Institute for New Economic Thinking and Centre for International Governance Innovation (CIGI)

Law and Innovation: Is Intellectual Property a Path to Progress

April 12, 2014

Barry Sookman McCarthy Ttrault LLP bsookman@mccarthy.ca 416-601-7949

Introduction The protection of intellectual property is an important element in promoting innovation and in supporting markets in the trade and dissemination of innovative and creative products and services. In some sectors, intellectual property rights is the main asset of the business. Intellectual property rights are increasing the hard coinage earned by inventors and creators that are used to make, use and sell innovative products, obtain financing and capital, create well paying and rewarding jobs, obtain licensing revenues, and prevent free riding.1 While it is generally unquestioned that intellectual property rights play a pivotal role in advancing innovation, there are divergent views about whether the existing calibration of rights, particularly in the fields of copyrights and patents is appropriate or requires adjusting. For example, the US Congress,2 the European Union3 and its member states including the UK4 and Ireland,5 Australia6 and others have been re-examining their copyright laws in light of the challenges posed by digital technologies. Almost every stakeholder in these debates claims its proposals foster innovation. The major policy differences often relate to whether the innovation should permissionless; whether rightsholders should be compensated for new uses of their works; and the responsibilities, if any, of the innovators for infringements enabled or facilitated by the uses of new technologies. Aereo's retransmission service and the Google Books project are cases in point. The U.S. Congress, after just completing a major overhaul of the U.S. patent system, is once again examining a new set of patent reforms, among them reforms targeting patent trolls or NPEs. Stakeholders in those debates who argue for no reform, radical reforms, or reforms in between, also advance arguments premised on an innovation agenda.7 Intellectual property rights are also increasingly being raised in trade negotiations which has also raised issues as to their implications for innovation. The debates about the proper balance between exclusive intellectual property rights, exceptions to infringement, and the public domain come from multi-disciplinary perspectives. Many economists have researched the links between intellectual property rights and innovation. The courts, which play a major role in interpreting intellectual property laws, have their own views, views which sometimes shift or change in response to the cases and challenges they have to deal with. Given the importance of the roles played by the courts in interpreting IP laws, and in mediating between different perspectives on what their underlying purposes are, it is important to understand the judicial views about intellectual property rights.

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This paper has the very modest goal of explaining how some courts have viewed the purposes and roles of intellectual property laws in relation to promoting innovation. The focus of the paper is on the law of patents, with particular emphasis on leading appellant decisions from U.S. and Canadian courts. The approach taken is to highlight the perspectives of the courts by setting out sample extracts from leading cases on important areas of patent law which reflect the courts views about the relationship between patent law concepts and innovation. Patents and Innovation what the courts have said Justification for patents Article I, 8, cl. 8, of the U.S. Constitution gives Congress the power "[t]o 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." Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) At the outset it must be remembered that the federal patent power stems from a specific constitutional provision which authorizes the Congress "To promote the Progress of . . . useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries." Art. I, 8, cl. 8.The clause is both a grant of power and a limitation. This qualified authority, unlike the power often exercised in the sixteenth and seventeenth centuries by the English Crown, is limited to the promotion of advances in the "useful arts." It was written against the backdrop of the practiceseventually curtailed by the Statute of Monopoliesof the Crown in granting monopolies to court favorites in goods or businesses which had long before been enjoyed by the public. It is considered a bargain (especially in Canadian patent law). The inventor secures exclusive rights in return for new, ingenious, useful and unobvious disclosures and dedication of the invention to the public when the term expires. Apotex Inc. v. Wellcome Foundation Ltd., [2002] 4 SCR 153 patent, as has been said many times, is not intended as an accolade or civic award for ingenuity. It is a method by which inventive solutions to practical problems are coaxed into the public domain by the promise of a limited monopoly for a limited time. Disclosure is the quid pro quo for valuable proprietary rights to exclusivity which are entirely the statutory creature of the Patent Act. Monopolies are associated in the public mind with higher prices. The public

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should not be expected to pay an elevated price in exchange for speculation, or for the statement of any mere scientific principle or abstract theorem (s. 27(3)), or for the discovery of things that already exist, or are obvious. The patent monopoly should be purchased with the hard coinage of new, ingenious, useful and unobvious disclosures. Bristol-Myers Squibb Co. v. Canada (Attorney General), [2005] 1 SCR 533 It is well understood that in Canada the grant of a patent is akin to a contract or bargain between the patentee on the one hand and the government of Canada (representing the interests of the general public) on the other. The patentee receives the grant of an exclusive right to use the patented invention in Canada for a specific period of time in return for fully disclosing the invention to the public by way of the patent specification The grant of a patent is in the nature of a bargain between the inventor on the one hand and the Crown, representing the public, on the other hand. The consideration for the grant is double: first, there must be a new and useful invention, and secondly, the inventor must, in return for the grant of a patent, give to the public an adequate description of the invention with sufficiently complete and accurate details as will enable a workman, skilled in the art to which the invention relates, to construct or use that invention when the period of the monopoly has expired. Teva Canada Ltd. v. Pfizer Canada Inc., [2012] 3 S.C.R. 625 The patent system is based on a bargain, or quid pro quo: the inventor is granted exclusive rights in a new and useful invention for a limited period in exchange for disclosure of the invention so that society can benefit from this knowledge. This is the basic policy rationale underlying the Act. Free World Trust v. lectro Sant Inc., [2000] 2 SCR 1024 Patent protection rests on the concept of a bargain between the inventor and the public. In return for disclosure of the invention to the public, the inventor acquires for a limited time the exclusive right to exploit it. It was ever thus. Even before the Statute of Monopolies (1623), the Crown rewarded an inventor with a limited monopoly in exchange for public disclosure of a new invention and a new trade within the kingdom ... or if a man hath made a new discovery of any thing: Clothworkers of Ipswich Case (1653), Godb. 252, 78 E.R. 147, at

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p. 148, where the court went on to say that the effect of an unjustified monopoly was to take away free-trade, which is the birthright of every subject. Scott Paper Co. v. Marcalus Co., 326 US 249 (1945) By the patent laws Congress has given to the inventor opportunity to secure the material rewards for his invention for a limited time, on condition that he make full disclosure for the benefit of the public of the manner of making and using the invention, and that upon the expiration of the patent the public be left free to use the invention. See Special Equipment Co. v. Coe, 324 U.S. 370, 378. As has been many times pointed out, the means adopted by Congress of promoting the progress of science and the arts is the limited grant of the patent monopoly in return for the full disclosure of the patented invention and its dedication to the public on the expiration of the patent. Patent rights are statutory and the rights of inventors are only those that are conferred by the applicable statute. Apotex Inc. v. Sanofi-Synthelabo Canada Inc., [2008] 3 SCR 265 At the outset, it is appropriate to refer to the words of Judson J. for this Court in Commissioner of Patents v. Farbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius & Bruning, 1963 CanLII 2 (SCC), [1964] S.C.R. 49 There is no inherent common law right to a patent. An inventor gets his patent according to the terms of the Patent Act, no more and no less. The most recent reference to the law of patents being wholly statutory are the words of Lord Walker in Synthon B.V. v. SmithKline Beecham plc, [2006] 1 All E.R. 685, [2005] UKHL 59, at paras. 57-58: The law of patents is wholly statutory, and has a surprisingly long history. . . . In the interpretation and application of patent statutes judge-made doctrine has over the years done much to clarify the abstract generalities of the statutes and to secure uniformity in their application.

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Nevertheless it is salutary to be reminded, from time to time, that the general concepts which are the common currency of patent lawyers are founded on a statutory text, and cannot have any other firm foundation. Patent laws goals have been summarized as having three objectives: Aronson v. Quick Point Pencil Co., 440 US 257 (1979) First, patent law seeks to foster and reward invention; second, it promotes disclosure of inventions to stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent protection seek to assure that ideas in the public domain remain there for the free use of the public. Balancing innovation and monopolies Patent law is based upon the social and economic rationale of balancing encouraging innovation and the avoidance of monopolies which can stifle competition. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 The Patent Clause itself reflects a balance between the need to encourage innovation and the avoidance of monopolies which stifle competition without any concomitant advance in the "Progress of Science and useful Arts." As we have noted in the past, the Clause contains both a grant of power and certain limitations upon the exercise of that power. Congress may not create patent monopolies of unlimited duration, nor may it "authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available." Graham v. John Deere Co. of Kansas City, 383 U. S. 1, 6 (1966). Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy. Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) Jefferson's philosophy on the nature and purpose of the patent monopoly is expressed in a letter to Isaac McPherson (Aug. 1813), a portion of which we set out in the margin. He rejected a natural-rights theory in intellectual property rights and clearly recognized the social and economic
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rationale of the patent system. The patent monopoly was not designed to secure to the inventor his natural right in his discoveries. Rather, it was a reward, an inducement, to bring forth new knowledge. The grant of an exclusive right to an invention was the creation of societyat odds with the inherent free nature of disclosed ideasand was not to be freely given. Only inventions and discoveries which furthered human knowledge, and were new and useful, justified the special inducement of a limited private monopoly. Jefferson did not believe in granting patents for small details, obvious improvements, or frivolous devices. His writings evidence his insistence upon a high level of patentability. Bilski v. Kappos, 130 S. Ct. 3218 This Age puts the possibility of innovation in the hands of more people and raises new difficulties for the patent law. With ever more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles. Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 Given the above, the respondents argument that the object of the Act leads inexorably to the broadest reading of the definition of invention possible is problematic and is, in my view, based on an oversimplification of the patent regime. In the court below, Rothstein J.A. preferred the approach taken by the majority of the U.S. Supreme Court in Chakrabarty, supra. The majority read the language of the Act expansively on the basis that the Act embodied Thomas Jeffersons philosophy that ingenuity should receive a liberal encouragement (p. 308). The minority of the court did not wholly accept this characterization, commenting in respect to the objective of the Act, at p. 319 of the reasons: The patent laws attempt to reconcile this Nations deep-seated antipathy to monopolies with the need to encourage progress. Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 530-531 (1972); Graham v. John Deere Co., 383 U.S.1, 7-10 (1966). Given the complexity and legislative nature of this delicate task, we must be careful to extend patent protection no further than Congress has provided. In particular, were there an absence of legislative direction, the courts should leave to Congress the decisions

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whether and how far to extend the patent privilege into areas where the common understanding has been that patents are not available. eBay Inc. v. MERCEXCHANGE, LLC, 547 US 388 (2006) In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest. In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test. The equitable discretion over injunctions, granted by the Patent Act, is well suited to allow courts to adapt to the rapid technological and legal developments in the patent system. For these reasons it should be recognized that district courts must determine whether past practice fits the circumstances of the cases before them. With these observations, I join the opinion of the Court There is an explicit trade-off inherent in the patent system between providing exclusivity and preventing fee riding for a limited term and the associated potential drawbacks of rising prices, the need to engage in complex rights clearance exercises and temporary reduced competition. Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289 (2012) Patent protection is, after all, a two-edged sword. On the one hand, the promise of exclusive rights provides monetary incentives that lead to creation, invention, and discovery. On the other hand, that very exclusivity can impede the flow of information that might permit, indeed spur, invention, by, for example, raising the price of using the patented ideas once created, requiring potential users to conduct costly and time-consuming searches of existing
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patents and pending patent applications, and requiring the negotiation of complex licensing arrangements. Vornado Air Systems v. Duracraft Corp., 58 F. 3d 1498 (10th.Cir.1995) Vornado suggests that no patent law purpose is served by allowing copying of product configurations that are not necessary to competition. We cannot agree. We find no support in the Patent Act itself or its application for the proposition that the patent goals are limited to enhancing competition, at least in the direct sense. To the contrary, patents operate by temporarily reducing competition. They create monopolies to reward inventors who invent "`things which are worth to the public the embarrassment of an exclusive patent.'" Graham v. John Deere Co., 383 U.S. 1, 9, 86 S.Ct. 684, 689, 15 L.Ed.2d 545 (1966) (quoting Thomas Jefferson, author of the 1793 Patent Act). Although competition ultimately may be enhanced by the increased product supply that results from operation of the patent law, the system's more obvious objective is to give the public the benefits of technological progress. Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 (Binnie J, in dissent) If the patent were refused on the oncomouse itself, it would be easy for free riders to circumvent the protection sought to be given to the inventor by the Patent Act simply by acquiring an oncomouse and breeding it to as many wild mice as desired and selling the offspring (probably half of which will be oncomice) to the public. Patent law is assumed to create incentives to invest in, engage in, and to take risks to do research and development that foster innovation and new goods and services that benefit the public more than the disadvantages associated with patents. Teva Canada Ltd. v. Pfizer Canada Inc., [2012] 3 S.C.R. 625 The patent bargain encourages innovation and advances science and technology. Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 There is no doubt that two of the central objects of the Act are to advance research and development and to encourage broader economic activity (see Free World Trust v. lectro Sant Inc., 2000 SCC 66 (CanLII), [2000] 2 S.C.R. 1024, 2000 SCC 66, at para. 42).

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Kewanee Oil Co. v. Bicron Corp., 416 US 470 (1974) The patent laws promote this progress by offering a right of exclusion for a limited period as an incentive to inventors to risk the often enormous costs in terms of time, research, and development. The productive effort thereby fostered will have a positive effect on society through the introduction of new products and processes of manufacture into the economy, and the emanations by way of increased employment and better lives for our citizens. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 The applicant whose invention satisfies the requirements of novelty, nonobviousness, and utility, and who is willing to reveal to the public the substance of his discovery and "the best mode . . . of carrying out his invention," 35 U. S. C. 112, is granted "the right to exclude others from making, using, or selling the invention throughout the United States," for a period of 17 years. 35 U. S. C. 154. The federal patent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful, and nonobvious advances in technology and design in return for the exclusive right to practice the invention for a period of years. Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) Thomas Jefferson, who as Secretary of State was a member of the group, was its moving spirit and might well be called the "first administrator of our patent system." See Federico, Operation of the Patent Act of 1790, 18 J. Pat. Off. Soc. 237, 238 (1936). He was not only an administrator of the patent system under the 1790 Act, but was also the author of the 1793 Patent Act Jefferson, like other Americans, had an instinctive aversion to monopolies. It was a monopoly on tea that sparked the Revolution and Jefferson certainly did not favor an equivalent form of monopoly under the new government. His abhorrence of monopoly extended initially to patents as well. From France, he wrote to Madison (July 1788) urging a Bill of Rights provision restricting monopoly, and as against the argument that limited monopoly might serve to incite "ingenuity," he argued forcefully that "the benefit even of limited monopolies is too doubtful to be opposed to that of their general suppression," V Writings of Thomas Jefferson, at 47 (Ford ed., 1895).

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His views ripened, however, and in another letter to Madison (Aug. 1789) after the drafting of the Bill of Rights, Jefferson stated that he would have been pleased by an express provision in this form: "Art. 9. Monopolies may be allowed to persons for their own productions in literature & their own inventions in the arts, for a term not exceeding years but for no longer term & no other purpose." Id., at 113 And he later wrote: "Certainly an inventor ought to be allowed a right to the benefit of his invention for some certain time. . . . Nobody wishes more than I do that ingenuity should receive a liberal encouragement." Letter to Oliver Evans (May 1807), V Writings of Thomas Jefferson, at 75-76 (Washington ed.) Int'l Technologies Consultants v. Pilkington plc, 137 F. 3d 1382 (9th.Cir.1998) The owner of the patent is given a limited monopoly. The justification is that the public is best served by giving inventors monopolies on commercial exploitation of their innovations for enough time to furnish an incentive to do the work and spend the money creating them. Sanofi-Synthelabo v. Apotex, Inc., 470 F. 3d 1368 (Fed.Cir.2006) We have long acknowledged the importance of the patent system in encouraging innovation. Indeed, the "encouragement of investment-based risk is the fundamental purpose of the patent grant, and is based directly on the right to exclude." Patlex Corp. v. Mossinghoff, 758 F.2d 594, 599 (Fed.Cir.1985). The district court relied on the testimony of Dr. Hausman in finding that the average cost of developing a blockbuster drug is $800 million. Importantly, the patent system provides incentive to the innovative drug companies to continue costly development efforts. We therefore find that the court did not clearly err in concluding that the significant "public interest in encouraging investment in drug development and protecting the exclusionary rights conveyed in valid pharmaceutical patents" tips the scales in favor of Sanofi.

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Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 (Binnie J, in dissent) [T]hat the massive investment of the private sector in biotechnical research is exactly the sort of research and innovation that the Patent Act was intended to promote. As this case demonstrates, even university research has to be paid for, and intellectual property rights are an important contributor. We are told that in the United States (comparable statistics do not seem to be available in Canada), a health-related biotechnology product on average costs between 200 and 350 million dollars (U.S.) to develop, and takes 7 to 10 years from the research and development stage to bring it to market (Statistics Canada, Biotechnology Use and Development 1999 (March 2001), at p. 25). One would think it in the public interest to shorten the time and reduce the cost of research designed to minimize human suffering, and to reward those who develop research tools (such as the oncomouse) that might make this possible, provided the inventors disclose their work for others to build on. The practical application of biotechnology is in large measure the preoccupation of enterprises that need to profit from their successes to finance continued research on a broader front. These successes are few and far between (Statistics Canada, supra, at pp. 13-14). It seems Du Pont spent about US$15 million to fund the oncomouse research: C. Arthur, The onco-mouse that didnt roar (1993), 138 New Scientist 4. Leder, the aforementioned co-inventor of the Harvard mouse, made the point to Congress as follows: [T]he great and costly engine for invention can only be effectively driven with the support from the private sector, motivated to serve a public need. The patent system offers the only protection available for the intellectual product of this research, and thus, the only hope of a fair return against the great financial risks that investment in biotechnology entails. There are those who question the level of incentive required to induce sufficient research in the biomedical field. Professor Gold of McGill University argues:

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The argument for greater patent protection should be understood for what it is: an attempt to maximize profit, not to maximize levels of innovation. Clearly, a company would prefer to have as large a monopoly as possible. . . . But patent law is not about individual profit maximization; it is about maximizing the overall level of innovation in society. The two do not necessarily go together. (E. R. Gold, Biomedical Patents and Ethics: A Canadian Solution (2000), 45 McGill L.J. 413, at p. 423) Nevertheless it is indisputable that vast amounts of money must be found to finance biomedical research. It is necessary to feed the goose if it is to continue to lay the golden eggs. The Patent Act embodies the public policy that those who directly benefit from an invention should be asked, through the patent system, to pay for it, at least in part. Momenta Pharmaceuticals v. Amphastar Pharma., 686 F. 3d 1348 Fed.Cir.2012) Per Rader CJ (in dissent) Too often patent law is misunderstood as impeding more than promoting innovation. This academic proposition, called the tragedy of the Anticommons in some scholarly presentations, suggests that exclusive rights impede the flow of information and limit experimentation that might lead to the next generation of technological advance. Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698 (1998). In the first place, in an era of empirical research, one might ask the reason that this academic notion has never actually been verified. Although studied, no research has substantiated this alleged attack on the patent system. In fact, "the effects predicted by the anti-commons hypothesis are not borne out in the available data." Timothy Caulfield, Human Gene Patents: Proof of Problems?, 84 Chi.-Kent L.Rev. 133, 137 (2009); see also American Association for the Advancement of Science, INTERNATIONAL INTELLECTUAL PROPERTY EXPERIENCES: A REPORT OF FOUR COUNTRIES 12 (2007) (finding the results of a 2006 survey of U.S. and Japanese researchers "offer very little evidence of an `anticommons problem'" and that "IP-protected technologies remain relatively accessible to the broad scientific community"). Surveys of academic researchers have revealed that "only 1 percent ... report having to delay a project, and none abandoned a project due to others' patents." Wesley M. Cohen & John P. Walsh, Real Impediments to Academic Biomedical Re search, in 8 INNOVATION POLICY AND THE ECONOMY 1, 10-11 (Adam B. Jaffe, Josh Lerner, & Scott Stern eds. 2008), available

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at http://www.nber. org/&mtilde;arschke/mice/Papers/cohenwalsh.pdf (citing John P. Walsh et al., The View from the Bench: Patents, Material Transfers and Biomedical Research, 309 SCIENCE 2002 (2005)). In other words, patents on research tools and biomedical innovations do not significantly slow the pace of research and do not deter researchers from pursuing promising projects. The reason that patents have not been proven to impede more than stimulate technological advance is simple: it does not happen. It does not happen for several reasons. First, experiments advancing technology rarely, if ever, generate commercial value. Thus patent owners have little, if any, incentive to license or inhibit research. Stated otherwise, even if a patent owner wanted to sue or license potential researchers, experiments do not produce income or a source of damages. See id. at 12. Second, in the modern age of technology, the character of technological advance has changed. The era when the Bell Labs or some other tech center could hire the most promising engineers and essentially invent everything for the world has passed. With the vast specialization of all fields of research, advances in technology require great cooperation. A new product or a new direction in biotechnology or electronics will be produced by cooperation between a professor in Chengdu, China, a young programmer in Bangaluru, India, an engineer at a large corporation in Munich, Germany, a graduate student at Tokyo University, and a team at a small start-up company in Silicon Valley. The patent system can help inform each of them of the other and bring together their incremental advances to achieve the next generation of progress in some tiny corner of human progress. Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 (Binnie J, in dissent) There is much scholarly controversy in Canada over the role of intellectual property in biotechnology: E. R. Gold, Body Parts: Property Rights and the Ownership of Human Biological Materials (1996); E. R. Gold, Making Room: Reintegrating Basic Research, Health Policy, and Ethics Into Patent Law in T. A. Caulfield and B. WilliamsJones, eds., The Commercialization of Genetic Research: Ethical, Legal, and Policy Issues (1999), 63; T. A. Caulfield, Underwhelmed: Hyperbole, Regulatory Policy, and the Genetic Revolution (2000), 45 McGill L.J. 437; B. M. Knoppers, Reflections: The Challenge of Biotechnology and Public Policy (2000), 45 McGill L.J. 559; P. R. Mooney,

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The Impetus for and Potential of Alternative Mechanisms for the Protection of Biotechnological Innovations (March 2001), at p. 13. Some thoughtful critics suggest that patents in this field may in fact deter rather than promote innovation: M. A. Heller and R. S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research (1998), 280 Science 698; Gold, Biomedical Patents and Ethics: A Canadian Solution, supra. On a more technical level, it is pointed out that a 20-year patent is a very long time in the life cycle of biotechnology. A shorter patent life, with conditions more tailored to the industry, would, it is said, provide sufficient incentive. Then there are those who advocate the farmers privilege to avoid farmers being subject to patent enforcement in the case of the progeny of patented plants and animals. Others advocate protection for innocent bystanders who inadvertently make use of a genetically engineered plant or animal, unaware of its being patented. The rules associated with patents are, for the most part, generally applicable across different technological domains. However, certain other public policy considerations may be taken into account and Congress (and Parliament) can refine the rules as public policy requires, subject in the U.S. to complying with the Constitution. Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289 (2012) At the same time, patent law's general rules must govern inventive activity in many different fields of human endeavor, with the result that the practical effects of rules that reflect a general effort to balance these considerations may differ from one field to another. See Bohannan & Hovenkamp, Creation without Restraint, at 98-100. In consequence, we must hesitate before departing from established general legal rules lest a new protective rule that seems to suit the needs of one field produce unforeseen results in another. And we must recognize the role of Congress in crafting more finely tailored rules where necessary. Cf. 35 U.S.C. 161-164 (special rules for plant patents). We need not determine here whether, from a policy perspective, increased protection for discoveries of diagnostic laws of nature is desirable.

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Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) Within the limits of the constitutional grant, the Congress may, of course, implement the stated purpose of the Framers by selecting the policy which in its judgment best effectuates the constitutional aim. This is but a corollary to the grant to Congress of any Article I power. Gibbons v. Ogden, 9 Wheat. 1. Within the scope established by the Constitution, Congress may set out conditions and tests for patentability. Association for Molecular Pathology v USPTO, 689 F.3d 1303 (Fed.Cir.2012) There is no collective right of adverse possession to intellectual property, and we should not create one. Our role is to interpret the law that Congress has written in accordance with the governing precedents. I would do so and would affirm the district court's rulings as to the BRCA gene and BRCA gene segment claims. Merck & Co., Inc. v. Apotex Inc., 2006 FCA 323 In support of their submission, Merck and Astra also argue that subsection 55.2(1) is an exemption from the primary purpose of the Act, which they say is to protect the exclusive rights of a patentee, and therefore should be strictly construed. Again, I do not agree. In Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77 (CanLII), [2002] 4 S.C.R. 153, at paragraph 37, that Court held that patent law seeks to find a balance between encouraging innovation and sharing the products of innovation with the public rather than simply seeking to protect the patentee: Moreover, in Harvard College v. Canada (Commissioner of Patents), 2002 SCC 76 (CanLII), [2002] 4 S.C.R. 45, the Supreme Court of Canada also acknowledged that the manner in which Canada has administered its patent regime reveals that the promotion of ingenuity has at times been balanced against other considerations. Subsection 55.2(1) is, accordingly, not an exemption from the purpose of the Act, but is an integral part thereof by seeking to balance the rights of patentees with those of the public. Accordingly, I can see no basis for strictly construing subsection 55.2(1) as Merck and Astra suggest. It is assumed that free exploitation of ideas will be the rule to which the protection of patents is the exception.

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Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 The attractiveness of such a bargain, and its effectiveness in inducing creative effort and disclosure of the results of that effort, depend almost entirely on a backdrop of free competition in the exploitation of unpatented designs and innovations. The novelty and nonobviousness requirements of patentability embody a congressional understanding, implicit in the Patent Clause itself, that free exploitation of ideas will be the rule, to which the protection of a federal patent is the exception. Why disclosures of inventions are beneficial A goal of patent law is to promote the disclosure of inventions. This is assumed to have several beneficial results. It results in inventions that would not be disclosed or devised in the absence of a patent system. Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) The difficulty of formulating conditions for patentability was heightened by the generality of the constitutional grant and the statutes implementing it, together with the underlying policy of the patent system that "the things which are worth to the public the embarrassment of an exclusive patent," as Jefferson put it, must outweigh the restrictive effect of the limited patent monopoly. The inherent problem was to develop some means of weeding out those inventions which would not be disclosed or devised but for the inducement of a patent. It results in knowledge that can be freely exploited when the patent expires. The benefit enures both to the public that uses the invention to make products and to consumers who benefit from exploitation by others. Kewanee Oil Co. v. Bicron Corp., 416 US 470 (1974) In return for the right of exclusion this "reward for inventions,"Universal Oil Co. v. Globe Co., 322 U. S. 471, 484 (1944) the patent laws impose upon the inventor a requirement of disclosure. To insure adequate and full disclosure so that upon the expiration of the 17-year period "the knowledge of the invention enures to the people, who are thus enabled without restriction to practice it and profit by its use," United States v. Dubilier Condenser Corp., 289 U. S. 178, 187 (1933), the patent laws require that the patent application shall include a full and clear description of the invention and "of the manner and process of
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making and using it" so that any person skilled in the art may make and use the invention. 35 U. S. C. 112. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 Soon after the adoption of the Constitution, the First Congress enacted the Patent Act of 1790, which allowed the grant of a limited monopoly of 14 years to any applicant that "hath . . . invented or discovered 147*147 any useful art, manufacture, . . . or device, or any improvement therein not before known or used." 1 Stat. 109, 110. In addition to novelty, the 1790 Act required that the invention be "sufficiently useful and important" to merit the 14-year right of exclusion. Ibid. Section 2 of the Act required that the patentee deposit with the Secretary of State, a specification and if possible a model of the new invention, "which specification shall be so particular, and said models so exact, as not only to distinguish the invention or discovery from other things before known and used, but also to enable a workman or other person skilled in the art or manufacture. . . to make, construct, or use the same, to the end that the public may have the full benefit thereof, after the expiration of the patent term." Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 Moreover, the ultimate goal of the patent system is to bring new designs and technologies into the public domain through disclosure. Scott Paper Co. v. Marcalus Co., 326 US 249 (1945) The aim of the patent laws is not only that members of the public shall be free to manufacture the product or employ the process disclosed by the expired patent, but also that the consuming public at large shall receive the benefits of the unrestricted exploitation, by others, of its disclosures. By the force of the patent laws not only is the invention of a patent dedicated to the public upon its expiration, but the public thereby becomes entitled to share in the good will which the patentee has built up in the patented article or product through the enjoyment of his patent monopoly. Hence we have held that the patentee may not exclude the public from participating in that good will or secure, to any extent, a continuation of his monopoly by resorting to the trademark law and registering as a trademark any particular descriptive matter appearing in the specifications, drawings or

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claims of the expired patent, whether or not such matter describes essential elements of the invention or claims. The public disclosure through patent applications is immediately available for others to build upon. It speeds the progress of scientific endeavor and facilitates experimentation. Momenta Pharmaceuticals v. Amphastar Pharma., 686 F. 3d 1348 Fed.Cir.2012) Per Rader CJ (in dissent) Thus, patents properly remain a tool for research and experimentation because the system encourages publication and sharing of research results. Disclosure of how to make and use the invention is the "quid pro quo" of the patent grant. See JEM Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001). In exchange for disclosure, the inventor receives a limited term of exclusivity to benefit from commercialization of his invention. Without this promise of exclusivity, researchers at corporations would be forced to turn to secrecy as the best protection for their inventions. Even academic researchers may delay publication of results in order to maintain an edge over the competition, Cohen & Walsh, supra at 14, and the race to the patent office helps counteract this tendency toward secrecy by rewarding earlier disclosure. "The information in patents is added to the store of knowledge with the publication/issuance of the patent.... [It] is not insulated from analysis, study, and experimentation for the twenty years until patent expiration." Classen, 659 F.3d at 1072. Rather, information shared through patent applications is immediately available for others to build upon. It speeds the progress of scientific endeavor. In other words, the patent system's modern benefits facilitate experimentation far more than any hypothetical inhibition. The public disclosure requirements to obtain a patent will stimulate further innovations. Kewanee Oil Co. v. Bicron Corp., 416 US 470 (1974) When a patent is granted and the information contained in it is circulated to the general public and those especially skilled in the trade, such additions to the general store of knowledge are of such importance to the public weal that the Federal Government is willing to pay the high price of 17 years of exclusive use for its disclosure, which disclosure, it is assumed, will stimulate ideas and the eventual development of further significant advances in the art.

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The patent system seeks not only superior inventions but also but also a multiplicity of inventions. Vornado Air Systems v. Duracraft Corp., 58 F. 3d 1498 (10th.Cir.1995) In this respect, it is significant that the framers of the patent system did not require an inventor to demonstrate an invention's superiority to existing products in order to qualify for a patent. That they did not do so tells us that the patent system seeks not only superior inventions but also a multiplicity of inventions. A variety of choices is more likely to satisfy the desires of a greater number of consumers than is a single set of products deemed "optimal" in some average sense by patent examiners and/or judges. And the ability to intermingle and extrapolate from many inventors' solutions to the same problem is more likely to lead to further technological advances than is a single, linear approach seeking to advance one "superior" line of research and development. The incentives provided by patents leads to inventions being discovered earlier than they otherwise would have been. Kewanee Oil Co. v. Bicron Corp. 416 US 470 (1974) The ripeness-of-time concept of invention, developed from the study of the many independent multiple discoveries in history, predicts that if a particular individual had not made a particular discovery others would have, and in probably a relatively short period of time. If something is to be discovered at all very likely it will be discovered by more than one person. Singletons and Multiples in Science (1961), in R. Merton, The Sociology of Science 343 (1973); J. Cole & S. Cole, Social Stratification in Science 12-13, 229-230 (1973); Ogburn & Thomas, Are Inventions Inevitable?, 37 Pol. Sci. Q. 83 (1922). Even were an inventor to keep his discovery completely to himself, something that neither the patent nor trade secret laws forbid, there is a high probability that it will be soon independently developed. If the invention, though still a trade secret, is put into public use, the competition is alerted to the existence of the inventor's solution to the problem and may be encouraged to make an extra effort to independently find the solution thus known to be possible. The inventor faces pressures not only from private industry, but from the skilled scientists who work in our universities and our other great publicly supported centers of learning and research. Perspectives on patent eligibility

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Patent eligibility is interpreted as being intentionally broad to promote innovation. Bilski v. Kappos, 130 S. Ct. 3218 Congress plainly contemplated that the patent laws would be given wide scope."Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). Congress took this permissive approach to patent eligibility to ensure that "`ingenuity should receive a liberal encouragement.'" Id., at 308-309, 100 S.Ct. 2204 (quoting 5 Writings of Thomas Jefferson 75-76 (H. Washington ed. 1871)). Diamond v. Chakrabarty, 447 US 303 The relevant legislative history also supports a broad construction. The Patent Act of 1793, authored by Thomas Jefferson, defined statutory subject matter as "any new and useful art, machine, manufacture, or composition of matter, or any new or useful improvement [thereof]." Act of Feb. 21, 1793, 1, 1 Stat. 319. The Act embodied Jefferson's philosophy that "ingenuity should receive a liberal encouragement." 309*309 5 Writings of Thomas Jefferson 75-76 (Washington ed. 1871). See Graham v. John Deere Co., 383 U. S. 1, 7-10 (1966). Subsequent patent statutes in 1836, 1870 and 1874 employed this same broad language. In 1952, when the patent laws were recodified, Congress replaced the word "art" with "process," but otherwise left Jefferson's language intact. CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS granted. Congress plainly contemplated that the patent laws would be given wide scope."); Bilski, 130 S.Ct. at 3225 ("Congress took this permissive approach to patent eligibility to ensure that `ingenuity should receive a liberal encouragement.'" (quoting Chakrabarty, 447 U.S. at 308, 100 S.Ct. 2204)). Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 I agree that the definition of invention in the Patent Act is broad. Because the Act was designed in part to promote innovation, it is only reasonable to expect the definition of invention to be broad enough to encompass unforeseen and unanticipated technology. I cannot however agree with the suggestion that the definition is unlimited in the sense that it includes anything under the sun that is made by man Parliament did not leave the definition of invention open, but rather chose to define it exhaustively. Regardless of the desirability of a certain activity, or the necessity of

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creating incentives to engage in that activity, a product of human ingenuity must fall within the terms of the Act in order for it to be patentable. Patent eligibility principles limit what can be patented to ensure that what can be patented is broad but not unlimited. In the U.S., the courts' precedents provide three judicially created exceptions to 101's broad patent-eligibility principles. Association for Molecular Pathology v USPTO, 689 F.3d 1303 (Fed.Cir.2012). The Court concepts covered by these exceptions are `part of the storehouse of knowledge of all men . . . free to all men and reserved exclusively to none.'" Bilski, 130 S. Ct. at 3225 Laws of nature, natural phenomena, and abstract ideas are not patentable. Diamond v. Chakrabarty, 447 US 303 (1980) This is not to suggest that 101 has no limits or that it embraces every discovery. The laws of nature, physical phenomena, and abstract ideas have been held not patentableThus, a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc[2]; nor could Newton have patented the law of gravity. Such discoveries are "manifestations of . . . nature, free to all men and reserved exclusively to none. Diamond v. Diehr, 450 U.S. 175 (1981). This Court has undoubtedly recognized limits to 101 and every discovery is not embraced within the statutory terms. Excluded from such patent protection are laws of nature, natural phenomena, and abstract ideas "A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right." Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289 (2012) We find that the process claims at issue here do not satisfy these conditions. In particular, the steps in the claimed processes (apart from the natural laws themselves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field. At the same time, upholding the patents would risk disproportionately tying up the use of the underlying natural laws, inhibiting their use in the making of further discoveries The Court has repeatedly emphasized this last mentioned concern, a concern that patent law not inhibit further discovery by improperly tying up the future use of laws of nature

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These statements reflect the fact that, even though rewarding with patents those who discover new laws of nature and the like might well encourage their discovery, those laws and principles, considered generally, are "the basic tools of scientific and technological work." Benson, supra, at 67, 93 S.Ct. 253. And so there is a danger that the grant of patents that tie up their use will inhibit future innovation premised upon them, a danger that becomes acute when a patented process amounts to no more than an instruction to "apply the natural law," or otherwise forecloses more future invention than the underlying discovery could reasonably justify. Mental processes cannot be patented. Gottschalk v. Benson, 409 U.S. 63, 67 (1972). Products of nature cannot be patented. Chakrabarty, 447 U.S. at 313 ("[T]he relevant distinction for purposes of 101 is . . . between products of nature . . . and human-made inventions."). There are exceptions to patentability in Canada as well. Tennessee Eastman Co. et al. v. Commissioner of Patents, [1974] SCR 111 The provisions of the Patent Act (R.S.C. 1952, c. 203, now R.S.C., c. P-4) relevant to this case include first, the definition of invention namely subs. (d) of s. 2 above referred to invention means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter This must be read subject to s. 28(3) which is as follows: No patent shall issue for an invention that has an illicit object in view, or for any mere scientific principle or abstract theorem.Having come to the conclusion that methods of medical treatment are not contemplated in the definition of invention as a kind of process, the same must, on the same basis, be true of a method of surgical treatment. In this connection, I would note that in Imperial Chemical Industries v. Commissioner of Patents, the Exchequer Court decided that an anaesthetic was a substance intended for medicine within the meaning of s.41(1), relying on the decision of this Court in Parke Davis & Co. v. Fine Chemicals of Canada Ltd. in which it was held that the word medicine should be interpreted broadly so as to include the product in bulk as well as in dosage form.

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Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 The sole question in this appeal is whether the words manufacture and composition of matter, in the context of the Patent Act, are sufficiently broad to include higher life forms. If these words are not sufficiently broad to include higher life forms, it is irrelevant whether this Court believes that higher life forms such as the oncomouse ought to be patentable. The grant of a patent reflects the interest of Parliament to promote certain manifestations of human ingenuity. As Binnie J. indicates in his reasons, there are a number of reasons why Parliament might want to encourage the sort of biomedical research that resulted in the oncomouse. But there are also a number of reasons why Parliament might want to be cautious about encouraging the patenting of higher life forms. In my view, whether higher life forms such as the oncomouse ought to be patentable is a matter for Parliament to determine. This Courts views as to the utility or propriety of patenting non-human higher life forms such as the oncomouse are wholly irrelevant. Having considered the relevant factors, I conclude that Parliament did not intend to include higher life forms within the definition of invention found in the Patent Act. In their grammatical and ordinary sense alone, the words manufacture and composition of matter are somewhat imprecise and ambiguous. However, it is my view th at the best reading of the words of the Act supports the conclusion that higher life forms are not patentable. As I discuss below, I do not believe that a higher life form such as the oncomouse is easily understood as either a manufacture or a composition of matter. For this reason, I am not satisfied that the definition of invention in the Patent Act is sufficiently broad to include higher life forms. This conclusion is supported by the fact that the patenting of higher life forms raises unique concerns which do not arise in respect of non-living inventions and which are not addressed by the scheme of the Act. Even if a higher life form could, scientifically, be regarded as a composition of matter, the scheme of the Act indicates that the patentability of higher life forms was not contemplated by Parliament. Owing to the fact that the patenting of higher life forms is a highly contentious and complex matter that raises serious practical, ethical and environmental concerns that the Act does not contemplate, I conclude that the Commissioner was correct to reject the patent application. This is a policy issue that raises questions of great significance and importance and that would appear to require a

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dramatic expansion of the traditional patent regime. Absent explicit legislative direction, the Court should not order the Commissioner to grant a patent on a higher life form. The exceptions to patentability are not applied too aggressively in the U.S. to avoid swallowing patent law entirely. Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289 (2012) The Court has recognized, however, that too broad an interpretation of this exclusionary principle could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS granted. Thus, even inventions that fit within one or more of the statutory categories are not patent eligible if drawn to a law of nature, a natural phenomenon, or an abstract idea. The underlying concern is that patents covering such elemental concepts would reach too far and claim too much, on balance obstructing rather than catalyzing innovation. But danger also lies in applying the judicial exceptions too aggressively because "all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012). Taken too far, the exceptions could swallow patent law entirely. Patentable subject matter for computer related inventions has been particularly problematic, especially business method patents. Bilski v. Kappos, 130 S. Ct. 3218; Canada (Attorney General) v. Amazon.com, Inc., 2011 FCA 328 CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS granted. "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." 35 U.S.C. 101 (2006). Short and unadorned, 101 appears deceptively simple on its face, yet its proper application to computer-implemented inventions and in various other fields of technology has long vexed this and other courts. Patent principles to advance innovation and prevent unjustified monopolies

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Patent laws requirements that an invention be novel, nonobvious, useful, and be fully described are intended to balance the goals of stimulating innovation without impeding progress. Bilski v. Kappos, 130 S. Ct. 3218 In order to receive patent protection, any claimed invention must be novel, 102, nonobvious, 103, and fully and particularly described, 112. These limitations serve a critical role in adjusting the tension, ever present in patent law, between stimulating innovation by protecting inventors and impeding progress by granting patents when not justified by the statutory design Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 Taken together, the novelty and nonobviousness requirements express a congressional determination that the purposes behind the Patent Clause are best served by free competition and exploitation of either that which is already available to the public or that which may be readily discerned from publicly available material. See Aronson v. Quick Point Pencil Co., 440 U. S. 257, 262 (1979) ("[T]he stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the use of the public"). CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F. 3d 1269 (Fed.Cir.2013) cert. to SCOTUS granted. It is also important to recognize that 101, while far-reaching, only addresses patent eligibility, not overall patentability. The statute directs that an invention that falls within one of its four enumerated categories "may" qualify for a patent; thus, inventions that are patent eligible are not necessarily patentable. As 101 itself explains, the ultimate question of patentability turns on whether, in addition to presenting a patenteligible invention, the inventor also satisfies "the conditions and requirements of this title," namely, the novelty, non-obviousness, and disclosure requirements of 35 U.S.C. 102, 103, and 112, among others. See 35 U.S.C. 101. Congress's broad approach to subject-matter eligibility ensures that the patent office doors remain open to most inventions, but even so, those that gain entry still must surmount various substantive and procedural hurdles that stand between patent eligibility and a valid patent. See Diamond v. Diehr, 450 U.S. 175, 191, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 (Binnie J, in dissent) The check on the indiscriminate grant of patents lies in the established criteria of utility, novelty and non-obviousness. Those are the criteria judged by Parliament to be

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relevant to its statutory purpose, which is to encourage ingenuity by rewarding its disclosure. The novelty requirement ensures that patent law does not impede innovation by ensuring that information in the public domain cannot be removed by patent law (or in the U.S.) State law. Kewanee Oil Co. v. Bicron Corp., 416 US 470 (1974) The Court has also articulated another policy of the patent law: that which is in the public domain cannot be removed therefrom by action of the States. "[F]ederal law requires that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent." Lear, Inc. v. Adkins, 395 U. S., at 668. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 For Jefferson, a central tenet of the patent system in a free market economy was that "a machine of which we were possessed, might be applied by every man to any use of which it is susceptible." 13 Writings of Thomas Jefferson 335 (Memorial ed. 1904). He viewed a grant of patent rights in an idea already disclosed to the public as akin to an ex post facto law, "obstruct[ing] others in the use of what they possessed before." Id., at 326-327. Jefferson also played a large role in the drafting of our Nation's second Patent Act, which became law in 1793. The Patent Act of 1793 carried over the requirement that the subject of a patent application be "not known or used before the application." Ch. 11, 1 Stat. 318, 319. A defense to an infringement action was created where "the thing, thus secured by patent, was not originally discovered by the patentee, but had been in use, or had been described in some public work 148*148 anterior to the supposed discovery of the patentee." Id., at 322. Thus, from the outset, federal patent law has been about the difficult business "of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not." 13 Writings of Thomas Jefferson, supra, at 335. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 Today's patent statute is remarkably similar to the law as known to Jefferson in 1793. Protection is offered to "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U. S. C. 101. Since 1842, Congress has also made protection available for "any new, original and
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ornamental design for an article of manufacture." 35 U. S. C. 171 The novelty requirement of patentability is presently expressed in 35 U. S. C. 102(a) and (b), which provide Sections 102(a) and (b) operate in tandem to exclude from consideration for patent protection knowledge that is already available to the public. They express a congressional determination that the creation of a monopoly in such information would not only serve no socially useful purpose, but would in fact injure the public by removing existing knowledge from public use. From the Patent Act of 1790 to the present day, the public sale of an unpatented article has acted as a complete bar to federal protection of the idea embodied in the article thus placed in public commerce. Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) Moreover, Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available. Innovation, advancement, and things which add to the sum of useful knowledge are inherent requisites in a patent system which by constitutional command must "promote the Progress of . . . useful Arts." This is the standard expressed in the Constitution and it may not be ignored. And it is in this light that patent validity "requires reference to a standard written into the Constitution." The not obvious requirement refuses protection to new developments where the differences between the subject matter sought to be patented and the prior art are such that the subject matter would have been obvious to a person of ordinary skill in the art. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 US 141 In addition to the requirements of novelty and utility, the federal patent law has long required that an innovation not be anticipated by the prior art in the field. Even if a particular combination of elements is "novel" in the literal sense of the term, it will not qualify for federal patent protection if its contours are so traced by the existing technology in the field that the "improvement is the work of the skillful mechanic, not that of the inventor." Hotchkiss v. Greenwood, 11 How. 248, 267 (1851). In 1952, Congress codified this judicially developed requirement in 35 U. S. C. 103, which refuses protection to new developments where "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at
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the time the invention was made to a person of ordinary skill in the art to which said subject matter pertains." The nonobviousness requirement extends the field of unpatentable material beyond that which is known to the public under 102, to include that which could readily be deduced from publicly available material by a person of ordinary skill in the pertinent field of endeavor. See Graham, 383 U. S., at 15. Apotex Inc. v. Sanofi-Synthelabo Canada Inc., [2008] 3 SCR 265 The definition of invention in s. 2 of the Act is relevant because at the time the pre-October 1, 1989 version of the Act was in force, there was no statutory provision expressly providing that obvious inventions were unpatentable. As explained by Professor D. Vaver in Intellectual Property Law: Copyright, Patents, Trade-marks (1997), at p. 136:Until very recently, the Patent Act did not expressly say that obvious inventions were unpatentable. Courts implied this criterion from the notion of invention. Inventions implied inventive ingenuity, without which an advance was obvious; and patents are not granted for the obvious. The disclosure requirement serves the purpose of enabling third parties to make and use the invention and to know the boundaries of the invention. The public is supposed to know what is safe and lawful. Eli Lilly and Co. v. Premo Pharmaceutical Labs., 630 F. 2d 120 (3rd.Cir.1980) that 112 has two primary purposes: (1) to require the patentee to make "a sufficient disclosure to enable one skilled in the art to reconstruct the invention"; and (2) to compel the patentee to "describe his invention with sufficient definiteness to enable others to discern the boundaries beyond which experimentation and invention are undertaken at the risk of infringement."[53] In Carter-Wallace, Inc. v. Otte,[54] the court went on to declare that, in cases involving the patentability of structurally obvious chemical compounds, the disclosure standards should be particularly high because otherwise "the public will not obtain the benefit of the particular use which justified the grant of the patent." Graham v. John Deere Co. of Kansas City, 383 US 1 (1966) As a member of the patent board for several years, Jefferson saw clearly the difficulty in "drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not." The board on which he served sought to draw such a line and formulated several rules which are preserved in Jefferson's correspondence.Despite the
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board's efforts, Jefferson saw "with what slow progress a system of general rules could be matured." Because of the "abundance" of cases and the fact that the investigations occupied "more time of the members of the board than they could spare from higher duties, the whole was turned over to the judiciary, to be matured into a system, under which every one might know when his actions were safe and lawful." Letter to McPherson, supra, at 181, 182. Apparently Congress agreed with Jefferson and the board that the courts should develop additional conditions for patentability. Although the Patent Act was amended, revised or codified some 50 times between 1790 and 1950, Congress steered clear of a statutory set of requirements other than the bare novelty and utility tests reformulated in Jefferson's draft of the 1793 Patent Act. Bristol-Myers Squibb Co. v. Canada (Attorney General), [2005] 1 SCR 533 The function of the description contained in the specification is both to enable the construction and use of the devices contained therein after the expiry of the patent, and also to enable others to ascertain with some measure of exactness the boundaries of the exclusive privilege upon which they may not trespass during the existence of the grant. Teva Canada Ltd. v. Pfizer Canada Inc., [2012] 3 S.C.R. 625 The issues in this appeal are best understood by reference to the fundamental principles underlying the patent system The role of the patent specification in the quid pro quo was described as follows by Lord Halsbury in Tubes, Ld. v. Perfecta Seamless Steel Tube Company, Ld. (1902), 20 R.P.C. 77, at pp. 95-96: . . . if one has to look at first principles and see what the meaning of a Specification is . . . why is a Specification necessary? It is a bargain between the State and the inventor: the State says, If you will tell what your invention is and if you will publish that invention in such a form and in such a way as to enable the public to get the benefit of it, you shall have a monopoly of that invention for a period of fourteen years. That is the bargain. The meaning which I think, in my view of the Patent Law, has always been placed on the object and purpose of a Specification is that it is to enable, not anybody, but a reasonably well informed artisan dealing with a subject-matter with which he is familiar, to make

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the thing, so as to make it available for the public at the end of the protected period. [Emphasis added.] Patents with claims that are too broad, questionable validity or are vague have the potential to stifle innovation and result in patent thickets. Association for Molecular Pathology v USPTO, 689 F.3d 1303 (Fed.Cir.2012) Of course, in light of its breadth, claim 5 of the '282 patent is likely to be invalid on other grounds, and thus a ruling as to patent eligibility with respect to that claim may be superfluous. Nonetheless, it is important to consider the effects of such broad patent claims on the biotechnology industry. While Myriad has emphasized the biotechnology industry's need of patent protection to encourage and reward research in this difficult and important field, there is another side to the coin. Broad claims to genetic material present a significant obstacle to the next generation of innovation in genetic medicine multiplex tests and whole-genome sequencing. New technologies are being developed to sequence many genes or even an entire human genome rapidly, but firms developing those technologies are encountering a thicket of patents. Secretary's Advisory Comm. on Genetics, Health, and Society, Dep't of Health & Human Servs., Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests 49-62 (2010). In order to sequence an entire genome, a firm would have to license thousands of patents from many different licensors. See id. at 50-51. Even if many of those patents include claims that are invalid for anticipation or obviousness, the costs involved in determining the scope of all of those patents could be prohibitive. See id. at 51-52; Rebecca S. Eisenberg, Noncompliance, Nonenforcement, Nonproblem? Rethinking the Anticommons in Biomedical Research, 45 Hou. L. Rev. 1059, 1076-1080 (2008) (concluding that existing studies "have focused relatively little attention on downstream product development" and that interviews accompanying those studies suggest that, though smaller than initially feared, the costs associated with the patent thicket are "quite real in the calculations of product-developing firms"). Bilski v. Kappos, 130 S. Ct. 3218 At the same time, some business method patents raise special problems in terms of vagueness and suspect validity. See eBay Inc. v. MercExchange, L.L. C., 547 U.S. 388, 397, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) (KENNEDY, J., concurring). The Information Age empowers people with new capacities to perform statistical analyses and mathematical calculations with a speed and
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sophistication that enable the design of protocols for more efficient performance of a vast number of business tasks. If a high enough bar is not set when considering patent applications of this sort, patent examiners and courts could be flooded with claims that would put a chill on creative endeavor and dynamic change. Free World Trust v. lectro Sant Inc., [2000] 2 SCR 1024 The scope of patent protection must not only be fair, it must be reasonably predictable. A patent is, after all, a public instrument issued under statutory authority which may result in severe financial consequences for its infringement. The scope of its prohibition should be made clear so that members of the public may know where they can go with impunity. As was said in another public law connection by Gonthier J. in R. v. Nova Scotia Pharmaceutical Society, 1992 CanLII 72 (SCC), [1992] 2 S.C.R. 606, at p. 639, precision in public enactments is required to sufficiently delineate an area of risk. The patent system is designed to advance research and development and to encourage broader economic activity. Achievement of these objectives is undermined however if competitors fear to tread in the vicinity of the patent because its scope lacks a reasonable measure of precision and certainty. A patent of uncertain scope becomes a public nuisance (R.C.A. Photophone, Ld. v. Gaumont-British Picture Corp. (1936), 53 R.P.C. 167 (Eng. C.A.), at p. 195). Potential competitors are deterred from working in areas that are not in fact covered by the patent even though costly and protracted litigation (which in the case of patent disputes can be very costly and protracted indeed) might confirm that what the competitors propose to do is entirely lawful. Potential investment is lost or otherwise directed. Competition is chilled. The patent owner is getting more of a monopoly than the public bargained for. There is a high economic cost attached to uncertainty and it is the proper policy of patent law to keep it to a minimum.

* I would like to thank Claire Gowdy, an articling student with McCarthy Tetrault for her research assistance with this paper.

[1] See, Intellectual Property and the U.S. Economy: Industries in Focus, Economics and Statistics Administration and the USPTO, March 2012 http://www.uspto.gov/news/publications/IP_Report_March_2012.pdf ; Intellectual property
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rights intensive industries: contribution to economic performance and employment in the European Union Industry-Level Analysis Report, European Patent Office and the EU Office for Harmonization in the Internal Markets, September 2013 http://documents.epo.org/projects/babylon/eponet.nsf/0/8E1E34349D4546C3C1257BF30034 3D8B/$File/ip_intensive_industries_en.pdf ; WIPO Studies on the Economic Contribution of the Copyright Industries (2013) http://www.wipo.int/export/sites/www/copyright/en/performance/pdf/economic_contributio n_analysis_2012.pdf ; Copyright Industries in the U.S. Economy: The 2013 Report, Canadian International Council, http://www.iipa.com/copyright_us_economy.html; Rights and Rents: Why Canada must harness its intellectual property resources http://www.opencanada.org/wpcontent/uploads/2011/10/CIC-IP-Report-2011.pdf . [2] See, U.S. House of Representatives Subcommittee on Courts, Intellectual Property, and the Internet, Scope of Fair Use, January, 28, 2014, http://judiciary.house.gov/index.cfm/2014/1/the-scope-of-fair-use, and Section 512 of Title 17, March 13, 2014, http://judiciary.house.gov/index.cfm/2014/3/section-512-of-title-17, USPTO, Green Paper on Copyright Policy, Creativity and Innovation in the Digital Economy July 2013 http://www.uspto.gov/news/publications/copyrightgreenpaper.pdf . [3]Public Consultation on the review of the EU copyright rules May 2013 http://ec.europa.eu/internal_market/consultations/2013/copyright-rules/index_en.htm [4] UK Changes to copyright law and guidance, in force June 2014 http://www.ipo.gov.uk/types/hargreaves/hargreaves-copyright/hargreaves-copyrighttechreview.htm [5]Irish Copyright Review Committee Report: Modernising Copyright, October 2013 http://infojustice.org/archives/31120 [6]Copyright and the Digital Economy (ALRC Report 122), February, 2014 http://www.alrc.gov.au/publications/copyright-report-122 [7]PatCon 4: The Patent Troll Debate, http://patentlyo.com/patent/2014/04/patcon-patentdebate.html?utm_target/=feedburner; A Historical Perspective of Patent Litigation: Continued Innovation & Recurrent Controversy, http://cpip.gmu.edu/2014/04/11/a-historicalperspective-of-patent-litigation-continued-innovation-recurrent-controversy/ ; Trolls at heart

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of patent litigation, Myths of the Patent Wars: An Explosion Of Patent Litigation Greater Than Any in History?, http://www.ipwatchdog.com/2014/04/08/myths-of-the-patent-wars-patentlitigation-explosion/id=48977/

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