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Patents in Relation to Monopoly*
Published online by Cambridge University Press: 07 November 2014
Extract
Francis Bacon long ago pointed out that to know truly is to know by causes. I think it can be said with some measure of accuracy that no one can know the patent system and be capable of judging its merits and defects who does not possess a reasonably intimate knowledge of its historical foundations and development. As Mr. Justice Holmes observed, historic continuity with the past is not a duty but only a necessity and if this be so, in no field is it more applicable than in a consideration of patents and monopolies. The superficial writers of history, and their slavish imitators, have persisted in painting the picture of an English citizenry groaning under the grievous weight of monopolies dispensed with a lavish hand by the Tudor and Stuart sovereigns to greedy and avaricious courtiers and favourites who milked the populace dry with their monopolistic exactions. They point to the Statute of Monopolies of 1624 as a milestone in the history of English law—a statute forced upon a reluctant king in much the same spirit as the little affair at Runneymede four centuries earlier. That is not an accurate view. Monopolies were not all regarded as anathema either by the common law or by Parliament in those early days. If they were for the good of the realm their propriety was never questioned. From this theory evolved the thought that a new invention or the setting up of a new manufacture was a laudable thing and a grant of monopoly to its introducer by an exercise of the Crown prerogative was a beneficial act and did not offend against the principle of the common law which regarded as illegal and in restraint of trade any monopoly which took away any freedom or liberty enjoyed by the public before the grant. From the genesis of this policy stemmed the great influx of alien workmen to England which, commencing in the reign of Edward III, was responsible for the introduction of a number of new trades and manufactures and the transmutation of England from an economy of importation to one of domestic production of manufactured goods. An examination of the patents for new inventions and manufactures granted by Elizabeth and James I will show that to them was owed in large measure the great upsurge in domestic manufacture which accompanied the policy of self-sufficiency inaugurated by Cecil and pursued under James. Whatever criticism may be offered of a few of the monopoly grants, that criticism fades before an appraisal of the benefits conferred by the introduction, under the spur of monopoly patents, of the important inventions and manufacturing which began to appear during the Tudor and Stuart periods.
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- Articles
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 12 , Issue 3 , August 1946 , pp. 328 - 342
- Copyright
- Copyright © Canadian Political Science Association 1946
Footnotes
*
This paper was presented at the annual meeting of the Canadian Political Science Association in Toronto, May 24, 1946.
References
1 Holmes, O. W., Collected Legal Papers (New York, 1920), p. 138.Google Scholar
2 21 Jac. I, c 3.
3 This distinction will be gathered from the definition of monopoly given by Coke in his Institutes (vide Coke, 3 Inst., p. 181) as being ”an institution or allowance … of or for the sole buying, selling, making, working, or using anything; whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty that they had before, or hindered in their lawful trade.”
Substantially the same definitions are given by other standard treatise writers: Cf. Black-stone, Commentaries, Book IV, chap. 12, p. 159; Comyns, Dig. Tit. Trade D. 4; Hawkins, Pleas of the Crown, c. 79, s. 1; Wheeler, A Treatise of Commerce, 1601, p. 101.
4 The Book of Bounty, 1610.
5 25-6 Geo. V, c. 32. While patents were originally granted in Canada as an executive act flowing from the royal prerogative, the system early took a statutory form, the first Patent Act in Canada being that of Lower Canada in 1823 (4 Geo. IV, c. 25). Upon the formation of the Dominion, patents of invention and discovery were, by the B.N.A. Act, assigned to the exclusive jurisdiction of the Parliament of Canada.
6 “35 (1) The applicant shall in the specification accurately and fully describe the invention and its operation or use as contemplated by the inventor and set forth clearly the various steps in a process or the method of constructing, making, compounding or using a machine, manufacture or composition of matter in such full, clear, concise and exact terms as to enable any person skilled in the art or science to which it appertains or with which it is most closely connected to make, construct, compound or use it. In the case of a machine he shall explain the principie thereof and the best mode in which he has contemplated the application of that principle. In the case of a process he shall explain the necessary sequence, if any, of the various steps so as to distinguish the invention from other inventions. He shall particularly indicate and distinctly claim the part, improvement or combination which he claims as his invention.
“(2) The specification shall end with a claim or claims stating distinctly and in explicit terms the things or combinations which the applicant regards as new and in which he claims an exclusive property or privilege.”
7 Patent Act, sec. 53.
8 See, for example, the words of Lord Ellenborough. C. J., in Harmar v. Playne (1807) 17 Ves. 130; 11 East, 101; French's Ore Reduction Co. of Canada v. Electrolytic Zinc Process Co. (1930) S.C.R. 4(52; B. V. D. Co. Ltd. v. Canadian Celanese Ltd. (1936) Ex. C.R. 139; (1937) S.C.R. 221, 441.
9 Cf. Patent and Trade Mark Review, vol. XLIV, no. 5, 02, 1946, p. 119 Google Scholar; Board of Trade Committee, Second Interim Report (London, 04, 1946), p. 2.Google Scholar
10 Berge, Wendell, Cartels, Challenge to a Free World (Washington, 1944), p. 37.Google Scholar
11 Ibid., p. 40.
12 The Honourable Evan A. Evans, C. J.
13 Cf. Barnett, O. R., Patent Property and the Anti-Monopoly Laws (Indianapolis, 1943), p. iii.Google Scholar
14 Cf. Fox, H. G., “Patent Licenses and Restrictive Covenants” (Canadian Bar Review, vol. XXIII, no. 8, 08, 1945, p. 601).Google Scholar
15 United States Constitution, art. 1, sec. 8 (8).
16 Victor Talking Machine Co. v. The Fair (1930) 123 Fed. 424.
17 Sec. 65 (3).
18 Sec. 67.
19 Sec. 66 (d).
20 See the McGregor, Report on Canada and International Cartels, 10 10, 1945, part III, p. 52.Google Scholar
21 An extensive survey conducted by the American Chemical Society some years ago failed to reveal a single instance of this kind. Frank Jewett recently wrote: “Despite the fact that I have made diligent enquiry over the years, I have never been able to locate a suppressed patent nor have I found anyone who could cite an authentic case of suppression” (Cf. Journal of the United States Patent Office, vol. XXVIII, no. 2, Feb., 1946, p. 86).Google Scholar
22 Art. 1, sec. 8 (8).
23 (1941) 1 Fox Pat. C. at p. 202.
24 The Second Interim Report of the British Board of Trade Committee has recommended a number of amendments to the British Patents Act, particularly with regard to the conduct of litigious proceedings. While many of the suggestions contained in that Report have considerable application to the Canadian patent system, there is one situation in this country which urgently demands reform and in respect of which Canada stands in an unhappily unique position. The administration of our patent system is less efficient than exists in any other civilized country, owing to shortage of staff and the parsimonious treatment by government of a department which has always been more than self-supporting. Patent Office delays prejudice the inventor, industry, and the public interest; inefficient examination caused by insufficient staff brings disrepute to the patent system itself; lack of adequate numbers of examiners and absence of proper reference facilities cause foreign inventors, industrialists, and lawyers to hold our Patent Office, and, by reflection, our entire Administration, in contempt. Our position as one of the few industrial nations neglecting to print its patents causes improper financial burdens to be laid on interested parties and tends to work serious injustice of great consequence to industry and the public. This criticism has been voiced on more than one occasion (see e.g. University of Toronto Law Journal, vol. VI, no. 1, 1945, p. 143 Google Scholar; “Research in Canada,” Proceedings of the Chemical Institute of Canada, Quebec City, 06, 1945, p. 94).Google Scholar More useful work may be accomplished by endeavouring to perfect the system we now have, than by attempting to abolish it in favour of the untried, or to reform it into something suitable for Utopia.
25 At p. 31.
26 London, England.
27 On behalf of the following: Association of British Chemical Manufacturers, Biochemical Society, British Association of Chemists, Chemical Society, Institution of Chemical Engineers, Royal Institute of Chemistry, Society of Chemical Industry, Wholesale Drug Trade Association.
28 Representing inter alia Imperial Chemical Industries Ltd.; British-American Tobacco Co. Ltd.; Courtaulds Ltd.; Lever Bros, and Unilever Ltd.; Arthur Guinness, Son and Co. Ltd.; J. and P. Coats Ltd.; Tootal, Broadimrst, Lee, Co. Ltd.; Calico Printers' Association Ltd.; Dunlop Rubber Co. Ltd.; Asiatic Petroleum Co. Ltd.; General Electric Co. Ltd.; Reckett and Colman Ltd.; Anglo-American Oil Co. Ltd.; British Celanese Ltd.; Thomas Hedley and Co. Ltd.; Imperial Tobacco Co. Ltd.; Federation of British Industries; Manchester Chamber of Commerce; and Association of British Chemical Manufacturers.
29 “Speaking from wide experience of its members this Institute does not believe that patent monopoly rights are misused to any appreciable extent and it holds the definite opinion that patent owners in the vast majority of cases exercise their rights in a manner which is entirely satisfactory to the general community. It is not aware of any public dissatisfaction with the commercial development of inventions in this country or that the true benefits of particular inventions have been withheld owing to monopolistic practice. It would seem on the contrary, that the fullest effects of competitive enterprise have been experienced in all the main fields of invention.”
30 In Canada, sec. 65.
31 Extract from brief presented by the Joint Chemical Committee on Patents: “The abuse of patents of monopoly by the suppression of inventions so often charged against patentees in the popular press are usually found on examination either to be non-existent or to be due to the abuse of the power of wealth. … It has been alleged that patented inventions are bought up by interested parties in order to stifle them. Specific cases are practically never cited, but where details are given it is usually found on investigation that there was good reason why the invention was not worked. In reply to the general accusation, it is pointed out that if there is anyone willing to work the invention it is impossible to stifle it by buying up the patent, since Section 27 (2) (d) provides for tie grant of a compulsory license in such circumstances.”
Extract from brief presented by Trade Marks, Patents and Designs Federation, Limited: “It can easily be shown that in one way or another many of these activities serve the national interest. Thus, an exchange of patent rights and technical information often leads to an early establishment of a new or improved manufacture in a given territory, whereas in the absence of such arrangements very considerable delay may arise.
“We consider that the complaints made on the score of the operation of cartels in this country in relation to patents are in general not justified. We know of no case where patents granted for inventions originating in this country have been operated by a cartel to the detriment of the national interest. …”
“It may, however, not be out of place to refer to a common outcry against the suppression of inventions. The phrase ‘suppression of inventions’ is commonly used to denote a dog-in-the-manger attitude which is said to exist on the part of certain patentees or their licensees. It is alleged that they will neither manufacture under the patent themselves nor will they permit others to manufacture under it. It is even said that they will purchase inventions with the deliberate intention of suppressing them.
“For our part it must be said that we are not aware of any instance of this kind in which the public interest has been detrimentally affected.”
The brief then goes on to indicate that suppression of inventions must not be confused with mere non-working. This latter may be due to a variety of causes, among them being that the invention may be regarded as superseded; it may be viewed in the stage of development it has reached with disfavour; in the judgment of the potential manufacturer the capital outlay involved is too heavy, the raw materials are too costly or are not available in sufficient quantity, the labour and maintenance costs too high, the product not sufficiently reliable in quantity or operation, or the market for the product too small, to warrant commercial operation; perhaps further invention is required to put the finishing touches to the original concept; or a number of patents properly exist in the hands of one inventor who manufactures only the preferred embodiment. The brief then continues:
“Active ‘suppression’ as distinguished from simple ‘non-working’ is an operation of which instances are hard to find, and examination of any cases that may be put forward will probably show that the ‘non-working’ of the inventions concerned is an inevitable consequence of economic conditions over which the manufacturer accused of ‘suppression’ has no control. Errors of judgment on the part of manufacturers may perhaps be found, but these can be corrected under the provisions of Section 27. It is significant that no case of a ‘suppressed’ patent has yet been ventilated by proceedings under Section 27. Moreover, no case has been brought forward in which manufacture did not take place during the life of the patent but commenced on a considerable scale soon after the patent had expired.”
32 At p. 51.
33 Second Interim Report, April, 1946. The First Interim Report was published in April, 1945.
34 At p. 6.
35 At p. 6.
36 Patents and Designs Act, sec. 27.
37 The average number of patents granted per year in Great Britain is roughly 18,500, and in Canada, 9,000. Up to December 31, 1945, Canada granted 432,210 patents and the United States 2,391,835.
38 June 18, 1943: Chas. F. Kettering, Chairman.
39 The United States Patent Office compiled a list showing the average number of patents granted in the main industrial countries, for presentation to the Temporary National Economic Committee on January 16, 1939. The numbers given are averages for the eight years 1930-7 unless otherwise indicated.
40 See “Patents and Monopoly” (University of Chicago Round Table, no. 385, 08 5, 1945, p. 5).Google Scholar
41 R.S.C. 1927, c. 26 as amended.
42 The Combines and Fair Prices Act, 9-10 Geo. V, c. 45; the Combines Investigation Act, 9-10 Edw. VII, c. 9; the Customs Tariff Act, 6-7 Edw. VII, c. II, s. 12; see also the Criminal Code, R.S.C. 1927, c. 36, s. 498.
43 Philco Products Ltd. et al. v. Thermionics Ltd. et al (1943) 3 Fox Pat. c. 92.Google Scholar
44 The above quotation is a paraphrase by Mathew J., in Peck v. Sindes (1898) 15 R.P.C. 113, of the form in which the section was settled by the Statute Law Revision Act of 1888, 51 Vic, c. 3; cf. R.S.O. 1897, c. 323. The present form of the section as it appears as c. 323 in the 1937 Revision of the Ontario Statutes reads as follows:
“If any person shall be hindered, grieved, disturbed, or disquieted, or his goods or chattels any way seized, attached, distrained, taken, carried away, or detained, by occasion or pretext of any monopoly, or of any such commission, grant, license, power, liberty, faculty, letters patents, proclamation, inhibition, restraint, warrant of assistance, or other matter or thing tending as aforesaid, and will sue to be relieved in or for any of the premises, then and in every such case, the same person shall have his remedy for the same by action to be grounded upon this statute, the same action to be heard and determined in the Supreme Court against him by whom he shall be so hindered, grieved, disturbed, or disquieted, or against him by whom his goods or chattels shall be so seized, attached, distrained, taken, carried away, or detained, wherein, all and every person which shall be so hindered, grieved, disturbed, or disquieted, or whose goods or chattels shall be so seized, attached, distrained, taken, or carried away, or detained, shall recover three times so much as the damages which he sustained by means or occasion of being so hindered, grieved, disturbed, or disquieted, or by means of having his goods or chattels seized, attached, distrained, taken, carried away, or detained, and in such suits, or for the staying or delaying thereof, no privilege, injunction or order of restraint, shall be in any wise prayed, granted, admitted, or allowed; and no person shall, after notice given that the action depending is grounded upon this statute, cause or procure any action grounded upon this statute to be stayed, or delayed, before judgment, by colour or means of any order, warrant, power or authority, save only of the court wherein such action as aforesaid shall be brought and depending, or after judgment had upon such action, shall cause or procure the execution of, or upon, any such judgment to be stayed or delayed by colour or means of any order, warrant, power or authority, save only by due process of law (21 Jac. I, c. 3, s. 4).”
45 Chap. 323 of R.S.O. 1897, contained in the appendix vol. IV of R.S.O. 1937. Any further question that might have arisen as to the authority of the Statute of Monopolies is effectively put at rest by the judgment of Mathew J., in Peck v. Hindes (1898) 15 R.P.C. 113, where it was held that Sec. 4 of the Statute of Monopolies was in force and effect at the date of the judgment. That judgment is a valid guide to the courts of Canada. Cf. Fox, H. G., “Abuse of Monopoly” (Canadian Bar Review, vol. XXIII, no. 5, 05, 1945, p. 353).Google Scholar