Posted: June 6th, 2022

COMMERCIALISATION OF INTELLECTUAL PROPERTY

COMMERCIALISATION OF INTELLECTUAL PROPERTY
Question is ‘Since the enactment of the 1623 Statute of Monopolies, which prohibited the grant of a monopoly by the Crown but in section VI created an exception for a patent for “the sole working or making of any manner of new Manufactures … to the true and first Inventor and Inventors of such Manufactures …”, the purpose of a grant of a patent has been to encourage innovation. The monopoly granted by the patent rewards the inventor by enabling him or her to charge a higher price than would have been possible if there had been competition. The “patent bargain” is this: the inventor obtains a monopoly in return for disclosing the invention and dedicating it to the public for use after the monopoly has expired.’ (Actavis Group PTC EHF & Ors v ICOS Corporation & Anor [2019] UKSC 15, para. 53) Critically discuss this metaphor of the ‘patent bargain’. Please address in your discussion the following points: – What is the underpinning rationale of the ‘patent bargain’? – Why do recent developments in the commercialisation of patents challenge the ‘patent bargain’ by undermining innovation and competition rather than promoting them? – How do IP and competition law tackle these issues? – Are the solutions devised by courts and authorities drawing the right balance to promote innovation and protect competition? Support your discussion with concrete examples from the relevant case law, legislation, legal guidance papers, and academic literature.

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Introduction
Innovation is a fundamental component in the development of countries via technological progress. It remains the driver for domestic and international economic well-being and competitiveness among the different countries. Notably, the patent system makes up one of the primary policy tools that ensure innovation is promoted, the development of new technologies is encouraged, and the body of human knowledge is increased. The patent system is generally a one-size-fits-all tool as it will have all inventions, regardless of the technological field, is required to meet similar statutory patentability criteria.
The English Parliament passed the Statute of Monopolies in 1623, which is considered the mother of current patent law among all the common law nations. This law primarily focussed on repealing the practice of granting royal monopolies and all commissions, grants, licenses, charters, and letter patents given to any party for the sole purchase, sale, manufacture, working, or utilization within that particular realm. The declaration within Section 1 of all monopolies, including the letter patents being contrary to the law, became the Statute’s core. It would serve as the basis of English patent law for over two centuries. Within Section 6 of the Statute, an exception for the patent included excluding a number of classes of grants from the categorical ban on monopolies, including the letter patents are not to be prejudiced by the Statute if they had been granted for new inventions for a period not exceeding 14 years. The meaning of the word “to invent” was to originate and bring into utilization formally or by authority, to find, establish, institute, or appoint. The main reason for granting a patent was encouraging innovation. Hence, the monopoly granted in this form does reward the inventor by allowing one to have a higher price on their products that would not be possible in the presence of competition. Subsequently, the “patent bargain” concept arises where the inventor agrees that from the grant of the patent monopoly exchanges for the disclosure of an invention and dedicates it to the public to be utilized after the expiry of the monopoly. This was illustrated in Actavis Group PTC EHF & Ors v ICOS Corporation & Anor [2019] UKSC 15, para. 53.
This research seeks to discuss the “patent Bargain” in terms of its underlying rationale, reasons as to why the recent developments within the commercialization of patents challenge it by undermining innovation and competition instead of promoting them/ also, the discussion will look into how the I.P. and Competition law is handling the issues and whether the courts and authorities have come up with a proper balance that will promote innovation while protecting competition.
The “Patent Bargain” Legal Issue Acknowledged In The Actavis Group PTC EHF & Ors v ICOS Corporation & Anor [2019] Case
In the Actavis Group Case, the Supreme Court emphasized how vital the statutory concern on the obviousness of an inventive step should be to a skilled team. This obviousness will need a holistic consideration of facts and specific circumstances within a case. In this regard, a court must consider a stepwise series of tests when the skilled team would carry out the pre-clinical and clinical research within the realm of a foreseeable research trend. In dealing with the approaches to obviousness, the Supreme Court would first recognize the “patent bargain” principle stating that the objective of granting a patent is encouraging innovation. The general notion is that the extent of the patent monopoly needs to correspond and be justifiable to the actual technical contribution it provides to the art, as reiterated in the Generics v Warner-Lambert case. The U.K. Patent law and the European patent Convention did affirm this overarching principle.
The Supreme Court’s decision in the Generics v Warner-Lambert case was made based on the plausibility requirement for products seeking a patent monopoly. Lord Sumption indicated that the “patent bargain” concept provided the applicant with a monopoly in exchange for disclosing the working of the invention. While this is a straightforward thing in new products or processes, it cannot be the case for the second medical use patents. In these patients, the product and the method of manufacture are already known, with the only new thing being the new purpose for the product, in a thorough analysis of the U.K. and EPO case law. The Supreme Court affirmed a higher degree of consistency in terms of the patentee being required to demonstrate that he had appended the specification, which would claim therapeutic plausible. The fundamental tenet emphasized by the Court is that the patentee cannot claim a monopoly in the new use for an already existing product except when they demonstrate its contribution to the art.
The value of disclosure that arises from the “patent bargain” concept cannot be underestimated. First, the disclosure will facilitate a cumulative invention since the follow-on innovation accounts for a substantial majority of the technical breakthroughs suggesting how important inventors need to be compelled to explain their discoveries. It is, however, essential to note that it does not simply mean that the information utilized in the incremental innovations is exclusively within the boundaries of the patent specifications. Instead, the patent system does bring in more knowledge to society than what would otherwise be the case. Second, the information conveyed by patents plays the fundamental function of restricting the contours of the patentee’s property interests. To prevent the accidental trespasses of another party’s intellectual property, one will need to identify all the potentially blocking patents and obtain sufficient information to establish the exclusion zone created by each of them. The notice of property boundaries is specifically vital within the patent realm since no independent inventor defense exists, which is present within the copyright section.
The Impact of Recent developments In the Commercialization of Patents On the “Patent Bargain” Principle
The motivation for granting patents to investors is mainly to give the latter incentives to create and commercialize their inventions and new technologies, have them disclose and standardize the new technologies, and facilitate contractual agreements between the inventors and producers. In this vein, the inventor will file and retain a patent to protect their invention that one has commercialized by selling or licensing another party. Generally, commercialization of patents entails the original owner selling it, licensing it, introducing a new product based on their patent in the market within his organization, or introducing a new product in the market through his new organizations. The minimum requirement is that the owner has been able to generate some income from the patent.
While the primary motivation for patent commercialization is to be a catalyst and conduit for innovation, the recent trends illustrate that many of the patents fail to be commercialized. The non-commercialized patents include over 50000 high-quality patented inventions established by universities despite extensive finances and other resources used in the research and development. The Forrester Research indicated that the United States firms waste over a trillion dollars each year in under-utilized intellectual property assets due to the failure to extract the property’s utmost value via partnerships. The same situation is happening in the U.K., with the country being found to historically leave numerous promising and locally-developed innovations to slip through their fingers to reach other countries that reap the advantages. Sentiments concerning the U.K.’s ability to commercializing technology are incredibly negative, with almost 85% feel failing. Almost 45% believe the country’s investors receive the most blam due to the culture of caution that blocks the path from academic excellence to commercial success. In the same breadth, 27.6% indicated that entrepreneurs required more support, while another 12.1% believed the failures lay with the universities struggling to identify and support the promising technologies. In other words, the research institutions pour out their finances and productivity down the drain. Undoubtedly, the patents are not reaching their primary objective of stimulating innovation if they are not commercialized.
To this effect, the ripple effects of failing to commercialize can be felt in implementing the “patent bargain” principle. This principle runs on the rationale that the inventor gets to have a patent monopoly in exchange for disclosing the invention and dedicating to the public for the latter to use it after the monopoly has expired. Nonetheless, while the inventor ends up getting the patent after promising to fulfill the promise, their failure to commercialize their patents only makes the information-revealing function of the principle largely illusionary. Failing to commercialize means that third parties are not receiving important information on the inner workings of a protected technology. Numerous scholars have indicated that the patent’s system performance in disseminating information has been very disappointing. Research by Christopher Cotopia and Mark Lemley in 2009 indicated that many defendants in patent infringement cases were unaware that they are using already patented technology. Specifically, the I.T. industry is notorious for the production of patents that convey the least information on the underlying nature of the discovery.
Researchers require factual information that arises from patent commercialization to develop even further and have the entire society benefit ultimately. Therefore, when extremely vague information is provided in the market, an indeterminate zone of potential is created without any form of certainty; hence third parties could potentially traverse them. Even when the time comes to fulfill the promise of the patent bargain principle, the market fails to achieve a considerable amount of development and innovation at that particular aspect. The effects of the exclusion are twofold; first, instead of leveraging the country’s patent database for the valuable ideas that could be licensed and made into profit, the businesses and their research teams have been “incentivized” to avert their focus from potentially beneficial innovations. The prior knowledge from a patent could lead to higher penalties if the organizations are later considered to engage in patent infringement. Hence, the organizations choose to ignore the treasure of technologies, products, and processes that could establish entire new industries that could provide numerous employment opportunities and strengthen the economic vibrancy and competitiveness for fear of the litigation threat.
Intellectual Property and Competition Law Dealing with Recent trends in Patent Commercialization
At the most significant level of analysis, the intellectual property rights and competition policies are complementary since they share the objective of promoting technical progress for the ultimate gain to consumers. Organizations are more likely to innovate if they at protected from freeriding. There is also a higher likelihood of innovation when there is strong competition. The challenge is that even in the utmost lawful utilization of the I.P. rights, competition could be hindered to impede the gains from further innovation subsequently. This is evident with the lack of commercialization of the patents since no information is being shared to be worked upon. There is a consistently looming trade-off between increasing competition and the benefits from further innovation. The trade-off could potentially be outside the patent office mandates and is simply challenging for the competition agencies to make. The challenge is exacerbated by the competition agencies taking a stringent short-run view of competition. Nonetheless, these agencies increasingly incorporate a dynamic perception, mainly in the high-technology industries where intellectual property rights play a fundamental function in the competitive process.
One way the I.P. and Competition laws seek to improve patent commercialization is through intellectual property licensing. Having fair laws and policies that allow the licensing of intellectual property will benefit the competitive process by diffusion of innovation and helping the involved persons grasp their rewards, hence increasing these incentives to others who will engage in further innovation. Generally, organizations are prohibited from engaging in anticompetitive behavior that could affect trade in the U.K., specifically by Chapters I and II of the Competition Act 1998. If the anticompetitive conduct affects trade among the E.U. member states, their conduct is subject to Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). These competition laws prohibit two types of the anticompetitive activities, specifically the anticompetitive agreements and the abuse of a dominant market. It is, however, essential to note that there is no provision within the U.K. Competition laws that make specific reference to intellectual property rights. The U.K.’s Competition Authority is the Competition and Markets Authority (CMA) which reviews and investigates compliance with the respective regulations. Its remits include reviewing and controlling the acquisition, sale, or exercise of the intellectual property rights to the extent where competition may be affected. Conduct within the U.K. could affect the trade among E.U. member states which could jeopardize the European Commission’s jurisdiction. HENCE, the CMA will apply and enforce the provisions from the two chapters alongside the regulators in different sectors such as Ofgem in gas and electricity or Ofcom dealing with telecommunications and post. Various potential infringements if the competition laws are investigated, and fines or other interim measures could be imposed. Directions are also offered on how infringements can be prevented,
The U.K. follows a legislation model where when one refuses to deal, then they could be prompted to a compulsory license when the export market is not being supplied. The working of another patented invention that could make a considerable contribution has been prevented or impeded. Also, the compulsory license will be enacted if the establishment or development of commercial or industrial operations in the country faces unfair prejudice. The patent and know-how licensing agreements are subject to particular circumstances within the Fair Trading Act 1973, the Restrictive Trade Practices (RTP)Act 1976, and the Competition Act 1980. Within the RTP, an agreement between two or more parties doing business in the U.K. needs to be registered with the Director-General of Fair Trading in Case more than one party has acknowledged the restrictions among various units, such as prices and quantities. The agreements restricting the license solely will; fall outside the Act’s terms. The registered agreements are directed to the Restrictive Practices Court to be reviewed. Any restrictive one will be prohibited except when the court determines that it could work for the public’s interests.
Notably, despite the several efforts that the laws enacted to promote innovation and protect competition for the subsequent enforcement by the courts and other authorities, it would be improper to state that the right balance has been attained between the two objectives. The competition proceedings are based on the abuse of a dominant position, or other anticompetitive conduct relate to patents. Nonetheless, while patent enforcement could theoretically lead to anticompetitive behavior in particular circumstances, it is not primarily viewed as a matter of competition law by the English Courts even when the patents have exclusivity rights.
Research has proven vast differences in different industries to reflect the differences within the competitive advantage nature of dominant innovation procedures and the degree in competitive pressures. The distinctiveness in the industries is exceptionally fundamental compared to those between SMEs and large organizations in similar industries. For example, the U.K. has been found to have an informal means to protect I.P., explicitly bringing in lead time benefits and secrecy. The informal way dominated the formal ways for all organizations, regardless of size, concerning the formal I.P. rights. The SMEs will generally lag specifically concerning obtaining patents compared to the larger organizations. This is even though the highly innovative SMEs will utilize patents the same way as the larger firms and produce more patents on an employee basis. Therefore, the differences in utilization need to reflect whether patents are promoting innovation and protecting competition.
Conclusion
The “patent bargain” principle remains an essential element of the grant of patents, especially in boosting innovation. This was the fundamental reason why it would be included in Section 6 of the Statute of Monopolies. Notably, there has been a slow trend in the commercialization of patents, which is critical in achieving the principle’s objective. Failing to commercialize means third parties have limited access to information that could guide further developments. Therefore, it is prudent that the legislative branch of government and respective authorities enforce laws that could see more commercialization that boosts innovation and protects competition.

Bibliography
Articles and Journals
Arnold & Porter Kaye Scholer LLP, ‘Intellectual Property & Antitrust In The United Kingdom | Lexology’ (Lexology.com, 2018) accessed 22 April 2021
Christopher A. Cotropia & Mark A. Lemley, Copying in Patent Law, 87 N.C. L. REV. 1421, 1465 (2009).
Dan L. Burk & Mark A. Lemley, Is Patent Law Technology-Specific?, 17 BERKELEY TECH. L.J. 1155, 1176 (2002). Ofer Tur-Sinai, Technological Progress and Well-Being, 48 LOY. U. CHI. L.J. (forthcoming 2016), http://ssrn.com/abstract=2590038.
Devlin A, ‘THE MISUNDERSTOOD FUNCTION OF DISCLOSURE IN PATENT LAW’ (2010) 23 Harvard Journal of Law & Technology accessed 22 April 2021
Hughes A and A Milna, ‘The Impact of the Patent System on SMEs,’ U.K. Intellectual Property Office Report, [2010].
Maxim Kotsemir, Alexander Abroskin & Meissner Dirk, Innovation Concepts and Typology – An Evolutionary Discussion 3 (Higher School of Economics Research Paper No. WP BRP 05/STI/2013), available at http://ssrn.com/abstract=2221299.
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, COMPETITION POLICY AND INTELLECTUAL PROPERTY RIGHTS (Head of Publications Service, OECD) accessed 22 April 2021
Pham A, ‘Competition Law And Intellectual Property Rights: Controlling Abuse Or Abusing Control?’ [2008] CUTS Centre for Competition, Investment & Economic Regulation accessed 22 April 2021
Ponchek T, ‘The Emergence Of The Innovative Entity: Is The Patent System Left Behind?, 1’ (2016) 66 THE JOHN MARSHALL REVIEW OF INTELLECTUAL PROPERTY LAW accessed 22 April 2021
Svensson R, ‘Commercialization, Renewal, And Quality Of Patents’ (2012) 21 Economics of Innovation and New Technology
United Nations Economic Commission for Europe, ‘Intellectual Property Commercialization POLICY OPTIONS AND PRACTICAL INSTRUMENT’ accessed 22 April 2021

Case law
Actavis Group PTC EHF and others v ICOS Corporation and another [2019] United Kingdom Supreme Court, UKSC 15 (United Kingdom Supreme Court)
Warner-Lambert Company LLC v Generics (UK) Ltd (t/a Mylan) & Anor (rev 1) [2018] UKSC 56 (14 November 2018)

Legislation
Statute of Monopolies; England [1623]

Secondary Sources
Boynton J, and Bajjon A, ‘Supreme Court Confirms Requirement For Plausibility On Filing’ (Schlich.co.uk, 2018) accessed 22 April 2021
Davis A, ‘Competition Law – The Basics’ (Pinsentmasons.com, 2020) accessed 22 April 2021
England P, and Wessing T, ‘Patent Litigation In The UK (England And Wales): Overview’ (Uk.practicallaw.thomsonreuters.com, 2020) accessed 22 April 2021
Fisher D, ‘The Real Patent Crisis Is Stifling Innovation’ (Forbes, 2014) accessed 22 April 2021
Mark Allen Engineering Ltd, ‘Does The U.K. Still Have A Problem With Commercialising Technology?’ (The Engineer, 2018) accessed 22 April 2021

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