unencumbered by external pressure, so the Japanese approach is a classic example of what you can do when standards are controlled internally. The creation of a fully formed patent system takes many years to effect, and the most important part of this journey is in the process of growth itself. Just as it would be inappropriate to deny a composer a period of imitation in the development of their craft, so too a period of teething is not simply beneficial to the growth of a sustainable domestic IP market, it is essential. Imitation is as critical in the technological growth of a country seeking to develop as it is in the training of an artist, writer, or musician. However, whilst in the creative arts this inspiration is viewed favourably, even called apprenticeship, in the realm of technology it is called piracy. Once states have matured, and accelerated progress—playing technological catch-up—is no longer an issue, then inter-state trade of ideas and exportation of technology must become the focus. At this point in time, harmonisation measures such as the European Patent Convention become important. However, once a state willingly moves into a position wherein it is no longer solely responsible for its own patent policy, it has a certain responsibility to toe the line. Spengler goes some way towards expressing this point when he states that: ‘It is inappropriate to decline to co-operate on the achievement of legal unification whenever one’s own solution has not been chosen as the model for that of the Community’.14 However, this does not really go far enough: ultimately it is inappropriate to decline to co-operate when you have signed up to harmonisation measures in the first place.

Towards Further Harmonisation So where should the harmonised European position be moving, and how should the UK toe the line? It is clear that the current focus on interpretation as of publication is out of line with that in Germany where priority is the critical date of assessment. Indeed, as Hölder explains, the core determination of scope has to be 14 Spengler,‘Abschied vom allgemeinen Erfindungsgedanken’ [1967] GRUR 390, quoted from Singer & Stauder (eds), The European Patent Convention: A Commentary (Berlin, Carl Heymanns Verlag, 2003) Vol I at 239.

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completed at this latter date, otherwise ‘non-infringement and lack of novelty could not be alternatives from a logical point of view’15 However, interpretation solely at this date would do a great disservice to the creators of certain types of invention, notably those that would be classified as having pioneer status. As explained in chapter ten, above, the inventors of this type of invention face innumerable problems due to the lack of evident equivalents at the priority (or publication) date of the patent. In addition, they also face significant issues even under Lord Hoffmann’s one compulsory question in Kirin-Amgen due to contamination by hindsight bias. To bastardise slightly the words of Lord Russell in Non-Drip Measure Co v Strangers Ltd: ‘Nothing is easier than to say, after the event, that the thing was obvious and involved no invention’16 except, perhaps, that the technical contribution to the art was small. When viewed with hindsight the tendency is to examine the inventive territory and to identify what, in the light of subsequent advances, the patentee can be said to have contributed. However, the outcome of this investigation may be very different to that which the patentee, or indeed the rest of the world, would have considered the inventive advance to have been at the date that the claims were penned. Therefore, once more, dates become an issue. Not only is the time of construction decisive from the point of view of determining protection for equivalent technology, but it also has critical impact upon the teaching the patent can be seen to embody, and therefore the context from within which the skilled addressee should be interpreting the claims. In both cases pioneer advances are at a disadvantage. Attention clearly needs to be paid to this matter, as otherwise innovations that could be the most valuable to society are in danger of progressing unrewarded. In addition, the Kirin-Amgen approach to equivalents appears to be significantly out of line with certain readings of Article 69 EPC and the new text of the Protocol. This needs addressing. There is no clear reason, other than that derived from the apparent British perception of the patent, stemming from the Statute of Monopolies itself, as an exception to an otherwise absolute prohibition on monopoly, for this to be the case. As long as the scope of protection is immediately apparent from the claims when read in context then there is no reason to treat them in the absolute fencepost manner that they currently are.

A Modest Proposal Under the EPC, Article 69 dictates the prominence that the claims are to enjoy in determination of the patent’s scope of protection. This currently states that ‘the extent of protection conferred by a European patent . . . shall be determined by the terms of the claims. Nevertheless, the description and drawings shall be used to interpret the claims’. 15 Hölder,‘Exogenous Equals Endogenous? Claim Construction After the Amgen Decision’ (2006) 37 IIC 662 at 667. 16 (1943) RPC 135, at 142.

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This provision says nothing about the prudence, or not, of applying a two-stage test of construction. It also, contrary to what Lord Hoffmann states, says nothing about whether protection is allowed to extend outside of the wording of the claims. ‘Determined’ is clearly capable of more than one interpretation, but if the underlying purpose of the draftsman’s language is investigated then it becomes apparent that far from demanding a strict fencepost interpretation wherein the claim wording marks the outer boundary of protection and extension beyond this point is not allowed, the word deserves a more liberal interpretation. As Armitage has explained, the language chosen for Article 8 of the Strasbourg Convention17, upon which Article 69 EPC was based, ‘seeks to lay down a principle for interpreting claims which is somewhere between the system in which claims may be interpreted strictly according to the letter and that in which they do not play a decisive part in defining the limits of protection’ (emphasis added).18 Given this history, the requirement that scope be determined by the claims is clearly able to be satisfied if they constitute ‘not only a point of departure but the decisive basis for the determination the scope of protection’.19 There is, therefore, no reason to limit the analysis of the scope of the claims to a one-stage analysis. Given validity is not considered under a one-stage test (unless, that is, the approach of the House of Lords in Synthon is followed to its logical conclusion), it would seem perverse to insist upon single-stage analysis of the scope of the patent at any other point. The notion of novelty is clearly supplemented by ensuring that not only must the invention be new in the sense of that precise embodiment never having been seen before, but it must also be really new, in the sense of not being obvious to the person skilled in the art. There is no reason to suggest that the same approach could not be adopted for purposes of infringement. We appreciate that the prior art has two levels of influence on the surrounding technological field, so why would it be impossible to consider the same when the looking inwards to the patent rather than outwards to existing methods? If equivalents are understood to lie outside of the wording of the patent, ie forming an adjunct to the primary degree of protection, then a purposive interpretation of the claims becomes a clear element within the determination of scope per se. In other words, the claims may be interpreted in a purposive manner and then their scope of protection may be supplemented by consideration of equivalents that are obvious at the date of infringement of the patent. This approach would assist in providing clear reward to the patentee of pioneer advances, and would also not compromise the notion of predictability. Indeed, if anything it would enhance this latter concept as it would have the benefit of avoiding the need for an artificial investigation into what the court believes the skilled addressee would have considered the scope of the claims to have been at the date that the patent was filed. Whilst the 17

See discussion in text accompanying n 73–4 in ch 10, above. Quoted from Armitage, n 4, above, at 814. See also Armitage,‘Origins of Relevant Provisions of the Munich and Luxembourg Conventions’, in Kemp (ed), Patent Claim Drafting and Interpretation (London, Oyez Longman, 1983) at 7–15. 19 Handle Cord for Battery (Batteriekastenschnur) (1991) 22 ILC 104, at 107. 18

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core scope of the patent would be tied to this moment in time, there is nothing to be gained from entering into a speculative enquiry of what equivalents the patentee had in their contemplation at the point of drafting. The discussion in chapter four clearly illustrates that if something is thought of that would fall into this category then it enters the patent as an expressly claimed element. This approach also has the benefit of acknowledging that hindsight determination of the patent’s effective scope of protection is practically unavoidable. Recognition and embrace of this factor, rather than simply pretending that it is not a problem and that the patentee’s foresight definition of the invention is all that informs the court, enhances the predictability of the process of interpretation. It avoids the need to enter into a speculative investigation of what the patentee could have meant by the words that they used at some point in the past and moves on to consider what they currently mean. The expansive effect of this investigation is, of course, still bounded by the prior art so that the patent’s zone of protection should not be able to distend into areas that would not have been new or inventive at its priority date. However, with this small qualification, the assessment would be reduced to consideration of an easily understandable and eminently predictable set of equivalents. Adopting this approach would not have any impact on the development of subsequent technology, for the patentability criteria would still apply in the same manner. We would still ask if, at the priority date of the later invention, the earlier invention rendered it old or obvious. However, this would also provide the investigation for purposes of infringement as well. Pioneer inventions would therefore get the protection that they rightly deserve and the yawning gap between the incentive and reward functions of the patent would be closed. Moreover, the court still has the opportunity, should the situation dictate, to say that the allegedly infringing technology is so far changed from that disclosed in the patent that it falls outside of its teaching and cannot therefore be monopolised.

To Conclude Implementation of the amended text of the EPC represents a golden opportunity to reconsider patent law, and to finally relate the construction of the claims to a clearly comprehensible and predictable standard. It provides the chance to amend the UK’s current position and finally bring it into line with Germany’s arguably broader view of the reward the patentee deserves. And it provides opportunity to give full and detailed consideration to some of the issues that we have discussed in this text. It would be regrettable if these opportunities were missed.

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INDEX Abramovitz, Moses, 140 Adams, John, 53 Alexander, Jay, 144, 150, 156–60 Alps, 24–5 Ancient Greece, 23 anti-patent debate: 1829 Select Committee on Patents, 41-2, 62, 78, 83 1851 Select Committee on Patents, 76, 79, 81, 142 1871 Select Committee on Patents, 63, 72, 76, 78 1872 Select Committee on Patents, 76-7 abolitionist sentiment, 70-2, 75-9, 83-5 background to the debate, 62-4, 86 exchange theory and, 81-85 free trade, 61, 71 generally, 59–89, 182–3, 382 German model, 74, 77, 227–8 incentive theory and, 73-81 international dimension, 268 legal confusions, 64 lessons, 88–9, 92 natural right theory and, 66-8 public benefit and, 78 reward theory and, 68-73 United States, 221 Armitage, Edward, 308, 359, 371, 390 Armstrong, William, 75, 77 Arrow, Kenneth, 143 Assidoman case: acceptance, 328–31 approach to construction, 324–6, 333 facts, 323 Aston, Theo, 76 Atkinson, William, 193 Averley, Gwen, 53 Bacon, Francis, 38 Ball Spline case: appeal, 281–2 decision and impact, 278–87 facts, 280 fallout, 282–3 original decision, 281 prior art defence, 282, 283 recognition of equivalents, 279, 282, 287 subsequent cases, 283–7 Barzel, Yoram, 147 Bassinger, Kenneth, 220

Baxter, William, 119 Beaton, Glenn, 194 Beck, Roger, 150 Beckerman-Rodau, Andrew, 154 Benjamin of Tuleda, 25 Bentham, Jeremy, 56, 60, 61, 69, 72, 77, 80, 86, 137, 382 Bessemer, Henry, 76, 268 Beton, John, 349, 354 biotechnology, 101–2, 150–1, 342–3, 367–71 Blanco White, 291, 292, 315, 379 Böhmert, Viktor, 85 Book of Bounty, 38, 39 Brändle, Dieter, 248, 255 Branstetter, Lee, 277–8, 289 Bruchhausen, Karl, 8, 223, 232, 233, 244, 300, 325 Brunel, Isambard Kingdom, 79, 142 Buckingham, Duke of, 38 Bugbee, Bruce, 42 Byzantium, 23, 25 Carpmael, William, 76, 81–2 Carroll, Lewis, 381 Catnic case: application of test, 298–303 date of interpretation, 301–3, 345 objectivity, 299–301 Art 69 EPC and Protocol influence of, 298, 303-4 attempted rejection of, 316–31 deconstruction of dissent, 320–3 dissenting views, 317–20 quashed rebellion, 323–31 facts, 295 German law and, 241, 249, 251, 252, 253 House of Lords judgment, 296–303 immediately post-Catnic, 303–9 Improver case and, 309–11, 312, 314 legacy, 294–309, 386 lower courts, 295–6 meaning of vertical, 295–6, 298–7, 308, 352, 365–6 pioneer patents and, 301 pith and marrow doctrine and, 296, 297, 304 purposive construction, 297, 304 single-stage test, 297–8, 363 systemic change from, 339–42 textual and non-textual infringement, 296, 297 uncertainties, 322

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418

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Index

Carvalho, Nuno, 165 caveats, 48, 50 Cecil, William, 30 central definition: equivalents, 186 Germany, 224, 234, 244 meaning, 7–8 Netherlands, 224 US legal history, 178–80 Charles I, 47 chemical industries, 102, 152, 228 claims see also central definition; peripheral definition ambiguity, 1–2 amendment, 97, 210–14 basic claim theory, 7–8 drafting see drafting claims generally, 1-2 Germany see German interpretation of claims interpretation as of publication, 301–3, 345, 346, 356 Japan see Japanese interpretation of claims purpose, 1, 359–62, 373 UK see UK interpretation of claims US see equivalents (US) Coke, Edward, 38, 40–1, 103, 134 Cole, Paul, 20–1, 174, 214, 296, 330, 367–8 competition see also monopolies demand curve, 121–3 imperfect competition, 123, 128–9 inefficient competition, 149, 151 oligopolies, 122 patents and, 134, 135 perfect competition, 123, 129, 137 substitutability, 95, 120–1 consideration, 31-2, 45-7, 55, 81-5 contract: contra proferentem rule, 326 Elizabethan grants, 50–1 Liardet v Johnson, 54 patent as contract, 81–5, 98, 110, 300–1, 312 social contract, 68, 81, 84, 89 costs: aggregate variable costs, 126 basic economics, 125–8 definition, 126 marginal costs, 127–8 opportunity costs, 125–6, 129 patenting costs, 62, 78–9 social costs of patents, 77, 143 Coulter, Moureen, 66, 75, 82 Council of Europe, 224, 225 Court of Appeals for the Federal Circuit, 190 formative years, 192-6 creative destruction, 137 credibility, 164–5 Cromwell, Thomas, 30

Cubitt, William, 76 cumulative research, 143–5 Dam, Kenneth, 133, 168 Darcy, Lord, 37 Davies, D Seaborne, 33, 47, 48, 49 demand, prices and, 119–20 distributive justice, 72–3 drafting claims: amendment, 97, 210–14 communicating with the inventor, 100–3 German prescriptions, 239, 322 imprecision, 105–6 methodology, 58, 106–8, 211, 322 scope, 97–106 UK freedom, 234 Duffy, John, 145–6, 148–9 Dunlop, Hugh, 336, 338, 342, 346 Dutton, H, 66, 70 economics see also theories arguments for patent system, 135–7 basics, 119–31 costs, 125–8 demand curve under competition, 121–3 elasticity, 120–1 marginal revenues, 124–5, 127 monopolies, 129–31 price and demand, 119–20 profits, 128–31 classical justifications, 59, 65–85, 137 early economic analysis, 61–2, 137 post-classical justifications, 137–69 The Economist, 71–2, 79, 83–4 Edward III, 28 Eisenberg, Rebecca, 139 Elizabeth I, 29, 33–7, 59, 75, 267 Ellesmere, Lord Keeper, 38 Engel, Friedrich-Wilhelm, 249–50 EPC 2000: commencement, 355, 373 ratification, 355 Epilady case, acceptance of test, 314–16 facts, 307 generally, 307–16 German law and, 307–9, 312–13, 319, 322 German litigation in, 223–4, 241, 246–9 interim hearing, 307–9 Protocol questions, 331–9, 352–3 rejection, 319–31 substantive hearing, 309–13 three-stage test, 310–12 uncertainties, 322 equivalents: EPC clause, 151, 356 German interpretation of claims, 232, 309, 363

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Page 419

Index evident equivalents, 232 general inventive ideas, 232, 236–7, 271–2, 316, 321 technical teachings, 234–5, 253 Japanese recognition of, 279–87, 282, 287, 363 UK law, 349, 353, 354, 375 Kirin-Amgen case, 362–4, 364–5, 372–3, 374, 389 post-Kirin, 377 equivalents (US): after-arising equivalents, 204–6 CAFC, 190–9, 209–11, 216–19 creation, 190 formative years, 193–6 pro-patent bias, 168, 191, 195–6, 220 Corning Glass, 199 English critique of US experience, 363, 373 equity, 193–4, 196, 197 expansion, 191–2 Festo case, 175, 193, 207–19, 227 file wrapper estoppel, 175, 192–3, 195, 197, 198, 201–3, 208–11, 216–19, 363 Graver Tank, 183–90, 203, 204, 235 Hughes Aircraft, 191–4, 196, 197, 201, 202 justification for, 174–5 narrowing of, 196–9, 206 origin, 178-80, 182, 183-5, 362–3 Patent Act 1952, 187–8, 198 Pennwalt, 196–9 prospect theory and, 150 public policy, 196 reverse equivalents, 114, 182, 196–9, 206 Supreme Court jurisprudence, 200–7, 212–16 tight control, 244 triple identity test, 178, 185, 206 uncertainties, 186, 192, 193–6, 198–9, 213, 216, 220, 221 Warner-Jenkinson, 200–7 estoppel see prosecution history; equivalents: file wrapper estoppel European Patent Convention: Article 69 amendment, 355–7 fairness and predictability, 255–6 Formstein, 242–3 history, 224–6 post-Kirin, 376–7, 379–80 scope of claims, 223 text, 363–4, 389–90 UK Patents Act 1977 and, 292 clarity, 109 equivalents and, 151, 356, 389 harmonisation of laws, 227, 255, 309, 356–7, 359, 380, 388 languages, 225, 240 literal interpretation, 114, 225 peripheral definition, 224 Protocol on the Interpretation of Art 69

419

amendment, 355–7, 373, 375–6 Art 2 of, 356 German law and, 225–6, 227, 233, 240, 248 history, 224–6 problems, 386 UK law and, 292, 298, 320, 326–8, 331–9, 343–4, 347–8, 350, 352–3, 358–9, 364–6, 371, 376, 379–80 revisions, 238–9, 355–7, 373, 391 state parties, 223 UK ratification, 291 European Patent Office: database, 105 statistics, 134, 167 exchange for secrets theory, 81–5, 98, 110, 300–1 fairness, 69, 87, 108, 161, 175, 193–4, 196, 197, 199, 226, 239, 251–5, 320, 323, 338–41, 351, 356, 379, 385–6 Farey, John, 62, 83 Festo case, 175, 193 2nd CAFC judgment, 216–19 CAFC judgment, 209–11, 227 comment, 214–16 death of equivalents, 207 file wrapper estoppel, 193, 208–11, 213 issue, 208–9 rebutting presumption, 217–19 Supreme Court, 212–16 uproar, 207–8, 211–12 file wrapper estoppel see prosecution history first to file paradigm, 98 first to invent paradigm, 98 Florence, 25 Fox, Harold, 28, 38, 43, 61 Franzosi, Mario, 249, 254, 255, 338 free trade, 61, 71 French patent law: history, 25, 27 influence on Japan, 266 natural right theory, 66–7, 68 nature of patent rights, 267 no search system, 105 non-use doctrine, 266 Frost, Robert, 55 Frumkin, Maximilian, 25, 28 future, 388–91 Gaun, Tatchi, 264 Geissler, Bernhard, 243 general inventive idea, 232, 236–7, 271–2, 316, 321 German interpretation of claims: attempted application of in PLG, 319, 320, 327, 328, 329, 330 broad protection, 169, 173, 223–4 central definition, 7, 224, 234, 244 Cutting Knife 1, 250, 252–4, 313

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Index

German interpretation of claims (cont.): Epilady case and, 223–4, 241, 246–9, 307–9, 312–13, 319, 322 Formstein, 242–5, 251 aftermath, 245–6 history, 226–33 1st period, 226–7, 228–9 2nd period, 226–7, 229–32 3rd period, 227, 232–41, 302, 307, 358 4th period, 226–7, 241–54 Improver case and see Epilady case and influences, 8 Plastic Pipes, 250–2, 253, 311 practitioners’ opinions, 109–10 prosecution history, 228 recent cases, 249–54 reward theory and, 229, 231, 248, 255, 299 state of the art defence, 231, 237 three-part doctrine, 233–41, 251, 253 critique, 237–41 equivalents and, 232, 234–7, 309 general inventive idea, 232, 236–7, 271–2, 316, 321 literal definition and, 233–4 meaning, 232 state of the art defence, 237 technical teachings, 234–5, 253, 337 German patent law: history, 226–33 absence of protection, 74, 77, 227–8 jurisdiction of patent office and courts, 229, 230, 233 proto-patents, 25, 228 influence on Japan, 267, 271–2 nature of patent rights, 267 pan-European harmonisation, 226, 227 Patent Act 1981, 241 prescriptive drafting style, 239, 322 Germany: 19th century technological advances, 74, 77 Customs Union, 227 philosophical approaches, 309, 380 Gilbert, Richard, 145 Gillette defence, 237, 374 glass, 31, 44 Gomme, Arthur, 49 Grady, Mark, 144, 150, 156–60 Granville, Lord, 82–3, 85 Graver Tank case, 175 aftermath, 189–90, 220 critique, 185–7 equivalents, 183–5, 235 tripartite test, 185, 189 Great Exhibition (1851), 63 Greece, 355 Grove, William, 78, 86, 382 Guiddotti, Antonio, 30

guilds, 24 gunpowder, 36 Hantman, Ronald, 185–6 harmonisation: Anglo-German, 387 EPC, 227, 255, 309, 356–7, 359, 380, 388 future, 388–91 Germany, 226, 227 proposal, 389–91 Häusser, Erich, 230–1, 234, 238 Heald, Paul, 161, 164 Hegel, Georg, 309, 380 Heimbach, Karl, 349, 354 heroes, inventors as heroes, 80, 183 Hideyori, 262 Hideyoshi, 262 Hindmarch, William, 81, 82 hindsight, 160, 205, 238, 301, 330, 338, 342, 345, 369–70, 389, 391 history of patent law: anti-patent debate, 59, 62–4, 182–3 early monopoly grants, 24–5 Germany, 226–33 guilds, 24 role of history, 59, 381 Statute of Venice (1474), 24, 25–7, 176 UK see history of UK patent law United States, 175–90 history of UK patent law: 19th century see anti-patent debate administrative reforms, 63 early grants, 28–30 Elizabethan period, 29, 30–7, 74, 75, 267 abuse of monopoly, 20, 33–6 categories of monopoly, 34–5 common law, 36–7 consideration, 31-2, 45-7, 55 novelty, 31, 50 revocation clauses, 32–3 working clauses, 31–2, 50, 81 generally, 28–56 James I, 37–42, 47 Book of Bounty, 38, 39 Liardet v Johnson, 52–4 Nasmith case, 46, 47–52 Patents Act (1883), 88, 383 Protection of Inventions Act (1851), 63 Statute of Monopolies (1623), 39–54 issues of court jurisdiction, 43–5, 51 summary, 381–2 Holden, Isaac, 76 Hölder, Niels, 302, 360, 388–9 Holdsworth, William, 33 Honricke, Gerard, 46 Hulme, E Wyndham, 28, 31, 46, 49

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Index Iesayu, Tokugawa, 262 Improver case: see Epilady case incentive to invent theory, 73–81, 89, 93, 135–7, 347, 370 industrial applicability, 94 Industrial Revolution, 73, 80 intentions: defendants, US case law, 202–3 German law, 230 purpose of claims, 380 UK law Catnic case, 297 post-Kirin, 376–7 Tickner v Honda, 351 Wheatley v Drillsafe, 333, 337 international patent law, 87–8 internet searches, 104–5 inventive step, 94, 238, 374 Italy, 23, 25–7 James I, 37–8, 47 Japan: daimyo, 261–2 end of isolation, 263 feudalism, 261–3, 268 imperial rule, 264 institutional collectivism, 273–5 interpretation of claims see Japanese interpretation of claims isolationism, 261–3 Meiji period, 263–4, 274 patent law see Japanese patent law technological progress, 265, 268, 275, 279, 289 Tokugawa shogunate, 263, 264–5, 267 Japanese interpretation of claims: Ball Spline case, 278–87 appeal, 281–2 facts, 280 fallout, 282–3 original decision, 280 prior art defence, 282, 283 recognition of equivalents, 279, 282, 287 subsequent cases, 283–7 test, 283 equivalents, 279, 282, 287, 363 essential elements, 283–6 legal certainty, 260 narrow protection, 169, 173, 187, 260, 287–9, 322 sub-literal approach, 260 Japanese patent law: history 1871 Regulation, 264–5 1885 Patent Ordinance, 265–70 1899 Patent Ordinance, 270–1 1909 Patent Ordinance, 270 1921 Patent Ordinance, 270 1959 Patent Ordinance, 259–60, 275–6

421

influences, 266–7, 271–3 national favouritism, 267–70 patent scope certification trials, 271–2 post-war reform pressures, 275–8 institutional collectivism, 273–5 multiple claim system, 276–8 patent filing statistics, 279 redrafting claims in infringement proceedings, 272 jurisdiction: German patents, 229, 230, 233 Statute of Monopolies, 43–5, 51 UK patent law, 233 US inter-state jurisdiction, 176 Kahn, Zorina, 261 Kastriner, Lawrence, 133 Kaufer, Erich, 24–5 Kemp, John, 13 Kempe of Flanders, John, 28 Kirin-Amgen case: acontextual interpretation, 360, 362, 365, 372 Article 69 and Protocol, 358–9 comment, 371–6, 387 complexity, 343 construction on the facts, 365–7 Court of Appeal, 342–5 equivalents, 362–4, 364–5, 372–3, 374, 389 facts, 342–3 fairness, 385 House of Lords, 357–71 lower courts, 343, 357 narrow interpretation, 372 pioneer patents and, 346, 350, 367–71 post-Kirin uncertainty, 376–8 Protocol questions and, 343–4, 347, 364–6, 371, 376 purpose and context, 359–62, 373 repercussive effects, 373–6, 389 Kitch, Edmund, 71, 141, 145–51, 153, 155, 156, 157, 158, 159, 168 Klemperer, Paul, 145 knowledge, 64, 65, 72 Ko, Yusing, 142, 150 Kumagai, Ken-ichi, 266 labour theory, 67, 70 land law, 91 Lemley, Mark, 141–2, 164 Liardet v Johnson, 52–4 liberal interpretation: British approach, 226 practitioners’ views, 112–14 light bulbs, 183 Lincoln, Abraham, 73 Lipson, Ephrain, 34–5 literal interpretation: British approach, 114, 226, 386, 387

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422

Index

literal interpretation (cont.): certainty and, 109, 111 EPC, 225 equivalents and, 363 German three-part doctrine, 233–4 Graver Tank, 187 Japan, 260, 283 motivations and, 93, 111 practitioners’ views, 108–12 United States, 174, 213 literary works, 84 litigation: costs, 112 searches and, 105 Locke, John, 67, 68, 72 Long, Clarissa, 162–6 Loughlan, Patricia, 133, 138, 168 McCulloch, J.R, 66 McDonald, Daniel, 196 McFetridge, Donald, 148 Macfie, Robert Andrew, 71, 75, 77, 78, 79, 86, 136, 382 Machlup, Fritz, 66, 68, 70, 72–3, 80, 85, 166, 168, 215 MacLeod, Christine, 49 Mansell, Robert, 44 marginal revenue, 124–5 Martin, Donald, 159 Meier-Beck, Peter, 309, 371–2, 379, 380 Merges, Robert, 149, 151–6, 157, 158, 159, 176, 221 microbiologists, 100 Mill, John Stuart, 56, 60, 61, 62, 69, 72, 77, 86, 382 mining, 24–5, 29, 71, 146 monopolies see also Statute of Monopolies (1623) anti-monopoly rhetoric, 62 basic economics, 129–31 consideration, 31, 45 deadweight losses, 130 definition, 132 early grants, 24–5 Elizabethan grants categories, 34–5 legacy, 59 odious monopolies, 20, 33–6, 61–2, 103 James I period, 37–42 patents as monopolies, 94–5, 115 prejudice, 134 privileges, 134–5 terminology, 131–5 United States, 189, 190 phobia, 168 policy considerations, 19, 20 public perceptions, 131–2 reward by monopoly theory, 68–73

trade-off, 131 motivations: credibility, 164–5 non-profit motivations, 138 patent counts, 163–5 patentees, 95–7, 115, 163–4 rationale of patenting, 93–7 Schumpeter, 138 moulded curbstone, 241–5 Moy, Carl, 196 Nasmith case, 46, 47–52, 55 natural right theory, 66–8, 138 Nelson, Richard, 149, 151–6, 158 Netherlands, 27, 183, 224, 358 Nobunaga, Oda, 262 non obstantibus clauses, 51 Noonan, William, 189–90, 194 novelty: drafting claims, 58 Elizabethan grants, 31, 50 inventive step and, 374 Patents Act 1977 definition, 374 prior art and, 103–6 requirement, 94, 103, 374 research, 104–5 Statute of Monopolies, 103 substantial novelty, 150 Oddi, Samuel, 139, 142, 159, 160, 167, 168 oligopolies, 122 opportunity costs, 125–6 Oxford philosophy of language, 309, 380 packaging, 323 Palmer, Roundell, 72 Parchomovsky, Gideon, 165 Paris Convention (1883), 88, 268, 269–70 patent attorneys: costs, 62 double agents, 115 function, 113 literal v liberal views, 108–17 Patent Cooperation Treaty, 276 patent grants: monopolies see monopolies totemic value, 93 validity, 106, 107 Germany, 233–4 United Kingdom, 233 patent-induced theory: critique, 141–2 generally, 138–42 scope issues, 140–1 Patent Office (UK): examination time, 112 searches, 105, 106 patent portfolios, 163–5

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Page 423

Index patent system: 19th century administration, 63 economics see economics efficacy, 78, 112, 136 history see history of patent law justification see theories operation, 1 public perceptions, 91–2 purposes, 21 patentability requirements: industrial applicability, 94 inventive step, 94, 238, 374 novelty, 94, 103, 374 patentees: breakdown of communications, 100–3 familiarity with patenting process, 211, 212, 215 financial might, 104, 112, 113, 115–16, 215 motivation to patent, 95–7, 163–4 narrow-mindedness, 100 shifting profile, 80, 183, 383 patents as signals theory, 160, 163–6 Penrose, Edith, 66, 70, 72–3, 80, 85, 87–8, 161 peripheral definition: EPC, 224, 358 meaning, 7–8 Switzerland, 224 UK, 7–9, 174, 224, 358 US, 174, 180–3, 186, 187 pharmaceuticals, 98, 102, 133, 340, 342–3 pioneer patents: biotech, 150–1 Catnic question and, 301, 342 Germany, 231, 238 individual inventions, 116 Japan, 261, 286 Kirin-Amgen case, 346, 350, 367–71 proposal, 391 scope of patents, 153–4, 158–9 UK weaknesses in respect of, 89 US equivalents doctrine and, 179–80 piracy, 261, 268, 269 playing cards, 37 PLG case: Catnic challenged, 317–23, 347 interpretation under Protocol, 326–8 Pohlmann, Hansjoerg, 25 Political Economy Club, 70 Posner, Richard, 61, 119 predictability: English 18th century, 45 German law, 232, 239, 244, 248, 250, 252, 255–6, 308–9, 316 prospect theory, 150 requirement, 2, 385, 390–1 UK law, 308–10, 322–3, 328, 330–1, 335, 337, 339, 341, 344, 347–8, 350, 354, 356 Catnic, 302, 303, 320

423

Kirin-Amgen case, 371, 386–7 US case law, 175. 194, 196, 198, 202, 204–5, 214, 216, 220–1 prerogative powers, 30, 35, 36, 38, 41, 44, 50, 51, 60, 61, 62 Price, William Hyde, 27, 73 prices, demand and, 119–20 Prince-Smith, John, 78 prior art: German law, 230, 231, 237 Japan, 282, 283, 286 multi-claim patents, 277 novelty and, 374 problems, 103–6, 108, 112–13 US patents, 193–4 profits, basic economics, 128–31 property rights: exchange for secrets theory, 81–5 free goods and public goods, 64–5 intangibility of patents, 57, 58, 65–6 intangibility property, 91 patents as property, 57–9, 64–5, 135, 190 registration and, 63 prosecution history: German early cases, 228 US estoppel, 175, 192–3, 195, 197, 198, 201–3, 208–11, 213, 216–19, 363 prospect theory: critique, 147–9, 157 generally, 145–51, 153 scope of claims, 149–51 public perceptions, 91–2 publication dates, 301–3, 345, 346, 356 race-to-invent theory, 151–6 Rahn, Guntram, 263, 264, 265 registration, system of, 62, 63 rent-dissipation theory, 144, 156–60 Rentzch, Hermann, 85 research and development: corporate era, 137 cumulative research, 143–5 funding, 306 large entities, 274–5 research assessment exercise, 96 reward theory: anti-patent debate and, 68–73, 93 Germany, 229, 231, 248, 255, 299, 309 pioneer patents and, 346, 347 UK jurisprudence, 346, 347, 350 Ricardo, John Lewis, 70, 71 Rich, Giles, 132, 134, 168, 190 Rogers, J, 84, 86, 382 Rose, Bruce, 193 Rose, Simone, 168 Sakakibara, Mariko, 277–8, 289 satellites, 191

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424 Schäffle, Albert, 71 Scherer, F.M, 139–40, 141, 149, 150, 154, 383 Schiedame, John of, 29 Schumpeter, Joseph, 89, 137–8, 143, 145, 274–5 scope of patents: determinants of intrinsic, 97–106, 116 breakdown of communications, 100–3 importance of knowledge, 99–100 prior art issues, 103–6 timing, 98–9 Japanese certification trials, 271–2 monopoly effects, 131-5 motivation to patent, 95-7 narrowing by amendment, 97, 210–14 patent-induced innovations, 140–1 prospect theory, 149–51 race-to-invent theory, 152–6 rent-dissipation theory, 158–60 Scotchmer, Suzanne, 143 searches, 104–5, 112–13 secrets, 81–5, 162 Shapiro, Carl, 145 Shavell, Steven, 136 Siemens, Ernst von, 76–7, 268 Sijp, C, 235 Silberston, Z Aubrey, 65, 93, 153, 167 Smith, Adam, 56, 60, 61, 62, 69, 72, 86, 382 Smith, Douglas, 148 soap, 34–5 Solow, Robert, 140 Sony Walkman, 273 Spain, 36 specification see claims Nasmith case, 46, 47–51, 55 Liardet v Johnson, 52–4 Spence, William, 81, 82 Spengler, A, 294 starch, 35 Statute of Monopolies (1623): abuses preceding, 61–2 aftermath, 42–3 caveats and, 48 commentary, 40–1, 134 generally, 39–54 jurisdiction issues, 43–5, 51 novelty, 40-1, 103 origin, 39–40, 61–2 significance, 41–2, 110, 389 uncertainties, 50, 63 Statute of Venice (1474), 24, 25–7 Stirling, J, 83 Strasbourg Convention, 224, 225, 390 Strawbridge, Douglas, 196 Sturtevant, Simon, 46–7, 49 substitutes, 95, 120–1 Switzerland, 74, 76, 224

Index Takahashi, Korekiyo, 259, 265–6 Takenaka, Toshiko, 187, 198, 226–7, 229, 250, 260, 267, 271, 272–3, 275, 279, 286 Takura, T, 260 Taylor, Christopher, 65, 93, 153, 167 technical teachings, 234–5, 253, 337, 351 Technip principles, 376–7, 378, 379 telegraphy, 183 theories: basic claim theory, 7–8 classical economics, 59, 65–85, 386 exchange for secrets theory, 81–5, 300 incentive to invent theory, 73–81, 89, 93, 135–7, 347, 370 natural right theory, 66–8, 138 patents as contract, 81–5, 98, 110, 300–1 reward by monopoly theory, 68–73, 93, 229, 231, 248, 255, 299, 309, 346, 347, 350 French patent law, 66–7 German v English approaches, 380 inadequacies of economic theory, 166–8 post-classical economics, 137–69, 383–4 patent-induced theory, 138–42 patent signals, 160, 163–6 problems, 160–2 prospect theory, 145–51, 153, 157 race-to-invent theory, 151–6 rent-dissipation theory, 144, 156–60 public benefit, 78, 94, 147, 161 UK judicial approach to patents, 346–8, 350, 370 timing: date of publication, 301–3, 345, 346, 356 drafting claims, 98–9 pioneer patents, 370 trade secrets, 162 TRIPS, 2, 259, 289 Turner, Brian, 243 Turner, Jonathan, 299 Turner, Thomas, 67, 76 UK Intellectual Property Office see Patent Office (UK) UK interpretation of claims: Catnic see Catnic case Patents Act 1977, 291-4, 305 pith and marrow doctrine, 12-21, 255, 293, 296, 297, 304, 305, 347 post-EPC Assidoman case, 323–6, 328–31, 333 Catnic attempted rejection of, 316–31 Improver case, 307–16 Kirin-Amgen see Kirin-Amgen case PLG case, 317–23, 326–8 post-Kirin cases, 376–8 post-PLG, 323-31 pre-Kirin-Amgen period, 349–57

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Index Protocol questions, 292, 298, 320, 326–8, 331–9, 343–4, 347, 347–8, 350, 352–3, 358–9, 364–6, 371, 376, 378–80 Synthon case, 374–5, 390 systemic change, 339–42 Technip principles, 376–7, 378, 379 theoretical views, 346–8, 350 transition, 291, 292, 293–4, 303, 320 Wheatley v Drillsafe, 331–9 precursors and development, 45–7 19th century bureaucracy, 86 19th century weaknesses, 89 acceptance of practice, 51–2 Liardet v Johnson, 52–4 Nasmith case, 46, 47–52, 55, 381–2 non obstantibus clauses, 51 uncertainties, 50, 63, 78 purposive construction, 2, 174, 291, 297, 304, 306, 338, 376–7, 390–1 traditional position, 8–21, 91 EMI v Lissen, 10, 19, 359, 382, 386 EPC and, 255, 293, 296 exceptions to general rule, 11–12 immaterial variations, 12–21 literal view, 114, 226, 386 narrow constructions, 358 peripheral definition, 7–9, 174, 224 pith and marrow, 12–21, 293, 296, 297, 347 policy considerations, 19–21 Rodi & Wienenberger case, 18–20, 296, 297 Van der Lely case, 14–18, 19, 295 UK patent law: claims see UK interpretation of claims EPC ratification, 291 filing requirements, 1, 322 history see history of UK patent law jurisdiction of courts, 233 Patents Act 1977, 291–2 transitional provisions, 291, 292, 293, 320 Patents County Court, 315 purpose, 8, 21 validity proceedings, 233 United Kingdom: claims see UK interpretation of claims history of patents see history of UK patent law Industrial Revolution, 73, 80 patent law see UK patent law United States: California gold rush, 148 claims see equivalents (US) first to invent paradigm, 98 history of patent law, 175–83 central definition, 178–80 Constitution, 173, 176, 187, 213, 240 Patent Act 1793, 177

425

Patent Act 1836, 176–7 Patent Act 1870, 178, 180–3 Patent Act 1952, 187-8 peripheral definition, 180–3 statistics, 184 influence on Japan, 266–7 inter-state jurisdiction, 176 mineral claims, 71, 146 patent as monopoly, 133 Patent Office database, 105 prospect theory of patents, 146, 150 Vienna Conference and, 87 Usher, Dan, 143 Utynam, John of, 29 Van Thomme, Kurt, 219 Venice: silk weavers, 30 Statute of Venice (1474), 24, 25–7 trade, 27 venture capitalism, 164 Vienna Conference (1873), 87 Vojácek, Jan, 177, 230, 267 Wagner, R. Polk, 165 Walterscheid, Edward, 32, 42, 50, 54, 66, 77 Warner-Jenkinson: calls for death of equivalents denied, 200–1 defendant’s intention, 202–3 file-wrapper estoppel, 201–3, 211–12 generally, 200–7 precedent, 208, 209, 217 subsequent equivalents, 204–6 test of equivalence, 206–7 Wasleff, John, 193 weavers, 28, 29, 30 Webster, Thomas, 68 Wegner, Hal, 207 welding, 184 Westminster Review the, 67 Wheatley v Drillsafe: comment, 336–9 facts, 331–2 generally, 331–9 intentions, 333, 337 majority view, 335–6 patent as reward, 350 precedent, 340 radical approach, 332–5, 345 split approaches, 339 Winkler, Heinz, 238 working clauses, 31–2, 50, 81 Young, Richard, 35 Ypersele, Tanguy Van, 136