Skip to main content
Select Source:



Methods of operation


The international convention

Patent statistics

Arguments for patent protection

Charges of abuse and proposed remedies

Economic effects of patent protection


Patents are public documents conferring certain rights, privileges, titles, or offices. The word derives from the Latin litterae patentes (open letters); the expression “letters patent” is still used in legal parlance.

A patent of invention is the grant of an exclusive right to the use of a technical invention. This is the only meaning we attach today to the word “patent” standing alone. Defined more precisely, a patent confers the right to secure the enforcement power of the state in excluding unauthorized persons, for a specified number of years, from making commercial use of a clearly identified new and useful technological invention.

Methods of operation

What are inventions?

If the patent law is to protect novel and useful inventions, it must be determined just what should be regarded as an “invention” and what as “novel” and “useful.” Legislators and judges have had much trouble answering these questions.

An invention is a new contrivance, device, or composition of matter, or a technical art newly created—in contrast with a discovery of a principle or law of nature that has already “existed” although unknown to man. But not every new way of doing or making something, not every new thing never made before, is regarded as an invention. Some hold that it must be “an unusual mental achievement,” involving more than the exercise of ordinary technical skill. Some courts have declared that to be an invention, a new idea must originate in a “flash of genius,” not merely in the routine experimentation of large laboratories. The United States Congress, annoyed by such narrow judgments, stated in the Patent Act of 1952 that “patentability shall not be negatived by the manner in which the invention was made.”

What is novel and useful?

Subjective novelty is universally rejected in favor of objective tests such as “not previously patented, published, or used.” But whether novelty is to mean “never known anywhere” or only “not yet used within the country” was controversial for a long time. Among other questions long debated and arbitrarily solved were these: Should novel combinations of well-known elements or novel uses of known devices or techniques be patentable? How should priority be decided in cases of nearly simultaneous inventions: Should the patent go to him who was first in getting the idea, or to him who was first in putting it into patentable form, or to him who was first in submitting it to the patent office?

The usefulness of an invention cannot well be determined when the patent is applied for: How can one know whether what may seem useless at the moment will not become useful later? For this reason, patent offices usually have not bothered about economic or commercial utility. Several patent laws, however, deny on grounds of “social usefulness” the patentability of articles designed for “immoral purposes.” Some laws deny protection for “trivial” inventions; some confer only shorter periods of protection for “petty” inventions, such as Gebrauchsmuster (utility models) in Germany; some make “improvement inventions” eligible only for supplementary “patents of addition” of shorter duration, terminating, for example, with the primary patent on the invention that they improve.

Procedural questions

The questions of who is to judge the novelty and general patentability of an invention, and at what stage, have received different answers, and different procedures have been adopted in different countries. Under the registration system the validity of a registered patent is examined only if an interested party attacks it in the courts and asks that the patent be invalidated. Under the examination system a patent is issued only after the patent office has carefully examined the patentability of the invention. This examination may include so-called interference proceedings, when the office finds that two or more pending applications seem to claim, partly or wholly, the same invention, so that the priority of one invention has to be established. The examinationplus-opposition system (Aufgebotssystem) provides for an interval of time after the publication of the specifications examined and accepted by the official examiner and before the issuance of the patent, in order to enable interested persons to oppose the patent grant. In such proceedings the grounds of the opposition, such as “prior use” or “prior patent grant,” are heard and examined by the patent office.

The registration system is administratively the cheapest but may burden the economy with the cost of exclusive rights being exercised for many inventions which, upon examination, would have been found nonpatentable. The examination system, it has been argued, avoids a mass of worthless, conflicting, and probably invalid patents, onerous to the public as well as to bona fide owners of valid patents; it prevents fraudulent registration and sale of patents similar to claims patented by others; and it reduces the extent of court litigation.

Period of protection

The duration of patents has been determined by historical precedent and political compromise. The 14-year term of the English patents after 1624 was based on the idea that two sets of apprentices could, in seven years each, be trained in the new techniques, although a prolongation by another seven years was allowed in exceptional cases. The 17-year term in the United States was a compromise between the “historical” 14 and the potential 21 years of protection. The terms vary from country to country: Italy and Mexico grant 15 years from the date of application; Japan, 15 years from publication; United Kingdom, 16 years from the filing of specifications; United States, 17 years from the date of the grant; Germany, 18 years from application; France, 20 years from filing; and Argentina and Chile, 5, 10, or 15 years, depending on the type of invention.

The literature contains a variety of arguments in favor of a longer period of protection: it should be long enough to protect the inventor for the rest of his life; for the average length of time for which a user of an invention might succeed in keeping it secret; for the average time it would take for others to come up with the same invention; or for the average period in which investments of this kind can be amortized. Some pleas have been made for eternal protection through perpetual patents.

In several countries patents terminate prematurely upon failure to pay renewal fees; such fees may increase from very modest charges for the first years to progressively higher levels in later years. The fiscal results of this scheme are insignificant, but it probably fulfills the economic purpose of weeding out worthless patents. Premature termination—revocation, forfeiture, or nonenforcement—of patents may in some countries be ordered as a legal sanction for an “abuse” of the patent grant.


The beginnings, 1200-1624

Occasional privileges by which a sovereign granted the exclusive use of an invention to its inventor or introducer were known as early as the thirteenth century and were quite frequent in the fourteenth. They conferred manufacturing monopolies or only licensing monopolies; they were given either to a producer introducing technology already used abroad or to the “first and true inventor.”

The first patent law was adopted in 1474 by the Republic of Venice, but its grants of protection to inventors existed side by side with special privileges to makers of novel products; Venetian practice included revocation of grants if the invention was not used (compulsory working) and forced reduction of excessive royalty rates (determination of “reasonable royalties”).

Most privileges granted in the Netherlands after 1581 were clearly designed as incentives to invent, whereas most of the patent monopolies granted by the Tudor and Stuart kings in England served protectionist, autarkic, or fiscal purposes, if they were not downright misappropriations and handouts. After several parliamentary attempts to stop this misuse, a court, in the Case of Monopolies in 1603, declared that monopolies, such as that in playing cards, were unlawful unless they were granted for new inventions. The Statute of Monopolies of 1624 outlawed all monopoly patents except a few specified kinds, such as “letters patent and grants of privilege for the term of 14 years . . . to the true and first inventor or inventors of new manufactures.” Incidentally, the inventor under this law was less “true and first” than the inventor under the Venetian law of 1474, since the English “inventor” could be an importer of foreign skills and know-how. Novelty “to the realm” was sufficient; “whether learned by travel or by study, it is the same thing,” declared a court in 1693 (see Fox 1947).

Spread of patent legislation

1624-1845. The English law became the model for statutes adopted by some of the American colonies (Massachusetts in 1641, Connecticut in 1672). South Carolina in 1691 wrote the first law that recognized the inventor’s right to a patent. In 1787 the constitution of the United States gave to Congress the power “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The first patent law of the United States was enacted in 1790 and amended in 1793.

In France in 1791, the Constitutional Assembly adopted a comprehensive patent law, in which the inventor’s right in his creation was declared a “property right” based on the “rights of man.” Despite such ringing words, the law gave the right to the use of foreign inventions, not to the true inventors, but to the domestic entrepreneurs who introduced them in France.

The patent law of Austria (18IO, amended 1820) provided that inventors had neither any property rights in their inventions nor any rights to patents. However, it provided that the government could, if this was in the national interest, grant to inventors privileges that would restrict other subjects’ “natural rights” to imitate the inventor’s ideas.

Between 1810 and 1843 patent laws were enacted in 14 of the states (kingdoms and principalities) of Europe, including four German and four Italian states. Brazil and Mexico were the first Latin American countries to adopt patent laws (in 1830 and 1832, respectively), followed by Chile in 1840 and Paraguay in 1845.

The antipatent movement, 1850-1873

In the early 1850s a movement arose for the abolition of patent protection and against the adoption of patent laws in countries which had none. In Britain three parliamentary committees or royal commissions, in 1851-1852, 1862-1865, and 1869-1872, reported serious abuses of the system. The last committee recommended drastic reforms, including reduction of the patent term to seven years, annulment of patents not put into practice within two years, and compulsory licensing for all patents. A bill with these provisions passed the House of Lords in 1872.

In Germany several trade associations, in 1853 and 1863, recommended weakening or abolishing the system. The Congress of German Economists passed a resolution condemning the patent system as injurious to public welfare. Prussia opposed a patent law for the North German Federation, and in 1868 Chancellor Bismarck recommended that all patent laws be repealed in all of Germany.

In Switzerland, the only industrial country of Europe that had remained without patent legislation, the government and legislature rejected proposals for the introduction of a patent system in 1849, 1851, 1854, and 1863, the last time with a reference to economic experts who had declared the principle of patent protection to be “pernicious and indefensible.” In the Netherlands, which had had a patent law since 1817, the parliament repealed the law in 1869 after a long debate.

The system sustained, 1873-1912

It looked as if patent protection would be abolished everywhere, when the tide turned and, in and after 1873, the friends of the system overwhelmed the opposition by a well-organized counterattack. Various reasons have been advanced for the sudden change. The best historical evidence links the defeat of the antipatent movement with the defeat of the free trade movement after 1873. The depression strengthened the supporters of tariff protection as well as those of patent protection.

The defeat of the opposition was reflected in legislative actions. In Britain the drastic patent reform bill, passed by the House of Lords, was withdrawn in the House of Commons in 1874. In Germany a uniform patent law for the entire Reich was adopted in 1877. Japan, which had adopted her first patent law in 1872, only to abolish it in 1873, enacted another law in 1885. Switzerland held out longer: a referendum in 1882 still rejected patent legislation. A new referendum in 1887 enabled the legislature to pass a law, under which, however, most inventions in the chemical and textile industries were not patentable. Only in 1907, after a German threat of punitive tariffs on Swiss products, did Switzerland drop these exemptions from patent protection. The Netherlands withstood for 40 years all recriminations about “piracy” of foreign technology but finally reintroduced a patent system in 1910, which became effective in 1912.

The international convention

In 1883 an international convention created the International Union for the Protection of Industrial Property (UIPPI) and established several rules to be observed by participating countries (in part amended in 1900, 1911, 1925, 1934, and 1958). Only three provisions will be mentioned here.

The “national treatment” clause provides that foreigners (nationals of other Union countries) shall receive in each country the same treatment as the nationals of that country. Hence, reciprocity is ruled out: Swiss inventors were able to get patents abroad even when Switzerland granted no patents at all.

The “priority” clause establishes the right of the inventor to obtain patents in all Union countries in which his kind of invention is patentable and in which he applies within 12 months from the time of the original application. Hence, he is protected against others trying to patent elsewhere what he has disclosed to the patent office of one country and against foreign patent offices denying him patents on the ground of “lack of novelty” because of “prior publication.”

The “abuse” clause provides that each country may take measures to prevent abuses resulting from the exclusive rights conferred by patents, such as “failure to use,” but it may revoke these patents only if compulsory licensing is an insufficient remedy. Compulsory licenses cannot be required until three years after issuance of a patent, and then only if the patentee does not produce acceptable excuses.

As of December 1963, only 51 countries belonged to the Union, but the pressure on nonmember countries to join is strong.

Patent statistics

In view of the role attributed to patent protection in early stages of industrialization, statistics of patents granted in eighteenth-century England

Table 1 — Patents of invention issued in the United States
Source: Calculated from data in U.S. Bureau of the Census 1960 and U.S. Bureau of the Census Statistical Abstract . . . .

are of interest: The average number of patents taken out per year between 1700 and 1750 was nine; between 1751 and 1800 it was 34. From 1801 to 1830 an average of 116 patents per year were issued in England.

Patent statistics for the United States from 1790 to 1960 are summarized in Table 1. They show that patenting increased rapidly during the nineteenth century but reached a plateau early in the twentieth century. As the number of scientists and engineers employed in research and development has increased, the number of patents per research and development worker has declined drastically. This decline holds for patent applications as well as for patents issued. The number of scientists and engineers employed in research and development in the United States increased from 87,000 in 1941 to 327,000 in 1958. During these 18 years the number of patent applications filed per year fell from 55 to 24 per 100 persons in this group. One must conclude that it has become more difficult to create patentable inventions, or less customary to take out patents, or both.

Foreign patenting

Since every patent is a potential source of revenue, and since the international distribution of these revenues may affect a country’s evaluation of the patent system, one may be interested in the relative number of patents granted to foreigners. Table 2 gives this information for several countries for 1957-1961.

The percentage of patents granted to (or applied for by) foreigners evidently reflects the size and the degree of industrialization of the country: it is lowest in large and highly industrialized countries and is high in small countries even if they are industrialized (as in Belgium) and in nonindustrialized countries even if they are large (as in India). Available data are insufficient to prepare a matrix showing the international balances of foreign patenting (i.e., the number of patents obtained abroad compared with the number of patents granted to foreigners) and still less so for the international balances

Table 2 — Patents granted, in total and to foreigners, selected countries, 1957-1961
a. Number of patents applied for . Numbers granted not available.
b. 1957-1960 . Data for 1961 not ye t available.
Source: United Nation s . . . 1964.
United States239,59437,66915.7
United Kingdo m218,995 s102,866a47.0
Federal Republic of Germany89,95333,41637.1
Netherlands19,7291 5,56778.9
Trinidad and Tobago495*466*94.1

of earnings from patents (i.e., royalties received from and profits attributable to foreign patents compared with royalties and higher prices paid to foreign holders of patents). The data for Trinidad and Tobago are given only to illustrate the situation of a small, developing country.

Arguments for patent protection

Arguments to justify the patent system have been based on natural law, on moral requirements, or on economic considerations. Economic considerations weigh the objectives which patent protection is to serve, the benefits which society is likely to obtain, the excess of these benefits over social cost, and the superiority of the patent device over alternative means to the same end. For moral considerations, material benefits to society are not relevant, although one may still inquire about the cost to society—“justice at any cost” may be too expensive—and whether there are not cheaper ways to discharge the particular moral obligation. Thenatural law argument virtually excludes all assessments of social benefits, costs, or alternatives, since it deems the inventor’s rights to be indisputable, inalienable, and immutable.

Inventors’ natural property rights

As we have seen, the French Constitutive Assembly of 1791 proclaimed the inventor’s “property right” in his idea to be one of the “rights of man.” Statutory patent law was merely to stipulate the ways and means of safeguarding the inventor’s “natural” right. The property right in the patent was only a legal device by which infringements of the inventor’s natural property right in his idea could be prevented.

Under this juridical construction the word “monopoly,” with its bad connotations, was replaced by the word “property,” recognized as a good thing. The public-relations scheme—admitted to be such by Stanislas de BoufBer when he proposed it in introducing the French patent bill of 1791—was successful. It persuaded the public to regard patent protection not as a government intervention designed for a purpose but, rather, as an integral part of the institution of private property; not as an enforcement of a monopoly granted by the state but, rather, as a prevention of theft.

The moral obligation to reward inventors

The moral argument for patents assumes that the system is the best possible way in which society can meet its moral obligation to secure to each inventor his just reward. Critics of this position have questioned whether justice calls for such material rewards and also whether the patent system is the best method of securing them.

The critics contend that the development of technology is largely a cumulative process to which many—scientists, technicians, and tinkerers—contribute in succession until a particularly lucky one happens to put the finishing touch to a novel art. If he alone is rewarded, while those who have prepared the way for him get nothing, critics doubt that this is “just.” Critics also question the justice of the system when two inventors have reached the same solution almost simultaneously and one of them is declared to have been a little earlier and to deserve the full reward; or when the inventor of a toy or a kitchen utensil receives fat rewards, while a scientist who makes a fundamental discovery must be satisfied with a meager bit of glory.

Classical economists, especially Bentham and J. S. Mill, argued that the material reward which a patent can secure for the inventor is fair and just in that it is proportional to the service the inventor has rendered to society. Critics deny that the rewards are commensurate with the achievement. Some of the greatest inventions are ahead of their time and, since their practical application will be deferred, no earnings can be expected from their use within the period of patent protection. Even where inventions can be used without delay, no close relationship, let alone a proportional one, can be expected between the earnings from their exclusive use and the benefits accruing to society. The earnings are associated with the optimum restriction on use rather than with the social optimum of utilization. The profits derived from a patent monopoly cannot be indicative of the social benefits derived from the invention it covers.

This does not mean that expert appraisers estimating the social contribution of inventions would be more successful. Rewards in the form of prizes and bonuses determined by the government may not be any more “just” or “fair” than the monopoly rents from patents. Grave errors of judgment, and perhaps severe misuse of discretionary powers, might occur if government had to determine “just awards” to inventors.

Criticisms leveled against the moral argument for patents need not apply to the various economicincentive arguments. Incentives, to be effective, need not be just: high prizes in a lottery are designed to attract buyers of chances, not to mete out justice.

Compensation for disclosure of secrets

One of the economic arguments for patents emphasizes the benefits society can derive from the disclosure of secret technological information made public through the patents. Society pays for these benefits with grants of exclusive rights as it offers temporary monopolies in exchange for the surrender of “monopolies through secrecy.” In a simpler version of the argument, the promise of a patent monopoly serves as incentive for the inventor to give up his secret.

The formulation of the argument as a “social contract,” or bargain between the state and the inventor, has often been criticized, by James E. T. Rogers (1863), among others, on the ground that it is a rather poor bargain for society. The contract theory held that protection of exclusive use for 14 to 20 years was justified because supposedly this was the average length of time during which a user of a secret technology could expect to keep it secret. The critics objected that this average duration of secrecy becomes a sham if each inventor has the choice of taking the patent or keeping his secret, for he will patent only what he cannot expect to keep secret. Society thus fails to secure disclosure of safe secrets but agrees to grant monopolies restricting the use of technologies that could be found out and made available for general use.

The argument for patent protection as an incentive to disclose technological secrets also includes another effect of early disclosure: knowledge of the patent may inspire competitors to look for substitute processes and substitute products, that is, to try to “invent around the patent.” Lawyers and engineers stress the supposedly beneficial effects of such “competitive invention,” but some economists point to the waste involved in searching for alternative technologies.

Other versions of the argument stress the indirect effects of disclosure. Early disclosure may give other inventors new ideas, not for alternative techniques of making the same products but for entirely different processes or products, perhaps in different industries. In addition, the dissemination of technological information in the descriptions of inventions may serve to bolster general technical knowledge and curiosity. Critics have asked whether such benefits could not obtained at lower cost by other institutions or methods.

Another aspect of this argument deserves consideration : some inventions are disclosed by publication in technical journals or by patents taken out years before the first use, whereas without patents these inventions might become known only when the products for which they are used reach the market. How important this is, no one knows.

Incentives for inventive activity

The classical, traditional argument for patents stresses that the promise of patent monopolies is an incentive to engage in inventive activity. The argument presupposes (1) that without government intervention society would undertake less inventive activity than was good for it and (2) that patent protection is the best possible form such intervention can take.

If “perfect competition” is defined to imply immediate imitation of anything that promises supernormal profits, it follows that under such conditions inventive activity will not pay, and some artificial obstacles to quick imitation will be needed to promote invention. Differently defined, however, perfect competition allows for natural delays and normal friction, and so does not imply immediate imitation. The innovator may then have a natural head start in the practical application of a new invention even without patent, for it takes time until competitors can examine the product, detect the technology used, build the plant and equipment required to produce it themselves, and bring their competing product to the market. In the meantime the first user may have made enough profits to pay for his efforts. This was the counterargument made by Schaffle (1867). Competition, moreover, is seldom perfect, even in the absence of patent monopolies. Newcomers’ competition is slow and imperfect under the oligopolistic organization of many industries, which lengthens the first user’s head start. Finally, the oligopolist’s fear of falling behind in the race with his competitors may be as much of an incentive to invent as the hope for patent monopolies can be. For all these reasons, several economists have refused to accept the assumption that there would not be “enough” inventive activity in the absence of government intervention.

Those who recognize that the state should promote invention may nevertheless reject the assumption that patents are the best method for the purpose. They may hold that prizes and bonuses for important inventions, or subsidies and government contracts for research and development, can serve the purpose more efficiently and at lower cost to society. These alternative methods can do what the patent system cannot, namely, promote technological progress in selected areas. Arnold Plant and others have said that the patent system serves chiefly to steer inventive efforts into different channels, away from industries in which improvements rarely take the form of patentable inventions and toward industries that are favored by the requirements of patentability. Only by coincidence will these be the industries in which inventive efforts would be most productive for society. Selective promotion of technological advance through direct government support of research and development has therefore become the principal approach to the problem, at least in the United States.

The need for and effectiveness of patent protection as incentive to inventive activity has been questioned for economies in which large corporations employ salaried inventors in large laboratories. It is held, however—for example, by John Jewkes—that the patent system still serves its traditional purpose in protecting independent inventors and small producers who could not survive without this protection (Jewkes et al. 1958).

Incentives for development and investment

The cost of postinventive development has become so large relative to the cost of strictly inventive activity that the arguments for patent protection have changed. The emphasis has been shifted from promotion of invention to promotion of development and innovative investment. Patent protection, it is now said, serves less as an incentive to engage in inventive activity than as an incentive to undertake the large investments needed to develop inventions, make them usable in mass production, construct pilot plants, create mass markets, and build the productive facilities to supply the goods. These outlays are said to be so large and so risky that they would not be undertaken without patent protection against competition.

Critics of this argument point to large innovative investments in many industries in which there are no important patents. One cannot deny, of course, that there may be investments which would not be made without the hope of monopoly profits derived from patent protection. The question is whether these investments are more productive or socially more beneficial than other investments. Why should investments that are made attractive only by patent protection be more productive, from the point of view of society, than alternative investments which, if they were not placed at a disadvantage by the incidence of patent protection, would be the highest bidders for available funds? There is no reason why it should be socially desirable to divert investment funds from industries without patents to industries with patents.

The theory of a general lack of investment opportunities has also been adduced to support the argument that patent protection is needed as an incentive to invest. Investable funds might go begging, it is said, and savings might find no outlets, if it were not for the profit opportunities afforded by patents.

Sources of investable funds

Another argument for patent protection is that firms sheltered from competition will, thanks to their higher profits, have larger funds available for investment than will firms exposed to competition. To claim that patents will cure both a scarcity of investment opportunities and a scarcity of investment funds is self-contradictory if “scarcity” refers to an imbalance of potential sources and uses of funds. The contradiction disappears if the alleged scarcity is meant to relate to a desired rate of progress, for one may hold that progress is accelerated if firms have more funds as well as more opportunities to invest. Monopoly positions due to existing patents afford a larger flow of funds to firms, which will be induced to use these funds for activities that will, by leading to additional patents, perpetuate and strengthen their monopoly positions and, in the process, enhance technological progress. This theory as Schumpeter observed (in a short discussion in Capitalism, Socialism, and Democracy),may justify not only patent protection but also other restrictions on competition.

Excess of social over private benefits

Most economic arguments for patents can be formulated as applications of the standard justification of government intervention in a competitive market economy: Where the private marginal product of an activity is smaller than its social marginal product, while private marginal cost is not correspondingly below social marginal cost, the state can increase total welfare by promoting the allocation of additional resources to that activity.

If a new process or product can be imitated by competitors without delay, and output is not limited by any monopolistic restrictions, the market price of the product of the new technology will soon fall to the level of its production cost. This cost does not include expenses for inventing and developing the novel art, for an imitator incurs no such expenses, nor are they a part of the innovator’s marginal costs of production. They are sunk costs; they do not increase as the use of the new technology is increased. Thus, under unlimited competition, output will increase and price will fall to the competitive level, which does not allow recovery of sunk costs.

New technology undoubtedly has “social value,” since it contributes to an increase in national product. But its private value will approach zero if it can be used without restriction. Thus, while consumers will benefit, the inventors, developers, innovators, and their financiers may get insufficient returns on their investments of time and money. Hence, without government intervention, the allocation of resources to inventive and innovative activities would be less than “optimal” from the point of view of society. Intervention attempts to compensate for the shortfall of the private below the social marginal productivity of inventive and innovative activities.

This is a cogent argument for promoting invention, but not necessarily for patent protection; other methods of encouraging, subsidizing, or financing inventive activity may well be more efficient or less costly. The bias inherent in the patent system in favor of technologies that happen to satisfy the requirements of patentability is one of the defects of the system. Another is that the system tries to promote the creation of technical knowledge by restricting its use. What is wanted is a system that does not discriminate between types of technology or operate by restricting the application of the inventions that it stimulates.

Charges of abuse and proposed remedies

Some nonlawyers speak of an “abuse” of the patent monopoly when the social objectives it is supposed to serve are not promoted but, rather, are jeopardized by the way it is used; for example, when the “limits” of the monopoly “intended” by society are overstepped and the monopolistic control is extended in time, scope, or strength. In most countries, the law does not recognize this broad concept of “abuse.”

Patentees may succeed in extending the effective duration of control (a) through procedural devices, especially by prolonging the pendency of the patent between application and issuance; (b) through secret use of the invention prior to the filing of the application; (c) through incomplete disclosure, making it impossible for those without special know-how to use the invention even after the expiration of the patent; (d) through the successive patenting of strategic improvements that make the unimproved invention commercially obsolete after the expiration of the original patent; (e) through the creation of a monopolistic market position based on the good will of a trademark associated with the patented product or process, where the mark and the consumer loyalty continue after expiration of the patent; and (f) through licensing agreements that survive the original patent because they license a series of improvement patents and a possibly endless succession of future patents.

The patentee may succeed in extending the scope and strength of the monopoly beyond the limits consistent with the social objectives of the system—especially, beyond the control of the use of a single invention supposedly in competition with other inventions—to achieve control of an entire industry or of the markets of other goods not covered by the patent. Substantial control of an industry can be achieved by a “basic patent” (on a bona fide basic invention); by an “umbrella patent,” under which illegitimately broad or ambiguous claims, covering the entire industry, have been allowed and are not tested in the courts; by a “bottleneck patent,” which is not basic but is good enough to delay or exclude the entrance of newcomers to the industry; by an accumulation of patents which secure domination of all existing firms and effectively close the industry to newcomers; or by the use of restrictive licensing agreements establishing domination or cartelization of the industry and exclusion of newcomers. Control sometimes is extended to markets for products not covered by the patent through the use of tying clauses in licensing agreements, chiefly in order to increase monopoly revenues by means of price discrimination [SeeMonopoly]. (For example, by selling a material that must be used on a patented machine at a monopoly price, the seller collects more from those who make heavy use of the machine than from those who make less use of it, although the cost of making and using the machine is the same no matter who uses it.) All these “extensions” of control have been objected to by opponents of monopoly, but this does not mean that they have been found to be unlawful.

Patent pooling arrangements, sometimes necessary in order to permit the efficient use of complementary inventions controlled by different firms, have often been the vehicles for highly restrictive cartel agreements. Indignant complaints have been raised against the use of patents to oppress weaker firms by harassing litigation or threat of litigation and against the use of license agreements to bind competitors or customers not to contest the validity of dubious patents. There have been similar complaints against the taking out of patents, not to work the patented invention, but to keep others from working it, especially to “fence out” possibly competing developments of the patented invention or to “fence in” the competition by blocking possible developments of inventions patented to them.

Nonworking and insufficient working

Nonworking of patented inventions has been high on the list of grievances against patent protection. One must distinguish, however, between the nonuse of inventions whose use would be uneconomic and the “suppression” of inventions that could be used economically. In the first category are inventions of nonmarketable articles, inventions of processes that are inoperable or too expensive, and inventions of alternative processes, instruments, or products that are not superior or perhaps are inferior to those in actual use. Neither the patentees nor anyone else may want to use such inventions. If others do want licenses that a producer holding the patent refuses to grant, although he himself does not use the invention, one may suspect a case of suppression. (This prima facie indication could be rebutted by showing that the applicants would not use the invention either, if they could freely choose among all known technologies, including the ones used by the producer who refused to license.) In the absence of any applications for licenses, suppression of inventions is difficult to prove: one would have to show that their use would be economically practical and desirable although the patent owners, perhaps in view of the “premature” obsolescence of their capital equipment, have decided to keep these inventions on the shelf. The proof might be feasible for cost-saving inventions, but hardly for product-improving ones; after all, cost calculations can be checked, but demand estimates are mere conjectures.

Under the laws of some countries, especially England, “insufficient working” is regarded as an abuse of the patent monopoly, as is the charging of “excessive prices” for patented articles. Since it is the very essence of patents to restrict competition and to permit output to be kept below, and price above, competitive levels, it is difficult to conceive of economic criteria by which one could judge whether output is less than what would be “reasonably practicable” and whether price is “unreasonably high.”

The patent laws of some countries provide against the domestic nonuse of inventions patented to foreigners who seek mainly to have a sheltered market for their imports. Compulsory working—a threat of revoking patents not worked after a few years—may operate like a protective tariff, leading to uneconomic uses of resources. For this reason, compulsory working was replaced, as a remedy for domestic nonuse of patented inventions, by compulsory licensing of the patents to those interested in taking up production.

Compulsory licensing

Compulsory licensing is not always instituted as a penalty or remedy for “unlawful abuse”; in some countries it may be resorted to whenever deemed necessary to safeguard the public interest. Be it because of “abuse,” as in England, or “in the public interest,” as in Germany, the issuance of a compulsory license may be requested by an interested party whom the patentee has refused to license or may be proposed by a government department. In Germany such actions have been taken to facilitate the use of dependent patents, that is, of patents covering inventions that could not be worked without license under a patent held by someone else. In Britain insufficient use of a patent may be charged in a claim for a compulsory license or for “licenses of right,” especially in a case of food products and medicines (which were made patentable only by the Patent Act of 1949), although these provisions have rarely, if ever, been used. In the United States compulsory licensing has sometimes been ordered by the courts in cases in which patentees have used their patents in violation of the antitrust laws. Some of these compulsory licenses have been royalty-free, while others have provided “reasonable” royalties.

Economic effects of patent protection

The “effects” of an existing social (legal, economic) institution can be seen only by a mental experiment: one must imagine what difference it would make if the institution were abolished. This is difficult, for institutions are rarely eliminated without something else taking their place. If there were no patent system, what would be done to protect industrial secrets; to prevent the raiding of personnel with special know-how; to maintain, strengthen, or weaken the market positions of the technologically most progressive firms; or to support research and development by trade associations, by government bureaus, and by individual firms? Thus, should one analyze the benefits and costs of the patent system on the assumption that there would be other ways of promoting technological progress or that there would be nothing of the sort? Obviously, arbitrary assumptions cannot be avoided.

Social benefits

One may attribute to the patent system all additions to the national product that are obtained through the use of such technology as is invented, developed, or put to use thanks only to patent protection, actual or expected. Not all inventions actually covered by patents owe their existence or utilization to the patent system. Many inventions would have been made in any case. On the other hand, some inventions not covered by patents may have been inspired by patented technology or stimulated by the hope for patents. Per contra, the patent system may have prevented some inventions from being made or used; for example, if the strong patent position of one firm discourages others from working in the particular field.

The most important distinctions are between (1) inventions which, without patent protection, would never have been made or used; (2) inventions which, without patents, would have been made or used only at a later time; and (3) inventions which would have been made or used at the same time. The additions to national product that are due to the third category of invention cannot be credited to the patent system; and those due to inventions of the second category can be credited only for the years of earlier use.

There is no objective evidence for judging the relative frequency of inventions in the three categories. Some patent lawyers think that almost all inventions fall into the first category; some sociologists regard this as a nearly empty class and judge most inventions as belonging to the third category.

The problem of estimating the increments of national product that depend on new inventions is quite complicated. It is soluble as far as cost-reducing inventions are concerned; for quality-improving and product-innovating inventions one would have to use “welfare indices” based on hypothetical consumer surpluses. There is a further complication in the implications of economic growth. It is relatively easy to estimate the benefits due to a costreducing invention if the supply of labor and other resources remains constant, but if resources and demand grow from year to year, the effects of a cost reduction will increase accordingly. Thus, the present value of the increment to national product attributable to a particular invention will depend not only on the rate of interest but also on the prospective growth rate of the supply of resources.

Social costs

When some economists said that the patent system costs society nothing, they must have meant that there was no net cost, that is, that the benefits exceeded the cost. Six categories of cost may be distinguished.

(1) Operating costs of the patent system. These are the remuneration of administrators, lawyers, technicians, and clerks in government, in the law offices, and in industry. One must include the time that scientists and engineers spend in expressing their findings in a form that qualifies them as patentable inventions.

(2) Cost of research, invention, and development. These may be counted only to the extent that the activities are induced by the patent incentive. The money cost of research may understate the opportunity cost if, for example, scientists employed in industrial research could do more productive work in teaching or basic research.

(3) Cost of innovation and resource reallocation. The innovation induced by patent protection requires resources in itself and also may accelerate the obsolescence of capital equipment and cause losses through the necessary retraining of displaced labor with specific skills.

(4) Restriction of output due to limited use of patented technology. Such restriction is inherent in the system, since only by holding output below the “competitive norm” can any earnings be secured from the patent monopoly. In the case of inventions that would never have been made without patents, the loss due to output restriction may be entered into the social-cost account only if the benefits from the full utilization of the invention are credited to the patent system. For inventions that would have been made later without patents, the ratio of benefits to costs depends on how much earlier the new technologies come into use as a result of the patent system and for how many years their use is restricted under the exclusive rights.

(5) Restrictions of output due to transcendent strengthening of monopoly positions. The acquisition of strong patent positions may strengthen the market power of firms in areas other than those covered by its patents, leading to smaller outputs in these other areas.

(6) Loss of output due to delayed invention and use. Losses occur where the existence of strong patent positions discourages potential inventors and potential users of inventions from invading the protected area.

Net benefit or loss

Present knowledge does not enable us to make numerical estimates of the total social costs and benefits of the patent system. Apodictic assertions about the “great” net benefit or net loss are without any foundation. Most of those who have made such assertions have not even considered the relative order of magnitude of the various items.

While it may be impossible to estimate the total benefits and costs of the patent system, one may attempt to analyze the marginal benefits and costs of particular moderate changes in the duration, scope, or strength of patent protection. For example, one may examine the probable effects of lengthening (or shortening) the duration of the patent term by one year. The marginal benefit may be found by considering what effects marginal profit expectations would have upon marginal research and development budgets, upon real resources acquired with these funds, upon the flow of inventions and the portion of the flow that can be practically applied, and upon the change in total output that depends on it. The marginal cost may be found by concentrating chiefly on cost items (2) and (4) in the list above. An analysis of this sort for a patent term longer than 15 years conveys the impression that the marginal benefits fall short of the marginal costs.

Similar techniques of analysis may be employed for other changes in the patent system, such as the introduction of compulsory licensing or the extension of the patent system to (or its withdrawal from) particular types of products or processes. Not that we may hope for a consensus of the experts (with their judgments often affected by their interests), but some crucial issues can probably be isolated for special study.

Present knowledge and ignorance

Even where economic analysis seems to have reached conclusive results, the conclusions often are politically ineffectual. There can be little doubt, for example, that in small countries and in nonindustrial countries the social costs of the patent system exceed its benefits, chiefly because many of the benefits could be obtained there without granting patents. Nevertheless, these (perhaps newly independent) nations are anxious to adopt a patent system and, thus, to have the honor of paying higher prices for imported products.

For large industrial countries the net effects of patents are as yet unknown. This ignorance is not likely to be overcome soon, since the information needed to test the essential factual assumptions does not exist. Until we have the evidence, we shall have to be cautious and skeptical regarding both the claims made by enthusiastic supporters of the patent system and the charges preferred by fanatic abolitionists.

Fritz Machlup

[See alsoInnovation; Research And Development.]


BÖhmert, Viktor 1869 Die Erfindungspatente nach volkswirtschaftlichen Grundsätzen und industriellen Erfahrungen. Vierteljahrschrift für Volkswirtschaft und Kulturgeschichte 25:28-106.

Chevalier, Michel 1878 Les brevets d’invention examinés dans leurs rapports avec le principe de la liberté du travail et avec le principe de l’égalité des citoyens. Paris: Guillaumin.

Folk, George E. 1942 Patents and Industrial Progress: A Summary, Analysis, and Evaluation of the Record on Patents of the Temporary National Economic Committee. New York: Harper.

Fox, Harold G. 1947 Monopolies and Patents: A Study of the History and Future of the Patent Monopoly.Univ. of Toronto Press.

Gilfillan, S. Colum 1964 Invention and the Patent System. Materials presented for the consideration of the U.S. Congress, Joint Economic Committee. Washington: Government Printing Office.

Hamilton, Walton H. 1941 Patents and Free Enterprise. U.S. Temporary National Economic Committee, Investigation of Concentration of Economic Power, Monograph No. 31. Washington: Government Printing Office.

Hulme, Edward W. (1896-1902) 1909 The Early History of the English Patent System. With a list of monopoly grants for new industries and inventions, A.D. 1554-1603. Boston: Little. → First published in the Law Quarterly Review.

Jewkes, John; Sawers, David; and Stillerman, Richard 1958 The Sources of Invention. New York: St. Martins.

Macfie, Robert A. (editor) 1869 Recent Discussions on the Abolition of Patents for Inventions in the United Kingdom, France, Germany and the Netherlands. London: Longmans.

Machlup, Fritz 1958 An Economic Review of the Patent System. U.S. Congress, Senate, Committee on the Judiciary, Subcommittee on Patents, Trademarks, and Copyrights, Study No. 15. Washington: Government Printing Office.

Machlup, Fritz; and Penrose, Edith T. 1950 The Patent Controversy in the Nineteenth Century. Journal of Economic History 10:1-29.

Mandich, Giulio 1948 Venetian Patents, 1450-1550. Journal of the Patent Office Society 30:166-224.

Meinhardt, Peter (1946) 1950 Inventions, Patents, and Monopoly. 2d ed. London: Stevens.

Neumeyer, Fredrik 1956 A Contribution to the History of Modern Patent Legislation in the United States and in France. Scandinavian Economic History Review 4:126-150.

Patent Office Society 1936 Outline of the History of the United States Patent Office. Journal of the Patent Office Society 18:5-234.

Penrose, Edith T. 1951 The Economics of the International Patent System. Baltimore: Johns Hopkins Press.

Plant, Arnold 1934 The Economic Theory Concerning Patents for Inventions. Economica New Series 1: 30-51.

Polanyi, Michael 1944 Patent Reform. Review of Economic Studies 11:61-76.

Price, William H. 1906 The English Patents of Monopoly. Boston: Houghton Mifflin.

Prince-Smith, John 1863 Ueber Patente fiir Erfindungen. Vierteljahrschrift fiir Volkswirtschaft und Kulturgeschichte 3:150-161.

Rentzsch, Hermann (1866a) 1870 Geistiges Eigenthum. Pages 333-338 in Hermann Rentzsch (editor),Handwörterbuch der Volkswirtschaftslehre. 2d ed. Leipzig: Klinkhardt.

Rentzsch, Hermann (1866b) 1870 Patentwesen. Pages 625-636 in Hermann Rentzsch (editor), Handworterbuch der Volkswirtschaftslehre. 2d ed. Leipzig: Klinkhardt.

Rogers, James E. Thorold 1863 On the Rationale and Working of the Patent Laws. Journal of the Royal Statistical Society 26:121-142.

Schäffle, Albert E. F. 1867 Die nationalokonomische Theorie der ausschliessenden Absatzverhdltnisse, insbesondere des literarisch-artistischen Urheberrechtes, des Patent-, Muster- und Firmenschutzes nebst Beitrügen zur Grundrentenlehre. Tübingen (Germany): Laupp.

Silberstein, Marcel 1961 Erfindungsschutz und merkantilistische Gewerbeprivilegien. Zurich: Polygraphischer Verlag.

Taussig, Frank W. (1915) 1930 Inventors and Moneymakers. Lectures on some relations between economics and psychology delivered at Brown University in connection with the celebration of the 150th anniversary of the foundation of the University. New York: Macmillan.

United Nations, Department of Economic And Social Affairs 1964 The Role of Patents in the Transfer of Technology to Developing Countries. Doc. E/3861. New York: United Nations.

U.S. Bureau Of The Census 1960 Historical Statistics of the United States; Colonial Times to 1957: A Statistical Abstract Supplement. Washington: Government Printing Office.

U.S. Bureau of the CensusStatistical Abstract of the United States. → Published since 1878.

U.S. Temporary National Economic Committee 1939 Investigation of Concentration of Economic Power.Hearings Before the Temporary National Economic Committee, 75th Congress, 3d Session, Pursuant to Public Resolution No. 113. Part 2: Patents. Washington: Government Printing Office.

Vaughan, Floyd L. 1925 Economics of Our Patent System. New York: Macmillan.

Vaughan, Floyd L. 1956 The United States Patent System: Legal and Economic Conflicts in American Patent History. Norman: Univ. of Oklahoma Press.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Patents." International Encyclopedia of the Social Sciences. . 23 Jul. 2018 <>.

"Patents." International Encyclopedia of the Social Sciences. . (July 23, 2018).

"Patents." International Encyclopedia of the Social Sciences. . Retrieved July 23, 2018 from

Learn more about citation styles

Citation styles gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).

Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.

Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, cannot guarantee each citation it generates. Therefore, it’s best to use citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:

Modern Language Association

The Chicago Manual of Style

American Psychological Association

  • Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
  • In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.



Rights, granted to inventors by the federal government, pursuant to its power under Article I, Section 8, Clause 8, of the U.S. Constitution, that permit them to exclude others from making, using, or selling an invention for a definite, or restricted, period of time.

The U.S. patent system is designed to encourage inventions that are useful to society by granting inventors the absolute right to exclude all others from using or profiting from their invention for a limited time, in exchange for disclosing the details of the invention to the public. Once a patent has expired, the public then has the right to make, use, or sell the invention.

Once a patent is granted, it is regarded as the personal property of the inventor. An inventor's property rights in an invention itself are freely transferable and assignable. Often employees who invent something in the course and scope of their employment transfer and assign their property rights in the invention to their employer. In addition, a patent holder, or patentee, can grant a license to another to use the invention in exchange for payment or a royalty.

Inventors are not required to participate in the patent system, and they can elect instead to try to keep their invention a trade secret. However, if the inventor begins to sell his or her invention or allows the public to use it, others can study the invention and create impostor products. If this happens, the original inventor has no protection because he or she did not obtain a patent.

There are three types of patents: (1) design patents, (2) plant patents, and (3) utility patents. Design patents are granted to protect a unique appearance or design of an article of manufacture, whether it is surface ornamentation or the overall configuration of an object. Plant patents are granted for the invention and asexual reproduction of a new and distinct variety of plant, including mutants and hybrids. Utility patents are perhaps the most familiar, applying to machines, chemicals, and processes.

Governing Laws

Patent law in the United States is based upon statutes located in Title 35 of the U.S. Code, including the Patent Act of 1952. The rules of the patent and trademark office, found in Title 37 of the code of federal regulations, provide additional authority. In addition, the general agreement on tariffs and trade (GATT) has led to significant changes in U.S. patent law that are designed to bring some aspects of U.S. law into conformity with those of the country's trading partners. The GATT Implementation Act was signed into law in 1994, and those of its provisions that impact U.S. patent law began to take effect in 1995.

Patent Duration

One important change in U.S. patent law resulting from GATT is the duration of U.S. patents. Patents were originally given 14-year terms from the date of issue, until that was changed in 1861. From 1861 until the implementation of GATT, the term of a patent was 17 years from the date of issue. Under GATT, all patents issued after June 7, 1995, have a term of 20 years from the effective filing date. GATT contained a retroactive component which provided that all patents that had been issued, but not yet expired, as of June 7, 1995, would have a term that is the longer of 20 years from its effective filing date or 17 years from the date of issue. The effective filing date is the date on which the earliest U.S. application is filed under which priority is claimed. In the United States, patent rights begin when the patent is issued.

Upon expiration of the term, the invention becomes public property and is freely available for use, reproduction, or sale. Patents can be extended for up to five years under limited circumstances, including interference proceedings (proceedings to determine the priority of an invention), secrecy orders, and appellate review.

Patentable Inventions

The Patent Act provides a broad definition of what can be patented: any new or useful process, machine, manufacture, composition of matter, or any new and useful improvement thereof. Although these categories of patentable subject matter are broad, they are also exclusive, and any item that does not fall into one of them is not patentable.

As defined by the Patent Act, a process is a method of treating certain material to produce a specific physical change in the character or quality of that material. A machine is a device that uses energy to get work done. The term manufacture refers to a process whereby an article is made by the art or industry of people. A composition of matter is a compound produced from the combination of two or more specific ingredients that has properties different from, or in addition to, those separately possessed by each ingredient.

An improvement is any addition to, or alteration in, a known process, machine, manufacture, or composition that produces a useful result. The right to a patent of an improvement is restricted to the improvement itself and does not include the process, machine, or article improved.

Naturally occurring substances, such as a type of bacteria or an element, are not patentable. But a genetically engineered bacterium is patentable. The law of gravity and other laws of nature are not patentable. Other abstract principles, fundamental truths, calculation methods, mathematical algorithms, computer programs, and bookkeeping systems are not patentable. Ideas, mental theories, or plans of action alone, without concrete means to implement them, are not patentable, irrespective of how revolutionary and useful to humanity they might be.

Is the Human Genome Patentable?

Deoxyribonucleic acid (DNA) is often called the "blueprint of life." Between 1980 and the early 2000s efforts were made to patent the human genome, which contains the entire genetic code for the human species. These efforts have generated controversy, especially between members of the scientific and religious communities. In 1980 the U.S. Supreme Court contributed to the controversy by ruling that live, human-made microorganisms are patentable subject matter under the federal Patent Act. Applying the Supreme Court's ruling to the human species, the U.S. patent and trademark office (USPTO) extended patent protection to isolated and purified strands of the human genome.

The U.S. Constitution gives Congress the power to "promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." U.S.C.A. Const. Art. I Section 8, Clause 8. Pursuant to this authority, Congress enacted the Patent Act of 1952. July 19, 1952, c. 950, 66 Stat. 797. Section 101 of that act allows a patent to be obtained by anyone who "invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C.A. 101. Congress also created the USPTO to issue patents.

A patent is like a legally protected monopoly over a specific intellectual property. Patents grant inventors the exclusive right to make, use, or sell their inventions for a period of 20 years. 35 U.S.C.A. 154. Patent holders can prevent anyone else from using their invention, even someone who innocently infringes on the patent holder's intellectual property rights by subsequently developing the same invention independently. Alternatively, patent holders can require that subsequent users pay licensing fees, royalties, and other forms of compensation for the right to make commercial use of an invention. In exchange for this broad, exclusive right over an invention, patent holders must disclose their invention to the public in terms that are sufficient to allow others in the same field to make use of it. 35 U.S.C.A. 112.

The patentability of inventions under U.S. law is determined by the Patent and Trademark Office (USPTO) in the department of commerce. A patent application is judged on four criteria. The invention must be "useful" in a practical sense (the inventor must identify some useful purpose for it), "novel" (i.e., not known or used before the filing), and "nonobvious" (i.e., not an improvement easily made by someone trained in the relevant area). The invention also must be described in sufficient detail as to enable one skilled in the field to use it for the stated purpose (sometimes called the "enablement" criterion). In general, raw products of nature are not patentable. DNA products usually become patentable when they have been isolated, purified, or modified to produce a unique form not found in nature. The USPTO has three years to issue a patent.

As of 2003 over 3 million genome-related patent applications have been filed. U.S. patent applications are confidential until a patent is issued. The human genome represents a biological map of the DNA in a body's cells. The human body is made up of roughly 1 trillion cells. Every cell contains 23 pairs of chromosomes, and each chromosome houses a single DNA molecule. The chief DNA task is to provide cells with instructions for building thousands of proteins that perform most of the body's essential chores. Proteins contain amino acids and enzymes that catalyze hormones, biochemical reactions, and major structural development, a process known as protein synthesis.

The legal controversy surrounding DNA patenting intensified during 1988 when Congress initiated the Human Genome Project (HGP), a 15-year, $3 billion dollar research project designed to map and sequence the entire human genome. The HGP goal is to develop diagnostic tests and treatments for more than 5,000 genetically-based diseases. A rough draft of the entire genome was completed in June 2000.

In 1995 a group of more than 200 Catholic priests, Protestant ministers, Jewish rabbis, and other religious leaders gathered in San Francisco at the annual Biotechnology Industry Organization conference to attack the laws that have allowed scientists to patent the DNA of various organisms. They argued that such laws violate the sanctity of life by unlocking divine secrets and enabling scientists to patent God's creations. Environmentalists, who assert that nature is devalued by laws enabling corporations to reduce a species and its molecules to ownership, have leveled a variation of this criticism. They raise questions about what will happen to society when its most basic notions about the distinctions between animate and inanimate objects are blurred, as human life becomes just another commodity to be bought and sold on the open market.

Some of the strongest criticism has come from the scientific community itself. Certain members of that community have argued that patenting human DNA sequences hampers the free flow of information necessary to most research projects. They contend that having to invest time in tracking down a patent holder, entering into licensing agreements, and paying royalties drives up costs, slows research, and provides disincentives for scientists to undertake research in the first place. They observe that two companies, Incyte Pharmaceuticals Inc. and Human Genome Sciences Inc., own more than half of the U.S. patents on human genetic structures, and thus can exact exorbitant fees from healthcare companies hoping to put their discoveries to use.

Proponents of DNA patenting point to the groundbreaking discoveries that have already been patented, including genetic links to breast cancer, colon cancer, multiple sclerosis, tuberculosis, diabetes, cystic fibrosis, Huntington's disease, and Alzheimer's disease. Proponents maintain that the speed at which these discoveries were made was dramatically increased by laws making them a commercially valuable, patentable invention.

further readings

Lyon, Jeff, and Peter Gorner. 1995. Altered Fates: The Genetic Re-Engineering of Human Life. New York: Norton.

Weissman, Gerald. 1995. Democracy and DNA: American Dreams and Medical Progress. New York: Wang and Hill.

Wilkie, Tim. 1993. Perilous Knowledge: The Human Genome Project and Its Implications.Los Angeles: Univ. of California Press.


Intellectual Property; Patent and Trademark Office.

However, the 2001 Supreme Court case J.E.M. AG Supply, Inc. v. Pioneer Hi-Bred Intern., Inc., 534 U.S. 124, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001), affirmed that newly developed plant breeds are patentable subject matter. In an opinion written by Justice clarence thomas, the Court said that plants were patentable under the general utility patent statute. To obtain patent protection, a plant breeder must show that the plant it has developed is new, useful, and non-obvious, and must provide written description of plant and deposit of seed that is publicly accessible.

A process that uses a natural law, fundamental principle, or mathematical equation can be patented. For example, in the 1981 decision of Diamond v. Diehr, 450 U.S. 175, 101 S. Ct. 1048, 67 L. Ed. 2d 155, the U.S. Supreme Court decided that an industrial process could be patented in spite of the fact that it depended upon a mathematical equation and involved the use of a computer program.

The Diamond ruling upheld a patent to two inventors for an improved process for molding rubber articles. A patent examiner had previously ruled against the inventors, finding that they sought patent protection for a computer program, which the Supreme Court had expressly said could not be patented. The process in question, which was patented, was developed to calculate with greater accuracy the amount of time required to obtain uniform curves in synthetic rubber molds.

As a further requirement for an invention to be patentable, it must meet three criteria: (1) novelty (it does not conflict with a prior pending patent application or a previously issued patent); (2) utility (virtually any amount of usefulness suffices); and (3) nonobviousness (the invention is not obvious to a person of ordinary skill in the art to which the invention pertains).

It is not always easy to determine what is an "ordinary level of skill" or what is "obvious" in deciding whether an invention meets the criterion of nonobviousness. The U.S. Supreme Court decision in Graham v. John Deere Co., 383 U.S. 1, 86 S. Ct. 684, 15 L. Ed. 2d 545, 148 U.S.P.Q. 459 (1966), provides the analytical framework in which to decide whether an invention is nonobvious. Just because all the parts of an invention may be found in a prior art does not necessarily make the invention obvious.

Patents may be rejected for nonutility when their only use is a violation of public morals, such as a tool that can only be used to commit a crime.

Individuals Entitled to Patents

To be entitled to a patent, an inventor must be the first and original inventor. Joint inventors can obtain a patent for a joint invention, but none of them can obtain a valid patent as a sole inventor.

U.S. law requires that patent applications be filed in the name of and signed by the actual inventor or inventors. If one of the actual inventors is deceased, then the patent application may proceed in the names of the other inventors, but the application must still properly identify all inventors. If all of the inventors, or the sole inventor, are deceased, another person may file a patent application in their place, but only if the filing individual has a legal right to file (such as through descent of the inventors' personal property) and the inventors are still properly identified.

In the United States, the initial right to file for a patent rests with the actual inventor, even if that person is an employee who creates the invention in the course and scope of his or her employment using employer resources. However, it is a regular practice for employees engaged in research leading to patentable inventions to sign written contracts that specify that they will assign to their employer the exclusive rights under any patent obtained during the course of the employment. The employee may receive a certain percentage of the profits earned by the invention in exchange for the assignment of the patent.

Government employees, other than those employed in the Patent and Trademark Office, are entitled to obtain patents for their inventions or discoveries. During the period of employment and for one year thereafter, anyone who is employed in the Patent and Trademark Office is ineligible to acquire or take directly or indirectly, except by inheritance or bequest, any rights in a patent that is issued or to be issued by the office.

Procedure for Obtaining a Patent

To obtain a valid patent, an inventor must make an application to the Patent and Trademark Office. Before making an application, inventors generally make a preliminary patentability search, a relatively low-cost search of all of the patents issued in the United States, to determine if it is feasible to proceed with an application. Often professional searchers perform these searches and give the results to a patent attorney who provides an opinion as to whether the invention is patentable. Although the preliminary search is not required by law, if it is performed, the inventor is required to provide all information obtained through that search to the Patent and Trademark Office if she ultimately files a patent application.

The application must include specifications and drawings of the proposed invention, an oath signed by the inventor, and the requisite fee. The Patent and Trademark Office keeps patent applications confidential until the patent is granted. The term letters patent refers to the document that contains the grant of a patent right.


A specification is a written description of the invention that includes the manner and process of creating, constructing, compounding, and using it. It should also state the practical limits of the operation of the invention. The description must be in complete, clear, concise, and precise terms to make the limits of the patent known, to protect the inventor, and to encourage the inventiveness of others by informing the public of what is still available for patent. Total disclosure of the invention is mandated to allow the public to freely use the invention once the patent has expired. No patent will be granted if the description purposely omits the complete truth about the invention in order to deceive the public.

The specification concludes with the claims, which explicitly describe both the structure of the invention and what it does. By regulation and time-honored tradition, the patent claims are written in the form of a continuous run-on sentence. The claims give the Patent and Trademark Office and the courts the opportunity to determine whether the subject matter is patentable or whether it has been anticipated by a previous invention. A claim can be either rejected by the Patent and Trademark Office or deemed invalid if it is vague, indefinite, or incomplete. The claim should cover only the actual invention. It can also be rejected if it is so broad as to include what is old and known information in addition to what is new. Each claim

must contain only one single and distinct invention, but more than one claim can be included in a single application. The inventor also must disclose in the specification what she considers to be the optimum way of practicing or using the invention.


Drawings must be included in a patent application only when they are necessary for understanding the subject for which a patent is sought. If drawings are omitted, the commissioner of patents can require that they be submitted within two months from the time that the inventor receives notice. Drawings that are submitted after that time cannot be used with the application, and a patent can be denied due to the inadequacy of the specification.

The commissioner can require that the inventor provide a model of the invention. In addition, when the invention involves a composition of matter, the applicant might have to furnish a specimen of it for inspection or experimentation.

Oath and Fee

The application for a patent is accompanied by an oath that the inventor believes herself to be the first and original inventor. The patent laws of the United States do not discriminate on the basis of the citizenship of the inventor. An inventor from another country may apply for a patent on the same basis as a U.S. citizen.

An application for an original patent must be accompanied by a filing fee payable to the Patent and Trademark Office. Fees vary depending upon the type of application and the size of the entity applying for the patent. Small entities pay lower fees. When a patent is issued, the patentee must pay an additional fee. These fees also vary based on the size of the entity to whom the patent is issued. Additional fees are charged for maintaining a patent, which likewise vary with the size of the entity involved in the maintenance of the patent.

Patent and Trademark Office Proceedings

Upon receipt of an application for a patent, the commissioner must examine it to determine whether the applicant is entitled to a patent. The Patent and Trademark Office is not restricted to the use of technical evidence in reviewing applications but can act upon anything that establishes the facts with reasonable certainty.

A patent application can be rejected for substantial and reasonable grounds, such as when the alleged invention lacks usefulness or when the invention has been publicly used or sold previously. If the patent is rejected, the commissioner must notify the applicant of the rejection and the grounds for the rejection. An applicant can request a reexamination of the application and submit evidence to rebut the reasons for rejection. Failure to request a review is considered a waiver of the right to challenge the rejection.

A pending application may be amended until the Patent and Trademark Office ultimately decides the matter, either by issuing the patent or rejecting the patent application. New and enlarged claims can be added by amendment only when they are fairly within the scope of the original claim. An amendment that involves a material departure from the invention described in the original specification or enlarges the scope of the original application is invalid. When made within a reasonable time, amendments relate back to the original date of the application and are treated as if they were included in the original application. This is significant because time determines who will be entitled to the patent when two inventors claim essentially the same invention.

Loss or Denial of a Patent

An individual who has invented or discovered a process or object is entitled to a patent if the item or process falls within the specific categories of patentable matter and possesses the necessary attributes of invention, novelty, and utility.

Anticipation A patent will be denied in the event that anticipation occurs, which means that the complete invention was disclosed before the applicant's invention or discovery. This situation might arise when substantially similar elements that produce, or are capable of producing, the same results are found in previously invented machines that are known and commercially used. However, if the two similar inventions accomplish substantially different results or perform totally different functions, they are not deemed to be anticipated, and the second invention will be patentable even if it is essentially identical structurally to the first invention.

For a prior patent to anticipate a later invention, it must disclose the complete and operative invention in such full, clear, and exact terms as to enable a skilled individual involved in the art to practice the invention without the exercise of his or her own inventive skill. A process or instrument used for one purpose might anticipate an invention that uses essentially the same method for a new use if the latter is so comparable to the original invention that it would be apparent to a person experienced in the field. An invention is not anticipated if it has been produced previously due to an accident but is incapable of being repeated because the necessary knowledge to do so is lacking. If the results could be reproduced, however, the invention is considered anticipated.

Previous experimental efforts that are abandoned before the invention achieves actual results do not anticipate the invention. The invention is anticipated, however, if the experiment proves successful.

Statutory Bar Section 102(b) of 35 U.S.C.A. provides a statutory bar to some otherwise meritorious inventions. Under this rule, an inventor is not issued a patent if her invention was described in a book, catalog, magazine article, thesis, or trade publication in the United States or any other country before she invented it or more than a year before she filed the patent application. This statutory bar applies regardless of who made the invention discussed in the prior publication. Thus, if an inventor publishes a description of an invention or places the invention for sale or for public use, a statutory bar can result. Once an invention is placed for sale in the United States, the inventor has just one year in which to file a patent application or the right to patent that invention is forever lost. The clock begins when the invention is placed for sale, even if it is never actually sold. This rule is intended to guarantee that an inventor cannot expand the period of patent protection for the commercial exploitation of her monopoly.

Abandonment and Forfeiture An inventor can lose the right to obtain a patent through abandonment. An invention is regarded as abandoned when it is subject to free and unrestricted public use.

A recognized exception to this general rule, called the "experimental use exception," occurs when an invention must be placed in the public use to determine its operability. However this exception is very narrow, and the inventor must be careful to document the invention to support a later claim of experimental use.

An inventor forfeits the right to a patent when she delays making a claim or hides the invention for an extensive period of time because such conduct unduly postpones the time that the public would be entitled to the subsequent free use of the invention. Delay in applying for a patent does not constitute abandonment if the inventor can demonstrate that she never intended to abandon the invention.

Priority When two or more inventors dis-cover or invent the same thing, patent priority can deny a patent to one of the inventors. Patents are generally issued to the first inventor, as determined by certain guidelines. The Patent and Trademark Office commences an interference proceeding to determine the priority of invention between two or more inventors who are claiming substantially the same patentable invention and who each appear to be entitled to the patent but for the other's application. Such a proceeding examines the dates of conception and reduction to practice and also considers the diligence exercised by the individual who conceived of the invention first but did not reduce it to practice until after the other inventor had done so. The date of conception is the date when the idea, encompassing all the basic and necessary components of the invention, becomes so clearly defined in the mind of the inventor as to be capable of physical expression. Reduction to practice occurs when the way in which the invention works is readily demonstrable.

An inventor who is the first to conceive of an invention and reduce it to practice is entitled to a patent. When an inventor who first conceives of an invention exercises reasonable diligence in reducing it to practice, she will receive a patent, even if the inventor who was second to conceive of the idea was faster in reducing it to practice.

Another general rule is that an individual who actually reduces an invention to practice has priority over one who constructively reduces it to practice. Actual reduction takes place when the invention is put into practical form, whereas constructive reduction occurs when a patent application is filed with the Patent and Trademark Office.

Former U.S. patent law only allowed inventive activity that actually took place within the borders of the country to establish a date of invention. GATT has changed this restriction to allow foreign inventors to prove inventive activity that took place in another country to show a date of invention. Because the United States has a "first to invent" patent system, whereas most other countries have a "first to file" system, the United States had effectively discriminated against foreign inventors because it gave patents to the first inventor to actually make the invention in the United States. GATT addressed this issue that for many years was a disadvantage for U.S. trading partners.


Applicants for a patent, or for the reissue of a patent, whose claims have twice been rejected can bring an appeal from the final decision of the primary examiner to the Patent Office Board of Appeals and Interferences. An applicant who is dissatisfied with the decision of the board of appeals can appeal to the U.S. Court of Appeals for the Federal Circuit or start a civil action against the commissioner in U.S. District Court for the District of Columbia within a specified period of time after the board issues its decision. The applicant is not permitted, however, to institute both a civil lawsuit and an appeal to the U.S. Court of Appeals for the Federal Circuit.

Reissue and Disclaimer

A reissued patent is the grant of a new patent that modifies the original invention by the addition of new elements. A reissued patent is essentially an amendment of the original patent effected to rectify some defect or insufficiency in it.

A disclaimer is the voluntary abandonment of some portion of a patent claim that would render it invalid for lack of novelty. It limits the claim to what is new and thereby saves the patentability of the item by circumventing the invalidity that would otherwise defeat the entire claim. An inventor who knows that a patent contains invalid claims should immediately file a disclaimer because the failure to do so could result in the rejection of the patent.

Assignment and Lease

An assignment is a transfer either of the entire patent, encompassing the exclusive right to make, use, and sell the invention, or a specified part thereof, in the United States. The assignment must be in writing and should be recorded in the Patent and Trademark Office. In the event that a patent is assigned but the assignment is not recorded, a later purchaser of the patent can use the purchased patent as if it had never been assigned.

An assignment is different from a license because a license merely provides the licensee with a temporary right to use the patent as agreed. A license need not be in writing. Whether a transfer is an assignment or a license is determined by reference to the contract between the parties. A patent license is personal to the licensee and cannot be transferred unless specifically indicated in the agreement. The licensor, the individual who issued the license to another, ordinarily requires the payment of a royalty for the use of the patent.

Marking Patented Items

A patentee or any authorized party who makes or sells any patented item must provide notice to the public that the article is patented by placing the word patent and the number given to the patent on the article. If the nature of the article prohibits such a designation, a label that contains the same information should be enclosed in, or marked on, its package. This marking requirement is not applicable to a patent for a process.

Inventors can mark their inventions with the words patent pending if they have a patent application on file and pending with the Patent and Trademark Office at the time the products are marked.

Federal law imposes a penalty for various forms of false marking, including marking an unpatented article with the word patent, or any term that implies that the article is patented, for the purpose of deceiving the public. If a patent holder fails to mark the patented product as required, he or she may not recover damages for any patent infringement that may take place as a result.


Infringement is the unauthorized making, using, or selling for practical use or for profit an invention covered by a patent. Effective 1996, GATT also made the offer to sell a patented invention without the permission of the patentee a direct infringement violation.

Although no infringement can occur before a patent is issued, infringement can occur even if the infringer does not have any actual knowledge of the existence of a patent. A direct infringer is one who makes, uses, or sells the patented invention without permission from the patentee. An indirect infringer is one who actively encourages another to make, use, or sell a patented invention without permission. A contributory infringer is one who knowingly sells or supplies a part or component of the patented invention to another, unless the component is a staple article of commerce and is suitable for a substantial noninfringing use.

The definition of an infringement, provided in 35 U.S.C.A. § 271, has been greatly expanded in the late 1980s and 1990s. For example, it is an infringement to apply for federal food and drug administration approval of a patented drug if the purpose is to obtain approval to manufacture, use, or sell the drug before its patent expires. It is also an infringement to provide a substantial portion of the components of a patented invention to someone outside of the United States so that the components can be assembled outside of the reaches of U.S. patent law. Similarly, it is an infringement to import into the United States a product made by a process covered by a U.S. patent although it was produced outside the United States.


The Patent Act provides for several remedies in the event of an infringement, including injunctive relief, compensable damages, treble damages when appropriate to punish the infringer, payment of attorneys' fees in cases involving knowing infringement, and payment of the costs incurred in bringing the infringement claim in court.

The owner of a patent has a right of action for the unlawful invasion of patent rights by an infringement that has arisen within six years from the date when the lawsuit is initiated.

Injunction Courts frequently grant injunctions to protect property rights in patents. An injunction is a court decree that orders an infringer to stop illegally making, using, or selling the patented article. An injunction is only granted when an award of monetary damages will not adequately remedy the situation—for example, when an infringer plans to continue the unlawful acts. If an individual disobeys an injunction and continues to make use of an invention without permission, he will be guilty of contempt and subject to a fine or imprisonment or both.

Damages In an action for infringement of a patent, compensation for prior infringements can be awarded; however, compensation will be denied for use of the invention before the date the patent was issued. Where there is an infringement, the court will award the patentee actual damages adequate to compensate for the loss in an amount that is equal to a reasonable royalty for the infringing use, together with interest or costs set by the court. If the jury in a trial does not determine the amount of damages, the court will. In either case, the court, under the authority of statute, can increase the damages awarded by the jury up to three times the amount determined, called treble damages. Treble damages are punitive and awarded only in certain instances, such as when the infringer intentionally, in bad faith, infringed the patent.

The question of whether amendments to a patent can bar an infringement claim was ruled on by the Supreme Court in the 2002 case of Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722, 122 S.Ct. 1831, 152 L.Ed.2d 944 (2002). In that case, the Court unanimously ruled that a patent amendment is not an absolute bar to a claim of infringement under the doctrine of equivalents. Justice anthony kennedy, writing for the court, stated the patentee has the burden of proving that the amendment did not surrender the particular equivalent in question.

further readings

Battle, Carl W. 1997. The Patent Guide: A Friendly Handbook for Protecting and Profiting from Patents. New York: All-worth.

Mann, Richard A., and Barry S. Roberts. 2004. Essentials of Business Law and the Legal Environment. 8th ed. Columbus, Ohio.: Thomson/South-Western West.

Walterscheid, Edward C. 1996. "The Early Evolution of the U.S. Patent Law: Antecedents." Journal of the Patent and Trademark Office Society 78 (October).

Wilson, Lee. 1990. Make It Legal: Copyright, Trademark, and Libel Law: Privacy and Publicity. New York: Allworth.


Intellectual Property; License; Property Law; Royalty.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Patents." West's Encyclopedia of American Law. . 23 Jul. 2018 <>.

"Patents." West's Encyclopedia of American Law. . (July 23, 2018).

"Patents." West's Encyclopedia of American Law. . Retrieved July 23, 2018 from

Learn more about citation styles

Citation styles gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).

Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.

Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, cannot guarantee each citation it generates. Therefore, it’s best to use citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:

Modern Language Association

The Chicago Manual of Style

American Psychological Association

  • Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
  • In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.




Patents have become an important form of intellectual property protection for computer software and informational media, supplementing and sometimes replacing copyright protection. Patents are exclusive rights granted by the federal government to the inventors of new and useful machines, articles, substances, or processes. The patent right is offered in return for full disclosure by inventors as to how to make and use their patented invention.

The holder of a patent has the right to prevent others from making, using, selling, offering to sell, or importing the invention, and he or she can sue for damages if any of these exclusive rights is violated. However, because the patent right is extensive and nearly absolute, patents are granted only for very significant advances in technology: the invention cannot have been obvious to those of skill in that technology.

As a consequence, unlike other forms of intellectual property protection, such as copyrights and trademark rights , patent rights do not arise spontaneously. In the United States, patents are only issued after an administrative application procedure in the United States Patent Office. The inventor must submit an application that fully describes and explains the invention as well as sets out the limits of technology being claimed. This description will form the basis for the published patent once the application is approved. If the patent is granted, a full description of the invention and its use is published by the government in the patent. These published patent disclosures form a fund of knowledge for the public.

The term of the exclusive right lasts for twenty years from the date that the application is filed, and at the end of the patent term, the invention passes into the public domain; that is, anyone may freely use it. Should the Patent Office grant a patent improperly, the patent may be invalidated by a challenge in court.

As in the case of most intellectual property, including copyright and trademarks, there is no such thing as a worldwide patent. Successful applications to the United States Patent Office will result in a patent that is good only in the United States. If inventors desire patent protection in other countries, they must apply for a patent in the patent office of each country where a patent is wanted. The expense of so many patent applications may be prohibitive, so inventors must frequently be selective as to the countries in which they wish to apply. The countries in which an inventor chooses to apply will be determined by long-range business plans; usually, inventors will choose to apply for patents in the countries where they are most likely to license their inventions.

Because patent law covers processes, and computer software constitutes a type of process, patent law might seem a natural form of intellectual property protection for software inventions. However, software and related inventions were nearly excluded from patent protection altogether. Patent protection does not extend to natural "discoveries," as it does to manufactured inventions. Thus, laws of nature and mathematical formulae are typically not considered patentable.

During the early 1980s, the U.S. Supreme Court issued two opinions denying patent protection to computer programs on the grounds that a software algorithm is like a mathematical formula, and therefore unpatentable. The court soon modified this position to hold that computer programs are not patentable by themselves, but only in association with a tangible machine or tangible output. During the next twenty years, this position gradually evolved in lower courts to a position that software would be patentable if it produced a "useful result."

The United States Patent Office began routinely accepting patent applications claiming software inventions first as new and useful processes, or as articles of manufacture when associated with some hardware or tangible media. This acceptance of software as patentable subject matter resulted in the explosive proliferation of software patents during the 1990s and early twenty-first century, both in the United States and abroad.

The acceptance of software patents by U.S. courts opened the door to widespread patenting of other types of processes or methods related to digital media. Because the standard for patentability is a "useful result," many processes involving computers now come under patent protection. Such processes need not be internal to the computer's operation, but may involve activity and interface with the user. Such patentable processes might include web-based methods for instruction, electronic commerce, and informational display. Some of these method patents have been controversial because critics view them as being too obvious to deserve patent protection.

see also Copyright.

Dan L. Burk


Davis, Randall. "The Digital Dilemma." Communications of the ACM 44, no. 2 (2001): 7783.

Miller, Arthur R., and Michael H. Davis. Intellectual Property in a Nutshell, 3rd ed. St. Paul, MN: West Publishing, 2000.

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Patents." Computer Sciences. . 23 Jul. 2018 <>.

"Patents." Computer Sciences. . (July 23, 2018).

"Patents." Computer Sciences. . Retrieved July 23, 2018 from

Learn more about citation styles

Citation styles gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).

Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.

Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, cannot guarantee each citation it generates. Therefore, it’s best to use citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:

Modern Language Association

The Chicago Manual of Style

American Psychological Association

  • Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
  • In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.



A patent is the grant of a property right for an invention from the United States Patent Office to the inventor. A patent is granted for a twenty-year term beginning with the date on which the patent was filed in the United States, and U.S. patents are only effective in the United States, its territories, and its possessions. The language of the statute gives the inventor the right to exclude others from making, using, offering for sale, or selling the invention in the United States or importing the invention into the United States. Thus, the inventor is guaranteed the right to exclude others from making, using, offering for sale, selling or importing the invention.

The U.S. Constitution gives Congress the power to enact laws relating to patents in Article I, Section 8, which reads "Congress shall have powerto promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Under this power, Congress has from time to time enacted various laws relating to patents. The first patent law was enacted in 1790. The law now in effect is a general revision that was enacted on July 19, 1952, came into effect on January 1, 1953, and is codified in Title 35 of the United States Code. The patent law specifies the subject matter for which a patent may be obtained and the conditions for patentability. The law established the United States Patent Office to administer the law relating to the granting of patents and contains various other provisions relating to patents.

In the language of the statute, an individual who "invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent," subject to the conditions and requirements of the law. The term process, as defined by law, is a process, act, or method, and primarily includes industrial or technical

processes. The term machine, as used in the statute, needs no explanation; the term manufacture refers to articles that are made and includes all manufactured articles. The term composition of matter relates to chemical compositions, which may include mixtures of ingredients as well as new chemical compounds. These classes of subject matter taken together include practically everything that is made by humans and the processes for making them. Consequently, the Atomic Energy Act of 1954 excludes the patenting of inventions useful solely in the utilization of special nuclear material or atomic energy for atomic weapons. The patent law further specifies that the subject matter must be useful. The term useful, in this context, refers to the condition of the subject matter having a useful purpose and also being operable. That is, a machine that will not operate to perform the intended purpose would not be called useful; therefore, the inventor would not be granted a patent. Recent interpretations of the statute by the courts have defined the limits of the field of subject matter that can be patented. Thus the courts have held that the laws of nature, physical phenomena, and abstract ideas are not patentable subject matter.

A patent may only be granted for the creation of a new machine, manufacture, and so onnot for the mere idea or suggestion of the new machine. A complete description of the actual machine or other subject matter for which a patent is sought must be filed with the U.S. Patent Office.

The U.S. Patent Office administers the patent laws as they relate to the granting of patents for inventions and performs other duties relating to patents. Examiners with the office review patent applications to determine if the applicants are entitled to patents under the law. If the inventor is so entitled, the Patent Office approves and issues the patent. Further, the Patent Office publishes not only a list of issued patents but also various other information concerning patents as well as records of assignments of patents. The U.S. Patent Office has no jurisdiction over questions of infringement and the enforcement of patents.

The major purpose of the U.S. Patent Office as an agency of the U.S. Department of Commerce is to grant patents for the protection of inventions and to register trademarks. Further, the Patent Office advises the Department of Commerce and other governmental agencies concerning intellectual propertypatents, trademarks, and so onas well as assisting inventors and businesses in matters concerning their inventions and corporate products. In essence, the United States Patent Office encourages the scientific and technical advancement of the country.

For further information see the United States Patent and Trademark Office website,

Randy L. Joyner

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Patents." Encyclopedia of Business and Finance, 2nd ed.. . 23 Jul. 2018 <>.

"Patents." Encyclopedia of Business and Finance, 2nd ed.. . (July 23, 2018).

"Patents." Encyclopedia of Business and Finance, 2nd ed.. . Retrieved July 23, 2018 from

Learn more about citation styles

Citation styles gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).

Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.

Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, cannot guarantee each citation it generates. Therefore, it’s best to use citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:

Modern Language Association

The Chicago Manual of Style

American Psychological Association

  • Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
  • In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.