Patent policies

Rationale and objectives

A patent is a legal title that gives the holder the right to exclude others from using a particular invention. If the invention is successful on the market the patent holder will profit from its monopoly power. Patents therefore allow inventors to internalise more of the benefits they generate: without such a mechanism inventions would be immediately imitated and inventors' return on their investment would be reduced. Patents are granted in return for disclosure of the invention: they therefore play a role in the diffusion of knowledge. Inventors and firms apply for patents at patent offices, which grant (or reject) patents for their jurisdiction (domestic market), in accordance with their legal statute. Most patent offices are national; the main exception is the European Patent Office (EPO).

Major aspects

Patent filings have exploded worldwide, rising from 997 000 applications filed in 1990 to 1 980 000 in 2010, according to the World Intellectual Property Organization (WIPO). Some observers have raised concerns regarding a decline in patent quality owing notably to lower legal standards of novelty and to the work overload of examiners in patent offices. Since the mid-2000s patent offices and court decisions have sought to raise quality. Patents of poor quality are often held responsible for the rise in dubious litigation for alleged infringement ( “trolling” ) in certain jurisdictions over the past two decades.
Over the last decades patent subject matter has expanded to emerging technical fields, notably software and genetic material, and in some countries to non-technical fields such as business methods. Certain actors have welcomed this trend, and many patents have been filed in these fields. Some observers have noted however that patenting in these fields potentially hampers the diffusion of technology, with possible negative impacts on inventive activities in areas that are close to science and to mental processes (which are non-patentable areas). The law, court decisions and practices regarding patenting have tended to be more restrictive in the recent past in many countries.
According to WIPO, the average share of non-residents among patent owners worldwide increased from 31% in 1990 to 38% in 2010, in parallel with the globalisation of the economy. Over this period, efforts have been made to make the patent system more global. In particular, the Patent Cooperation Treaty (PCT), handled by WIPO, facilitates simultaneous patent applications in a number of countries (although the processing and the grant remain national). Discussions among patent offices have sought to improve the compatibility of patent laws across countries. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was a first step in this direction. This international treaty, established in 1994 and implemented by the World Trade Organisation (WTO), established strict rules for national laws to respect, including a broad definition of patent subject matter (all fields of technology, including drugs), a minimal statutory duration of 20 years, neutrality vis-à-vis the nationality of the patent applicant, etc. New procedures to reduce duplication of work by patent offices (notably search) have been set up; for example, the “patent prosecution highways” , a number of bilateral agreements between national offices to exchange work on particular applications.
Developing countries were granted a delay for implementing the TRIPs until 2013, but many have already translated at least part of it into law, with the view that it would serve domestic innovation. The inclusion of drugs in the compulsory subject matter has raised the issue of the access of the poor to essential care. Therefore, some flexibility has been introduced, notably since the Doha agreement (which allows poor countries to import drugs from countries in which the corresponding patents are not necessarily enforced). Another issue in some developing countries is enforcement of patent rights. This requires a strong and independent judicial system, without which infringement will flourish. Countries such as the People's Republic of China and India have made significant efforts in this area.

Recent policy trends

The United States passed in 2011 the American Inventor Act, the most complete reform of its patent system since 1952. It adopts the principle of “first inventor to file” (instead of “first to invent” ), and a post-grant opposition system aimed at revoking early in the process and at relatively low cost patents deemed invalid.
In 2011-12, the European Union made significant progress towards a “unitary patent” that would cover all signatory countries and complement the current cumbersome and costly bundling of national patents granted by the EPO. European countries have agreed on a reduction of translation requirements and on setting up a unitary judicial system for these patents.
In 2011 China and Korea updated and intensified their national strategies aimed at encouraging the use of intellectual property by industry (the IP Protection Action Plan, which includes financial incentives for businesses, in China, and the IP Basic Law in Korea). In 2008 Japan drastically reduced fees for SMEs.

Figure 7.4 Patent filings, 2000-11
Number of applications in major patent offices

Source: WIPO, and national patent offices.

References and further reading

OECD (2009), OECD Patent Statistics Manual, OECD, Paris.

  • See Chapter 2, Sections 2.2 and 2.3 on the legal foundations of patents.
  • See Chapter 2, Section 2.4 on the rationale for patents and their economic impact.
  • See Chapter 3 on patenting procedures across jurisdictions.

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  • Patent policies and IP systems