Creating a Research Use

Exemption that Better Fulfills

the Patent BargainKatherine J. Strandburg

DePaul University College of Law(2004 Wisconsin L. Rev.)

The Shrinking US Experimental Use

Exemption• Pecuniary interests of the patentee

⇓• Commercial v. Non-Commercial Nature of the Use

But . . . unstable because

Financial motives of infringer (commercial v. non)≠

Financial impact on patentee (incentives to invent)

DOOMED TO SHRINK – “Legitimate business of the infringer”

Experimenting “on” v.

Experimenting “with”

• Distinction seems to be gaining support

• Comports with emphasis on disclosure -- use of inventive idea during patent term

• Separate recouping appropriable investment from control over follow-on innovation

“Experimenting On”

Does it undermine incentives to invent?

KEY THEORETICAL IDEA:

Self-disclosing

v.

Non-self-disclosing Inventions

“Experimenting On”

• Incentive to Invent:– Free rider theory– Assumes inventive idea appropriable upon

commercialization– Trade secrecy not possible

Applies to self-disclosing inventions only!

• Incentive to Disclose:– Assumes inventive idea not disclosed by commercialization– Trade secrecy possible, patent “quid pro quo”

Applies to non-self-disclosing inventions only!

“Experimenting On”• Self-disclosing inventions

– Patent system provides “reimbursement” of investment– Increased disclosure requirements have little effect

• Non-self-disclosing inventions– Disclosure is primary public payoff– “Reimbursement” for invention not necessary– Increased disclosure requirements have large effect

“Experimenting on” - inherently differentiates between

these two types of inventions- does not have large impact on

incentive to invent

“Experimenting On”

• = increased disclosure requirement

• Should be permitted

• Self-disclosing/non-self-disclosing distinction is “self-executing”

“Experimenting On”v.

“Experimenting With”

Proposed test:

Could the use be replaced by more information about the invention?

YES: “Experimenting On”NO: “Experimenting With”

What about “Experimenting With” (Research Tools)?

• Trickier because cannot separate use of invention and use of inventive idea

Research use has:

direct impact on patentee’s market for invention

AND• direct impact on follow-on innovation

When Should We Worry?

• Only if tool patentee uses exclusivity to slow down publicly beneficial research by:

- not commercializing- not licensing to the best researchers

• Only slows down research if:No close substitutes for toolNo close substitutes for research

problem

When Might This Happen?

Tail Wagging the Dog? “Easy” research tools, difficult research

- Tool inventor competence

- Tool inventor resources

- Misaligned incentives:

Reputational incentives

Larger share of smaller pie

Can We Distinguish . . .

“Easy” tools, “Hard” research (tool patent may be a problem)

v.“Hard” tools,“Easy” research(tool patent not a

problem)

Inventor control of follow-on innovation(may be a problem)

v.Inventor recovery of investment(purpose of patent)

Proposal

• Separate “exclusivity term” from “investment recovery term”

• Two-tier patent term3-4 years complete exclusivityfollowed by compulsory licensing

Gives tool inventor chance to demonstrate:“hard” tool/”easy” researchcompetenceintent to promote rapid research

Thoughts on TRIPS

• Article 27: OK?

• Article 30: “limited”? “not unreasonable conflict with normal exploitation”? “not unreasonably prejudice legitimate interests” (patent holder and third parties)

• Article 31: Could work if procedure designed appropriately

Figure 1

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Invention

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Figure 2

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Figure 3

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Invention

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Figure 4

Self-Disclosing Patent

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Non-Self-DisclosingTrade Secret

Non-Self-DisclosingTrade Secret or Patent

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Figure 6S

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