Monday 10 December 2012

A Brief History of Patents

You have to feel a little sad for Filippo. He was an amazing artistic, engineering and architectural genius. He was revered in his own lifetime. He had convinced his government that he had an amazing and revolutionary invention that needed an extraordinary protection if he were to go ahead and build it...

But mere hours after its launch his creation, his pride, and a sizeable part of his fortune lay at the bottom of the Arno river.


Portrait of Filippo Brunelleschi
Filippo Brunelleschi was a dude. I think he'd be quite popular today. He was a talented and gifted architect, artist, and engineer. He was commissioned to build the dome for the incomplete Santa Maria del Fiore, the Florentine cathedral, after he won a competition which involved standing an egg on its end on top of a piece of marble.

He won the competition by flattening one end of the egg by breaking it slightly. It sat quite easily after that. When the other competitors complained that they could have done the same thing, he reportedly laughed that if they could have done that then they would have built the dome already.

See? Dude.

To complete the dome Filippo had to invent new hoist systems to lift marble blocks to the height required. He also had to rediscover how to build domes that large, since no-one had been able to do so since the Romans. Finally, he had to ship a mind-boggling shitload[1] of marble into Florence.

To do this, he invented a new kind of ship: Il Badalone (The Monster). Frankly just naming the thing ought to have cemented his reputation as a marketing genius as well. However, Filippo was concerned that others would simply copy his ideas, so before building it he petitioned the State of Florence for a three year monopoly on the concept, after which he would build the ship and hoists and so reveal his secrets.[2]

Filippo was so influential that he didn't even need to reveal the design beforehand. The authorities trusted that he was onto a winner -- after all, he had form. The document is extraordinary by modern standards. It basically freezes the state of the art of ship building for three years, saying that only Filippo Brunelleschi may sail ships of a new design. Anyone else sailing any kind of ship on any kind of water that was not already in existence before Filippo's design would have their vessel burned. Only Filippo himself could design, build and sail new types of craft.[3]

Drawing of ship suspected to be Il Badalone
Il Badalone
When the ship finally set off on its maiden voyage in 1428 it sank, taking 50 tonnes of marble to the bottom of the Arpo river. It had sailed only 40 kms.

From everyone's perspective, this was surely not a great bargain. The state imposed a monopoly cost on its citizens, in exchange for which, it gained knowledge on how to build a vessel that could sink very efficiently. It won't be the last time however that the patent quid pro quo turns out to be a lousy deal.

The monopoly on new ship designs granted by Florence was an informal exercise of the state's prerogative. The Republic of Venice codified the principles under which such monopolies would be granted in 1474. This time, it was expected that inventors would reveal their inventions once perfected, and then enjoy monopoly rights over it for ten years.[4]

Meanwhile, in England...

The Royal Prerogative to Do as Thou Will

A prerogative is a special right or privilege. The word seems a little out of place when talking about monarchies (after all, isn't that what monarchies are all about? I mean, is there another kind of royal privilege?). Nevertheless, the history of democracy is basically about the gradual restrictions imposed by parliaments on Royal Prerogative.

Typically the granting of this right was done in writing, by way of a royal letter. The letter was addressed to all the subjects of the realm and was therefore an open letter. "Patent" (as most med-students or people with stents[5] would know) means "open". Hence there were "letters patent" -- an open letter to the public at large that granted a special right or privilege to another.

Portrait of King James the first
King James I
In mediaeval England, the monarch could grant citizens a monopoly over pretty much anything. Monopolies tend to be enormously profitable and so were very helpful in raising taxes while deflecting blame. For example, James I granted exclusive rights to "export calfskins; ...import cod and ling; [and] make farthing tokens of copper."[6] The monopoly holder could charge very high prices because of the monopoly, but would also be expected to pay a large tax on the revenue. Even commodities like salt were restricted in this way for a time. The monopolist got the blame -- the crown got the revenue.

Prerogative based monopolies were very powerful. Royal prerogative is subject to both the Magna Carta and the common law courts. The courts eventually got their chance to set out the requirements for a valid monopoly in the Case of the Monopolies.

Portrait of Queen Elizabeth the first
Queen Elizabeth I
Queen Elizabeth I had granted an exclusive license to make and sell playing cards to one Edward Darcy. The case suggests this was out of concern that the lower classes ("servants and apprentices and poor Artificers") were spending too much time playing cards and not enough time learning a trade. A monopoly on printing and distributing playing cards was issued to one Ralph Bowes for twelve years, after which it was then granted to Darcy. The grant allowed Bowes and Darcy to restrict the distribution of cards, and also involved the payment of fees to the Crown.

Thomas Allen must not have seen the memo. He was sued by Darcy for selling playing cards without his permission[7]. Ultimately Allen prevailed -- the Queen's Bench found that Darcy's monopoly was invalid. It was not a proper exercise of the royal prerogative, because:
  • Every citizen had a right to a lawful trade. A monopoly restricted this right, and was therefore not in the interests of the commonwealth. The prerogative right to issue monopolies could not be used if it harmed the citizens. But of course that's exactly what a monopoly does: it raises prices; restricts livelihoods; and impoverishes people who were trading prior to the monopoly existing.
  • It was argued that it was part of God's Law that men must labour to support their families. Therefore to restrict this ability was to go against God. This was consistent with Church teaching "which had condemned monopolies in the strongest possible terms."[8] A monarch could not use the royal prerogative to injure their subjects, for they themselves must obey God.
There was one exception allowed for by Allen's counsel. If a person invented something new, or was offering to bring foreign inventions to England and to teach their proper use to others, then a monopoly right could be lawfully given. This was because the whole realm benefited from new trades and  technologies. There was a corollary: once learned, a monarch could not renew the monopoly, because the benefit was no longer available (since the knowledge was now available to everyone).

The abuses of prerogative was one of the focal points of the struggle between the crown and parliament. This particular battle was finally resolved by the Statute of Monopolies in 1624.

Statute of Monopolies

Sir Edward Coke
The arguments against the establishment of prerogative monopolies, including the exception for inventions, was codified in 1624 in the Statute of Monopolies. The statute first revoked all monopoly privileges then in existence, since they were not in the public interest. Only one exception was allowed: patents for inventions for new methods of manufacture. However even these had an expiry date, being 14 years after issue.

Parliament rejected a "natural law" justification.  These patents for inventions were justified purely on economic incentives. Even in America and France, where there was no history of royal abuses of the privilege system, the justifications for monopolies on inventions was based on instrumentalist arguments and economic incentives. This was despite the fact that in both countries, the concept of natural rights, liberties whose existence where held to be self-evident, had no such restrictions.

The statute was quite short and broad -- it was up to the courts to interpret its application. Sir Edward Coke, writing in the Institutes of the Lawes of England, summarised the requirements for a valid patent:
[N]ew manufacture must have seven properties. First, it must be for twenty-one years or under. Secondly, it must be granted to the first and true inventor. Thirdly, it must be of such manufactures, which any other at the making of such letters patent did not use ... Fourthly, the privilege must not be contrary to law ... Fifthly, nor mischievous to the state, by raising the prices of commodities at home. In every such new manufacture that deserves a privilege, there must be urgens necessitas et evidens utilitas. Sixthly, nor to the hurt of trade ... Seventhly, nor generally inconvenient.
In modern terms, we might say that a valid patent:
  1. Is a temporary privilege, never a perpetual right.
  2. Must be granted to the first inventor.
  3. Must be new, and not cover the existing state of the art.
  4. Must not be for an invention that would be otherwise against the law.
  5. Nor can it be something that harms the state (for example, by raising the prices of commodities).
  6. The invention must be for something useful or the patent urgent and necessary.
  7. The patent must not be generally inconvenient.

Modern Patent Justifications

Graph showing steady increase in software patents from 1985 to 2000
The fact that the formula for a valid patent has remained virtually unchanged for almost 400 years is interesting in itself. There does seem to have been a subtle shift though in the arguments for the existence of patents. Whereas the early English cases speak of increasing the "knowledge capital" for the public good, modern justifications emphasise the need to ensure adequate returns on investments in research and development. 

Also in the early history of patents, the use of physical property as a metaphor to guide the law does not exist. The issuing of a patent is given in almost reluctant terms: that the state would really rather not issue these temporary monopolies, but will grudgingly do so to improve the knowledge of the nation. To do this, inventors may be granted temporary monopolies, as long as they disclose an invention that is new, useful, and does no harm.

Does that sound like the system we have today?

A thought occurred to me while reading Drahos and writing this post: that metaphor is powerful precisely because it constrains. It creates a framework which contains the subject being described. If the language of IP was still about privileges to promote the creation and sharing of new knowledge for the public benefit, would patent maximilists have been as successful in expanding and extending patent law?[9]

I've spent too long on this post already! The next thing to look at will be trademarks.


Acknowledgement: My research for this post relied heavily on Prof Peter Drahos writing in A Philosophy of Intellectual Property (1996).
    1. In metric terms, that's 4 million marble blocks
    2. Brunelleschi's Monster Patent: Il Badalone, New Legal Review, Linked 1 December 2012.
    3. For a modern equivalent, we'd have to imagine Pfizer being granted the exclusive right to research and produce blood pressure medication, or Apple being allowed to be the sole producer of tablets for three years. More than that, the patent owners would not have to reveal a word of what they were working on.
    4. See also Erik J Heel's Men Of Great Genius: Venetian Senate, Patent Act of 1474.
    5. Yes, that would be me.
    6. WS Holdsworth, 'The Commons Debates 1621', 52 Law Quarterly Review, 481, 487 (1936), quoted in P Drahos, 'A Philosophy of Intellectual Property', 1996, p 29.
    7. At one level the whole case is utterly banal. I mean, playing cardsThis is the thing that will shape the evolution of patent law for over 400 years? But this is actually not all that uncommon in common law countries -- that the highest ideals aren't discussed until enough stars align that a case reaches the highest courts. And so it was that the basic principles of patent law in England were decided in a case about cards.
    8. Briefly, because they interfered with just prices being set; were speculative and therefore usury; ones that related to food created artificial scarcity which was not in public interest. See Drahos, Ibid.
    9. Because maybe what we have today is a property-based justification. And property is generally acquired, accrued and hoarded. It also has the unfortunate property of depreciating in value almost as soon as it is acquired. Which motivates the acquisition of more property.

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