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Patent Law And Monopolies

October 22, 2007 | A version of this story appeared in Volume 85, Issue 43

Jesús Joanús i Timoneda's thoughtful response (C&EN, Aug. 20, page 4) to the article on the Supreme Court case KSR International Co. v. Teleflex, Inc. misses the point (C&EN, June 11, page 26).The Supreme Court said nothing about monopolies.

Instead, it admonished the Federal Circuit to apply the law as Congress had enacted it rather than legislate variations on the statute. Congress replaced the common law test of "invention" with a new test of "nonobvious" a half-century ago. Instead of construing the statute according to Supreme Court interpretations, the Federal Circuit drafted its own test of "teaching, suggestion, or motivation," words that do not appear in the statute.

The five arguments in the letter as to why patents are not monopolies cannot withstand scrutiny. First, in every country, patents are government grants that restrain trade in the invention. Patents are outside the scope of the antitrust laws because they are an exception, not because the antitrust laws are limited to "anything that was already in possession of the people." Diamonds are typically owned by the mining company and are not "already in the possession of the people," yet trade in diamonds is restrained to control prices. Patents restrain trade in drugs so that owners can maintain high prices, as any consumer of Lipitor knows.

Second, it is an error to contend that there is no "quid pro quo" with monopolies. Most of the oil pumped from Earth is the result of quid pro quo. I pump it out and you give me a monopoly.

Third, the owner of the patent "controls and rules the market." The fact that most patents do not have measurable value is a market problem, not a patent problem. Patents owned by Silicon Valley companies have much greater value than patents elsewhere because the market there is much more efficient, not because the patents are any different. There is a problem with patents granted for peanut butter-and-jelly sandwiches and for business methods, but that problem can be solved by the more rigorous patent examination that the KSR case contemplates.

Fourth, a patent "gives the monopolist rights to make, sell, buy, work, or use" the invention that may not be had by others. Likewise, diamond sellers in Western Africa have found a "way to design around" the monopoly enjoyed by South African diamond monopolists for generations.

Patents are wonderful, enshrined in the Constitution. But they are benign monopolies that advance the progress of the useful arts by making knowledge patent, that is, "open to public inspection." Patents started as monopolies and continue to be so, but that does not diminish their value to society.

John P. Sutton
San Francisco



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