Each time there is an invention of salience, it invariably IS accompanied by a pandemonium of patents. When I say,
salient, I mean inventions of the types of Alexander Graham Bell or Thomas
Elva Edison.
The rush of patents in the US
came in spurts.
The fungibility of IP assets is
huge. By fungibility is meant the exchangeability or interchangeability of
assets. That increases the valuation of an asset and also its attractiveness.
Whether the exponential
increase in patent filing could have been augmented by the failure or demise of
the open source movement, is indeed a moot point, and I doubt if anyone would
have an assessment of what the impact possibly could be.
1982 and 1998 are two milestone
years for patenting on the wall street. In 1982, Merril Lynch received a patent
for its cash management system. In the year 1998, Signature Financial Group
received a patent for its hub and spoke model for fund transfer and management.
This broke free the long standing myth that Patents could be granted for
tangible products only.
Phase I of patent filings :
1880 - 1900
While, India was still
convalescing from the rigorous clamp down on the natives by the colonial
machinery as an aftermath of the revolt of 1857, America was surging ahead in
one of its most innovative phases, having filed 20,000 patents in 1880. This
patents were all based around the inventions of the steam engine, telegraph,
telephone and electric power. There was a spurt of about 60 pct (from 12,000 to
20,000) in the filing patents.
Phase II of patent Filing :
1902 – 1920
This phase saw a second
resurgence in the patents being filed, from 20,000 per annum to 40,000 per
annum in America due to the inventions and advances made in Flying (you could
still not call it Aviation) and automobile industries.
Phase III of patent filing :
1960s – 1980s
Due to the advances in the
plastics, aerospace and computer industry, the filing per annum of patents
increased from 40,000 to 60,000
While the most important role
played by patents is the protection of profit for the inventor, imparting to
him the first mover advantage, the downside is frivolous patenting that on many
occasions results in curbing innovation, and denying the benefit of incremental
innovations to the people. Mindlessly granting patents to the patentee often
stifles academic freedom and monopolizes technological innovation.
Just as 40 years ago, patents
on biotechnology, particularly the strains were very controversial, 20 years
ago, it was the increased patenting of the business processes just as we saw in
the case of Merril Lynch, that courted controversy.
But the culture of patenting is
gaining strength. In the pre 1970s era, it was only the big companies that used
to file patents and often in collaboration with Universities. In the 70s, the
smaller companies constituted about 5 pct o patenting, but just 20 years later,
25 pct of the patents were being filed by smaller companies.
The Section 3(d) of the Indian
Patent Law needs to be admired as a piece of bureaucratic foresight and
prudence, as patent fencing and ever-greening are increasingly becoming
hallmarks of life cycle management by big corporates.
Several dimensions of the
dictat of Supreme Court of India are noteworthy in the Glivec Patent case.
While it admonishes Novartis on its audacity of challenging the sense of
balance of the Indian patent act, it took complete cognizance of the economic
benefit that denial of such patent ever-greening brought to the patient
population of the country.
It is a matter of time that
several emerging markets, which today are feeling stifled by the MNC led
patenting environment, will adopt provisions in full or in some measure,
similar to the section of 3(d) of the Indian patent act. And on this I would
only say MNCs beware.
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