The Patent System In The Pharmaceutical Industry International Law Essay

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Intellectual property has been protected globally for over 100 years.Patents are the strongest form of intellectual property, giving rise to a monopoly in the working of an invention either in relation to a product or a process. [2] Section 2 of the Patents Act [3] defines an invention as "any new and useful art whether producing a physical effect or not, process, machine, manufacture or composition of matter which is not obvious or any new or useful improvement thereof which is not obvious, capable of being used or applied in trade or industry and includes an alleged invention".

Such a monopoly should be granted where it would give rise to appropriate benefits in the wider public interest, for example, progress in science. In Darcy v Allin [4] it was held that the patent offended against common law and statute and, in highlighting the damages of monopolies too easily granted, paved the way for the Statute of Monopolies. Thus the patent system had its wheels set in motion as monopolies where limited.

A broader definition is found in the Background Reading Material on Intellectual Property [5] wherein, it is defined as a document, issued upon application, by a government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent. Generally a patent is conferred protection for a limited time usually (15 to 20 years). Another definition is found in The Columbian Encyclopedia [6] : today patent refers to the granting to the inventor of a useful product or process the privilege to exclude others from making the invention.


The idea of protecting innovation and gaining economic advantage from the invention is not a new one. [7] As early as the 12th Century the practice of granting privileges to citizens first found voice in Venice. The first patent recorded anywhere in the world was granted in 1442 to Antonius Marini, who offered to build 24 flour mills for each of Venice's boroughs. A professor in mathematics at Padua, Galileo was the most famous inventor to receive a patent from Venice. The history of patents is linked with the history of monopolies that were popular in the middle ages.

Although many changes have been made to the English Statute of Monopolies which was passed in 1624 it remains the basis of both the British and United States patent system to this day. It was introduced by James I after public outcry of the privilege system of granting patents. The statute stated:

"any letters patent and grants of privilege for the term of fourteen years or under, hereafter to be made, of the sole working or making of any manner of new manufactures within this realm, to the true and first inventor of such manufactures which others at the time of making such letters patents and grants shall not use."

The monarchy and other institutions like the 'Maison du Roi' granted patents in France. The Academy examined novelty [8] .


Requirements for the Registration of a Patent

The substantive conditions for patentability are:


Involves an Inventive Step;

Industrially applicable.

They are substantive in the sense that they encompass the essence, the technical content of the technical solution claimed to be on invention in the patent application. There are however further requirements required for example, subject matter.

The invention must be new or novel - the invention must show characteristics not derived in prior art in the technical field. Such an analysis is factual with the question asked being 'has the same invention already been made public.' The WIPO Model Law for developing Countries on Inventions proposes the so called universal definition of novelty, which encapsulates knowledge from all over the globe as far as it stems from a "publication in tangible form". On the other hand, oral disclosure or use only constitutes prior art if it occurs in the country. [9] 

Pending a decision was the issue of whether patent protection should be granted to the person who first conceived the idea in his mind (invention system) or the person who was first to file in the Patents Office (application system). Thus countries like the United States of America which still have the invention system have included further prerequisites for patent protection that is not only should the inventor conceive in his/her mind but the latter should put such invention to practice.

Therefore an invention which has already been handed over to the patents office would thus be disclosed and belongs to the public domain and can no longer be monopolized by anyone else. In Morrel v Norton and Co Ltd '…The concept of novelty must not be given such a narrow interpretation that only what has already been described in the same terms is prejudicial to it. The purpose of Article (54)1 [10] is to prevent the state of art being patented again.

It must show an inventive step - it is not sufficient that the invention claimed must be new, it must be such which cannot be deduced by a person of average knowledge of the technical field. The difference that exists in prior art must have two characteristics namely : (i) it must be inventive in the sense that it should be the product of a creative idea and (ii) it must be a step, that is, it must be noticeable.

Thus there must be a noticeable difference from the invention claimed and prior art. It is submitted that the requirement that the step be 'inventive' means it must be the result of a creative idea. In addition the difference must be 'non obvious' this perception is expressed in many patent laws and the Patent Cooperation Treaty.

Non obviousness is a subjective test of "the person having ordinary skill in the art." [11] Such a decision must be made by comparing the two. The test for inventive step in Windsurfing International Inn v Tabur Marine GB Ltd [12] has been slightly reworded in the more recent Court of Appeal case of Pozzoli Spa v BDMO SA & Anor [13] 

'Identify the notional "person skilled in the art". Identify the relevant common knowledge of that person;

Identify the inventive concept of the claim in question or if that cannot readily be done, construe it;

Identify what if any differences exist between the matter cited as forming part of the "state of art" and the inventive concept of the claim or a claim as construed;

Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?' [14] 

It must be industrially applicable. It must be capable of being applied for practical purposes. Thus the invention cannot be purely theoretical. Article 52(4) European Patents Convention excludes "methods for treatment of the human and animal body by surgery or therapy and diagnostic methods practiced on the human or animal body" from patentability, the reason being these methods are regarded as not susceptible to industrial application. The rationale is "to deny patent protection to methods which serve medical purposes, so that no one could be hampered in the practice of medicine by patent legal action."

Subject matter should be patentable at law - Section 2A of the Patent Act [15] provides that a patent should not be granted under this Act for (a) diagnostic, therapeutic or surgical methods for the treatment of human beings or animals; or 9b0 plants and animals other than micro- organisms or (c) essentially biological processes for the production of plants or animals other than micro biological processes, Lux Traffic Controls Ltd v Pike Signals Ltd 1993 RPC 107.

Patent protection for subject matter differs from country to country for example in Asia and the Pacific region.

Inventions contrary to public health or morality China, India, Nepal

Scientific discoveries theories and mathematical methods: China and Thailand

Pharmaceutical products: China, India, Thailand

Substances produced by chemical processes: China and India.


A number of theories have been submitted which justify the patent system. Four arguments justified the patent system during the industrial revolution namely: the natural law thesis, the reward-by-monopolies thesis, the monopolies-profit thesis and the exchange-for secrets thesis. [16] 

The natural law or natural right thesis presupposes that the creations of one's mind are the personal and exclusive property of the creator (the person), thus the unauthorized use of one's ideas was seen as theft. The French Patent Law of 1791 enshrined such reasoning and was advocated by J R Mc Culloch during the patent reform campaign of the 1820's: If anything can be called a man's exclusive property, it is surely that which owes its birth entirely to combinations formed in his own mind, and which, but for his ingenuity, would not have existed".

The reward-by-monopoly thesis was widely used to justify patents. It was primarily based on the notion that an inventor had to be rewarded according to the usefulness of his/her invention. Since the reward could not be secured by market forces the government had to step in and provide a limited monopoly. Jeremy Bentham [17] justified patents where he said:

"A man will not be at the expense and trouble of bringing to maturity (an) invention unless he has a prospect of an adequate satisfaction, this is to say, at least of such a satisfaction as his eyes appears an adequate one, for such troubles and expense." [18] 

The monopoly-profit-inventive thesis which put forward the notion that private reward can be an incentive, however such reward was concerned with just profits that could be made during the duration and exclusiveness of the monopoly itself. There is strong evidence of the belief in the causal link between patents, invention and industrial development. In 1791 Sir William Pultney could write to Lord Kenyon that:

"I think (patents) have been one of the greatest causes of important discoveries which in this country have so much improved our manufactures and trade…If new inventions "he concluded, "are not patented, England's sun is set…and … the mechanical genius of this country will sleep…"

The final justification was the exchange-for-secrets thesis or the disclosure agreement. It is premised on the 18th Century idea of contract where the inventor and society would make an agreement. One offering temporary protection while the other offered knowledge of the new techniques. This argument differed from the incentive argument in that disclosure was not related to the supply of inventive output. It was concerned with the dissemination of information of existing techniques which would otherwise remain secret. In King v Artwright [19] and in Williams v Williams Lord Eldon held that the patentees where "purchasers from the public": patents were exchanged for secrets.


Four incentives are primarily embodied in the patent system, namely: in the first place to invent; once made the invention is to be disclosed; the sums essential to experiment must be invested; and to design around and improve upon earlier patents.

Patents provide incentives for economically efficient research and development (R & D).

Without patents, large companies would invest less in R&D or it may be scrapped completely, thus there would be no technological advances or breakthroughs. Such would be the result, if third parties could freely exploit any new developments. A study conducted by the Intellectual Property Trade Society reveals that more than 430 billion euros was invested by 2000 of the largest global companies in 2008 in their R&D departments.

Patents facilitate and encourage disclosure of inventions into the public domain for the common good.

If an inventor was not offered legal protection for his/her invention they would keep it a closely guarded secret. Thus by affording and inventor such protection when the limited monopoly expires the public will have an opportunity to understand the techniques or advance such an invention. Having a public record of the invention also has the advantage that in the case of the death of the patentee the creation is not lost to humanity.

A small time inventor can take advantage of the exclusive right position to become a licensor which is one of the effects of modern patent usage. The basic purpose of the right of priority is to safeguard, for a limited period, the interests of a patent applicant in his endeavour to obtain international protection for his invention, thereby alleviating the negative consequences of the principle of territoriality in patent law.


The complete or partial opposition to the patent regime constitutes a criticism of intellectual property and is usually associated with the term "anti patent". [20] Criticisms reached an early peak in Victorian Britain between 1850-1880 and in the judgment of historian Adrian James "remains the strongest [campaign] ever undertaken against intellectual property", coming close to abolishing patents.

John's summarises some of the main arguments as follows: [21] 

"[Patents] projected an artificial idol of a single inventor, radically denigrated the role of intellectual commons, and blocked a path to this commons for other citizens-citizens who were all, on this account, potential investors too… Patentees were the equivalent of squatters on public land- or better, of uncouth market traders who planted their borrows in the middle of the highway and barred the way of people."

Patents were viewed as state grant monopolies inconsistent with free trade; in 1869 the Netherlands abolished them and then subsequently reintroduced them in 1912. [22] Further, they have been criticized as they are seen as meddlesome with the implementation of technology by nations in their stage of development, highlighting that many European nations in the early stages of economic development did not have patent laws for example, Switzerland. [23] 

Moreover the system is seen as an establishment that obscures the line between private investment in research and the prospect for potential returns on that investment (vis the right of investment). [24] 


The beneficiary of a compulsory license has the right to perform the acts covered by the exclusive right under an authorization given by an authority against the will of the owner of the patent for invention. The first international meeting on the issue of compulsory licenses was held in March, 1999 at the Palais des Nations in Geneva. It was organized by MSF [25] and the Consumer Project on Technology, Health Action International. The same groups of NGO's later that year held a conference in Amsterdam on increasing access to essential drugs in a globalized economy. The questions to be addressed were on the use of compulsory licensing, and mechanisms on increasing the export of medicines to countries with no and insufficient production capacity. Thus Amsterdam statement has served as a guide for the NGO's and other advocates of the TRIPS and public health. The Paris Convention [26] affords each contracting nation an opportunity to take legislative steps for the grant of compulsory licenses [27] which states:

"Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent abuses which might result from the exercise of the exclusive right conferred by the patent, for example failure to work."

An area of heated discussion has been that of drugs for treating serious diseases such as malaria, HIV & AIDS. The patent holding companies frequently charge prices for drugs which thwart their procurement by less developed countries.


The modern pharmaceutical industry is a highly competitive non-assembled [28] global industry. Its roots can trend back to the late 19th Century in the Upper Rhine Valley near Basel, Switzerland where found to have antiseptic properties. Overtime chemical companies moved to the development of pharmaceuticals and other synthetic chemicals. Research and Development was institutionalized after introduction and success of penicillin in the early forties. In the seventies coupled with tighter regulatory controls especially those governing the manufacture of 'generics' [29] 

The Pharmaceutical Industry and Patents

Pharmaceuticals are covered by a number of international agreements. The contemporary era of patenting began with the Convention of the Union of Paris [30] following the Vienna Conference [31] . The Patent Cooperation Treaty was signed in Washington on June 19, 1970 which began the process of international extension of stronger patent protection for medical products. The Munich Convention of October 3, 1973, implemented since October 7, 1978 defines the notion of a "European Patent". Additionally modifications of the original basic agreement led eventually to the definition of the European Community Patent, based on a convention signed in Luxembourg on December 15, 1975. [32] 

The pharmaceutical industry differs from other industries that rely on patent protection. Unlike, the medical field which emphasizes very early disclosure of inventions with technical based industries it is possible to keep an invention secret to the very last possible moment for filing. The reason being, the pharmaceutical industry is controlled and monitored by the government bureau to guarantee safety and effectiveness of products, and scientists have an obligation to disclose their findings when working in the field of human pathology.

Moreover, the lengthy time period it takes between filing and placing the product on the market means the pharmaceutical industry receives a shorter period of exclusivity.