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A patent is

an exclusive right granted for a fixed period of time to someone who invents or discovers (1) a new and useful process, machine, manufacture, or composition of matter or (2) any new and useful improvement of such items.[1]

Patents are

an exclusive right issued by authorised bodies to inventors to make use of and exploit their inventions for a limited period of time (generally 20 years). Patents are granted to firms, individuals or other entities as long as the invention is novel, non-obvious and industrially applicable.[2]

U.S. patent[]


A patent is a form of intellectual property protection authorized by the Patent clause of the U.S. Constitution (Art. 1, § 8, cl. 8). It is a property right granted by the U.S. Government to an inventor “to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States” for a limited time in exchange for public disclosure of the invention when the patent is granted.[3] The award of a patent permits the creator of an idea to exclude others temporarily from use of that concept without compensation. It also places the information associated with an invention within the public domain.

The basic quid pro quo contemplated by the Constitution and the Congress for granting a patent monopoly is the benefit derived by the public from an invention with substantial utility.[4]

Patent rights do not arise automatically. Under the Patent Act of 1952, an inventor must prepare and submit applications to the U.S. Patent and Trademark Office ("USPTO") if they wish to obtain patent protection.[5] USPTO officials known as examiners then assess whether the application merits the award of a patent.[6]

However, there is no statutory requirement that a patentee must practice the invention; the patentee is free to license to others the right to make, use, or sell the invention.[7] Nor does the grant of a patent give a patent holder an affirmative right to use the invention if, in doing so, it would be infringing someone else's patent.

Rationale for the patent system[]

As stated by the U.S. Supreme Court:

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.[8]

Innovation typically is knowledge-driven — based on the application of knowledge, whether it is scientific, technical, experiential, or intuitive. Innovation also produces new knowledge. One characteristic of knowledge that underlies the patent system is that it is a "public good," a good that is not consumed when it is used. As John Shoven of Stanford University pointed out, "[t]he use of an idea or discovery by one person does not, in most cases, reduce the availability of that information to others."[9] Therefore, the marginal social cost of the widespread application of that information is near zero because the stock of knowledge is not depleted. "Ordinarily, society maximizes its welfare through not charging for the use of a free good."[10] However, innovation typically is costly and resource intensive. Patents permit novel concepts or discoveries to become "property" when reduced to practice and therefore allow for control over their use. They "create incentives that maximize the difference between the value of the intellectual property that is created and used and the social cost of its creation."[11]

If discoveries were universally available without the means for the inventor to realize a return on investments, there would be a "much lower and indeed suboptimal level of innovation."[12] While research is often important to innovation, studies have shown that it constitutes only 25% of the cost of commercializing a new technology or technique, thus requiring the expenditure of a substantial amount of additional resources to bring most products or processes to the marketplace. The grant of a patent provides the inventor with a means to capture the returns to his invention through exclusive rights on its practice for 20 years from the date of filing. That is intended to encourage those investments necessary to further develop an idea and generate a marketable technology.

Issuance of a patent provides the inventor with a limited-time monopoly that is influenced by other mitigating factors, particularly the requirements for information disclosure, the length of the patent, and the scope of the rights conferred. The process of obtaining a patent places the concept on which it is based in the public domain. In return for a monopoly right to the application of the knowledge generated, the inventor must publish the ideas covered in the patent. As a disclosure system, the patent can, and often does, stimulate other firms or individuals to "invent around" existing patents to provide for parallel technical developments or meet similar market needs.

The patent system thus has dual policy goals — providing incentives for inventors to invent and encouraging inventors to disclose technical information.[13] Disclosure requirements are factors in achieving a balance between current and future innovation through the patent process, as are limitations on scope, novelty, and nonobviousness.[14] They give rise to an environment of competitiveness with multiple sources of innovation, which is viewed by some experts as the basis for technological progress.[15]

Criticism of the patent system[]

Patents are intended to provide an incentive to encourage the investment necessary to develop an idea and bring it to the marketplace embodied in a product or process. However, not everyone agrees that the patent system is a particularly effective means to stimulate innovation. While patents allow the inventor to obtain a larger portion of the returns on resource expenditures, they do not permit him to capture all of the benefits. Patents can be circumvented and infringement cannot always be proven. The efficacy of patents is perceived differently among individual industrial sectors.

Inventions of U.S. government employees[]

"The patent rights to any patentable creation developed by Federal employees in the course of their official duties belong to the government. The government is not required to take title if it would be inequitable or if it has insufficient interest in the invention. In such cases, the government may waive its patent right and the employee may seek a private patent. Even in such cases, however, the government retains a nonexclusive, irrevocable, royalty-free license with the power to grant licenses to others for all government purposes."[16]


  1. Intellectual Property: Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality, at 1 n.1.
  2. M. Khan & H. Dernis, "Global Overview of Innovative Activities from the Patent Indicators Perspective," STI Working Paper No. 2006/3 (2006) (full-text).
  3. 35 U.S.C. §§154(a)(1), 271(a).
  4. Brenner v. Manson, 383 U.S. 519, 534-35 (1966) (full-text).
  5. The 1952 Patent Act, as amended, is codified at 35 U.S.C. §1 et seq.
  6. 35 U.S.C. §131.
  7. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1547, 35 U.S.P.Q.2d (BNA) 1065 (Fed. Cir. 1995)(full-text).
  8. Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979)(full-text).
  9. John Shoven, "Intellectual Property Rights and Economic Growth," in Walker, Intellectual Property Rights and Capital Formation in the Next Decade, at 46.
  10. Robert P. Benko, "Intellectual Property Rights and New Technologies," in Intellectual Property Rights and Capital Formation in the Next Decade 27.
  11. Stanley M. Besen & Leo J. Raskind, "An Introduction to the Law and Economics of Intellectual Property," J. of Econ. Perspective 5 (Winter 1991).
  12. Kenneth W. Dam, "The Economic Underpinnings of Patent Law," J. of Legal Studies 247 (Jan. 1994).
  13. Robert P. Merges, "Commercial Success and Patent Standards: Economic Perspectives on Innovation," Cal. L. Rev. 876 (July 1998).
  14. Kenneth Van Dam, at 266-67.
  15. Robert P. Merges & Richard R. Nelson, "On the Complex Economics of Patent Scope," Colum. L. Rev. 908 (May 1990) ("[When only] a few organizations controlled the development of a technology, technical advance appears sluggish.").
  16. Defense Acquisition University, ACQuipedia, Intellectual Property and Data Rights (full-text).


  • Patents and Innovation: Issues in Patent Reform, at 5-6.

See also[]