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Industries that produce and manage “knowledge” and “creativity” have replaced capital, colonies, and raw materials as the new wealth of nations. Property, which has always been the essence of capitalism, is increasingly changing from tangible to intangible. Intellectual property (IP) rights are a class of assets known as intangible assets. These assets play an ever-increasing role in the development of emerging technologies like biotechnology, drug development, and nanotechnology. Patents are the most complex, tightly regulated and expensive form of IP. They have the attributes of personal property—they may be owned, assigned, bought, sold, or licensed.

Historical Basis of Patent Laws

Patent law is a subtle and esoteric area of law that has evolved in response to technological change. It has been modified numerous times since 1790, the year the first U.S. Patent Act was enacted. This is due to new interpretations of existing laws by the U.S. Patent & Trademark Office (PTO) and by courts or by creation of new laws by Congress. Patent law, arguably one of the most obscure legal disciplines, is now at the forefront of nanotechnology.

The founding fathers incorporated the concept of patents into the Constitution under Article 1, Section 8, Clause 8, whereby Congress was given the authority to promote the progress of science by granting inventors the exclusive right to their discoveries (i.e., a limited monopoly on their inventions). President George Washington signed the first U.S. Patent Act on April 10, 1790. Title 35 of the United States Code codified the Patent Act of 1952, the Act currently in use. Since the granting of the first U.S. patent in 1790, more than 7 million patents have been issued by the PTO.

What is a Patent?

A patent is a legal document granted by the federal government (i.e., the PTO) whereby the recipient (or “patentee”) is conferred the temporary right to exclude others from making, using, selling, offering for sale, or importing the patented invention into the United States for up to 20 years from the filing date. Similarly, if the invention is a process, then the products made by that process cannot be imported into the United States. A patent provides protection only in the United States, its territories, and its possessions for the term of the patent. It is estimated that around 90 percent of the world's patents are issued through the three main patent offices—the PTO, the European Patent Office, and the Japanese Patent Office.

All patented inventions eventually move “off” patent at the end of their patent term (“patent expiration”) at which time they are dedicated to the public domain. This is the basis for low-cost generic drugs that appear in the marketplace following expiration of the costlier versions of the patented branded drug.

Patentable inventions need not be pioneering breakthroughs. Improvements of existing inventions or unique combinations/arrangements of old formulations may also be patented. In fact, the majority of inventions are improvements on existing technologies. However, not every innovation is patentable. For example, abstract ideas, laws of nature, works of art, mathematical algorithms, and unique symbols and writings cannot be patented. Works of art and writings, however, may be copyrighted and symbols may be trademarked. Laws of the universe or discoveries in the natural world cannot be patented. For instance, Einstein's Law of Relativity cannot be patented. For a U.S. patent to be granted, an invention must meet specific criteria, both formal and informal, as set forth in the U.S. Constitution.

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