INTRODUCTION

Economic and Constitutional Basis for Patent System

The rational for a patent system is to establish economic incentives for inventors. By granting an inventor the exclusive right to make, use or sell and invention, the inventor then has a greater incentive to invent things. This incentive is even described in the Constitution. In Bonito_Boats v. Thunder Craft, 489 U.S. 141 (1989), the Supreme Court, in an opinion by Justic O'Connor, discussed the primarily economic basis for the patent system.

Article I, § 8, cl. 8, of the Constitution gives Congress the power

"[t]o 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 Patent Clause itself reflects a balance between the need to encourage innovation and the avoidance of monopolies which stifle competition without any concomitant advance in the "Progress of Science and useful Arts." As we have noted in the past, the Clause contains both a grant of power and certain limitations upon the exercise of that power. Congress may not create patent monopolies of unlimited duration, nor may it

"authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available."

Graham v. John Deere Co. of Kansas City, 383 U. S. 1, 383 U. S. 6 (1966).

From their inception, the federal patent laws have embodied a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself, and the very lifeblood of a competitive economy.

As a counter-point, one could argue that there is no need for a patent system and the limited monopoly granted by a patent. Indeed, there is the incentive to be the first one to have a product enter the market. Until competitors copy the idea and/or reverse-engineer product, the first inventor is the only one selling the invention. Furthermore, in a system with no patent rights, there is perfect clarity on the lack of ownership of inventions. A competing company does not have to invest significant resources in determining the extent to which their products and designs may or may not be infringing their competitors' patents.

Exclusive Rights

The basic rights that are associated with a patent are the rights to

• make;
• use;
• offer to sell; and,
• to sell

the patented invention, 35 USC 271.

35 USC 261 states that "patents shall have the attributes of personal property." What this essentially means is that the owner of the patent can sell or keep the patent, and has all the usual rights with respect to it that an owner of "regular" personal property would have. For example, the owner can sell the patent rights, or part of them, or choose not to, or give them away, just as the owner of an iPod could choose to do the same thing with that property.

Governing Law

The federal laws of the United States are called the US Code, which is organized into 50 Titles. The primary sections of the United States Code governing patents is Title 35, which has four parts:

• PART I—UNITED STATES PATENT AND TRADEMARK OFFICE
• PART II—PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS
• PART III—PATENTS AND PROTECTION OF PATENT RIGHTS
• PART IV—PATENT COOPERATION TREATY

The main parts we will consider in this course are Parts II and IV. We will study, in detail, the standards for an invention to be eligible for a patent, which is commonly referred to as patentability which is the focus of some of the sections in Part II. Part IV is the focus of the international aspects of patent law.

Relationship to State Laws

The supremacy clause in Article VI of the US Constitution states

the laws of the United States ... shall be the supreme law of the land

which means they preempt all state laws. Since the Federal Government has decided to regulate patents, any attempt to do so by the states is invalid. So, for example, if Indiana established its own state patent system, it would be invalid because it would violate the supremacy clause.

However, it is not so clear-cut when some laws of a state conflict with federal laws. Bonito Boats v. Thunder Craft, 489 U.S. 141 (1989) is a good example.

In September, 1976, petitioner Bonito Boats, Inc. (Bonito), a Florida corporation, developed a hull design for a fiberglass recreational boat which it marketed under the trade name Bonito Boat Model 5VBR. App. 5. Designing the boat hull required substantial effort on the part of Bonito. A set of engineering drawings was prepared, from which a hardwood model was created. The hardwood model was then sprayed with fiberglass to create a mold, which then served to produce the finished fiberglass boats for sale. The 5VBR was placed on the market sometime in September, 1976. There is no indication in the record that a patent application was ever filed for protection of the utilitarian or design aspects of the hull, or for the process by which the hull was manufactured. The 5VBR was favorably received by the boating public, and "a broad interstate market" developed for its sale. Ibid.

In May, 1983, after the Bonito 5VBR had been available to the public for over six years, the Florida Legislature enacted Fla.Stat. § 559.94 (1987). The statute makes

"[i]t . . . unlawful for any person to use the direct molding process to duplicate for the purpose of sale any manufactured vessel hull or component part of a vessel made by another without the written permission of that other person."

§ 559.94(2). The statute also makes it unlawful for a person to "knowingly sell a vessel hull or component part of a vessel duplicated in violation of subsection (2)." § 559.94(3). Damages, injunctive relief, and attorney's fees are made available to "[a]ny person who suffers injury or damage as the result of a violation" of the statute. § 559.94(4). The statute was made applicable to vessel hulls or component parts duplicated through the use of direct molding after July 1, 1983. § 559.94(5).

On December 21, 1984, Bonito filed this action in the Circuit Court of Orange County, Florida. The complaint alleged that respondent here, Thunder Craft Boats, Inc. (Thunder Craft), a Tennessee corporation, had violated the Florida statute by using the direct molding process to duplicate the Bonito 5VBR fiberglass hull, and had knowingly sold such duplicates in violation of the Florida statute.

Federal Court System

The Court of Appeals for the Federal Circuit

Established on October 1, 1982. The holdings of the the CCPA and the U.S. Court of Claims are binding precedent in the Federal Circuit, South Corp. v. US (South Corp. v. US (full text)).