Study Note: The study of this module will take you around 10 hours.

MODULE 1: INTRODUCTION: WHY YOU

MIGHT WANT A PATENT

Learning outcomes

On successful completion of this module, students will be able to describe:

• the purpose of the patent system worldwide
• the advantages of patent protection
• some of the factors that determine whether a patent is the appropriate form of
protection in a particular case
• alternative forms of protection
• some examples of how patents can work in practice in the development and
commercialization of products, including licensing, joint ventures and
marketing

Module 1: Introduction – why you might want a patent

1.1 Introduction – the role of the patents system
1.2 What can a patent do?
1.3 Advantages of a patent
1.4 Is a patent right for your particular circumstances?
1.5 Some alternatives
1.6 Some examples
1.7 Case studies
1.7.1 Case study 1: Burr Plug - Singapore
1.7.2 Case study 2: Enviro Loo – South Africa
1.7.3 Case study 3: IBTech; UNAM Water Treatment – Mexico
1.74 Case study 4: Hoodia Plant – South Africa
1.7.5 Case study 5: UV Waterworks – India
1.7.6 Case study 6: Nicosan – Nigeria
1.7.7 Case study 7: FK Biotec – Brazil
1.8 Self Assessment Questions

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1.1 Introduction - The role of the patent system

It is an aim of governments across the world to increase the wellbeing of their people
through economic growth; and essential to growth is innovation. The patents system
– by encouraging and rewarding creative endeavor – is a primary driver of
innovation.

Patents promote innovation through the grant of exclusive rights, as a reward for the
time, effort and ingenuity invested in creating new products and processes. Those
exclusive rights enable innovators to see a return on their investment that could be
put into further innovation. The potential for financial returns provides an incentive to
innovators to create, develop, and commercialize new technologies. Without the
incentive provided by patents, private investors may be reluctant to invest, resulting
in a failure to develop and exploit new technology.

The public disclosure of inventions constitutes another important rationale for the
patent system. In return for the exclusive right provided by a patent, the applicant is
required to disclose the invention to the public by providing a detailed, accurate and
complete written description of the invention in the patent application. The granted
patent and, in many countries the patent application as well, is published. This
public disclosure of the technical details of the invention expands and disseminates
the public stock of technical knowledge, reduces the duplication of research effort
and encourages transfer of technology.

Hence patents push invention and innovation forward, protecting the inventor whilst
making public the technical details of the invention. In this way they play a
fundamental role in accelerating the growth of knowledge and stimulating the
generation of wealth and wellbeing.

1.2 What can a patent do?

A patent gives its owner an exclusive right i.e. a right to exclude or prevent others
from commercially exploiting the patented invention. Specifically, this exclusive right
enables the patent owner to prevent anyone from making, using, offering for sale,
selling or importing a product or a process based on the patented invention without
the owner’s consent. The owner may or may not be the inventor. For instance the
invention may belong to the inventor’s employer e.g. a corporation or a university,
depending on the law and any employment contract. And as with other types of
property, the patent may be licensed out or assigned.

Note however that the exclusive right granted to the patent owner is not unlimited.
The protection is granted for a limited period of time, generally for a maximum of 20
years from the date of filing of the patent application, provided the required renewal
fees are paid on time. Often patents are in force for much shorter periods – most

M1v2.0 – page 2
commonly because the owner is not obtaining any financial return from the patent
and allows the patent to lapse. Once a patent expires, the protection ends, and an
invention enters the public domain, that is, the owner no longer holds rights to the
invention, which becomes available for commercial exploitation by others.

Patents are also territorial in nature, meaning that they are limited to the
geographical boundary of the relevant country. Therefore, in principle, a patent
application has to be filed in each country in which patent protection is sought,
complying with the requirements laid down in the national law of that country. Thus,
in order to obtain a patent, for example, in India, Cuba, the Philippines, Brazil, the
United States, an individual application has to be made to the national Patent Office
of each of these countries. There are however certain international and regional
treaties which facilitate getting protection in more than one country through a single
application. This topic is dealt with in Module 2.

1.3 Advantages of a patent

The exclusive right granted by a patent may be crucial to you and your company or
organization particularly if you wish to commercially exploit your invention, because
the patent system enables you to have:
• strong market position and competitive advantage as a result of the exclusive
right that prevents others from commercially using the patented invention;
• a head start over competitors resulting in higher returns on investment;
• various options to license or assign the patent to potential manufacturers;
• additional value to your corporate brand and organization’s reputation;
• diminished risks of infringing the rights of others when commercializing your
products; and
• enhanced ability to obtain grants and/or raise funds at a reasonable rate of
interest.

Examples of how people have used patents to help to achieve these results are
illustrated in the case studies below (section 1.7).

1.4 Is a patent right for your particular circumstances?

A patent can be a very effective tool to assist the marketing of an invention, but it
cannot guarantee commercial success, which of course will depend on many other
factors. Therefore, a careful weighing of pros and cons and an analysis of possible
alternatives is essential before filing a patent application. A patent may be
expensive and difficult to obtain, maintain and enforce. To file or not to file a patent
application is strictly a business decision. It should be based primarily on the
probability of obtaining commercially useful protection for the invention that is likely
to provide significant benefits from its eventual business use.

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Factors to be taken into account in deciding whether or not to file a patent application
include:
• is there a market for your invention, or do you think that you can create one?
• what are the alternatives to your invention, and how do they compare with
your invention?
• is the invention useful for improving an existing product or developing a new
product? If so, does it fit in with your company’s business strategy?
• are there potential licensees or investors who will be willing to help to take the
invention to market?
• how valuable is the invention expected o be to your business and to
competitors?
• is it easy to “reverse engineer” your invention from your product or “design
around” it?
• do the expected profits from an exclusive position in the market justify the
costs of obtaining a patent?
• will it be easy to identify violation of the patent rights and are you ready to
invest time and financial resources in enforcing your patent(s)?

1.5 Some alternatives

Some of these questions will only be answered when your invention is put on the
market. In any case it is vital to be familiar with how the patent system works and the
advantages that filing a patent application can bring to a project.

You may however be able to protect your invention in other ways, in addition to or
instead of getting a patent. For instance:
• Utility models, sometimes called petty patents or innovation patents, are
similar to patents but are cheaper, quicker and easier to obtain. They do not
have to meet the same stringent standards as patents and may not undergo
any sort of examination. However, they are not as strong as patents and
cannot run for as many years. They may be used to protect small incremental
improvements.
• Industrial designs (sometimes called registered designs or design patents)
protect the shape or appearance of objects.
• The layout design (topography) of integrated circuits may be protected - in
some countries under a special law specifically for that purpose; in other
countries under more general Intellectual Property law e.g. copyright, patents,
utility models, industrial designs, or unfair competition
• Computer programs as such are not patentable in some countries, although
the use of computer programs may be patentable (see Module 3 for a
discussion of this topic). However they may be protected under copyright.
• Trademark protection may be appropriate to avoid other people from trading
on the basis of the name and reputation of your business.

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 • Trade secrets - which can include manufacturing, industrial and commercial
secrets - may be protected under a special law specifically directed to that
purpose or under unfair competition law or by contracts with third parties.
There are no registration costs, but there are disadvantages in relying on
secrecy and confidentiality. These include the risk of reverse engineering of
products and the difficulty in seeking sufficient remedies if the secret leaks
out. Trade secrets and patents are not necessarily alternatives; one aspect
of an invention might be protected by patent, another by being kept secret.

1.6 Some examples

In which of the following situations would it be a good idea to file a patent

application?

(a) An engineer X has invented a device for practicing golf swings. He is looking for a
business partner to exploit the invention commercially.

(b) A toy manufacturing company Y has carried out experiments to find out which
combination of temperature and humidity works best in its factory. The company
does not want other toy manufacturers to imitate it.

(c) A university professor Z has found a new composition which appears to have
potential as an anti-inflammatory agent. However he does not have either the time
or the resources to develop or manufacture the product.

Answers:

(a) X should consider filing a patent application. He can then sell or licence the
patent to his new business partner and secure a financial return on his idea.

(b) The best combination of temperature and humidity might be regarded as just
workshop variations and therefore not inventive and not patentable. However if the
combination turns out to have an unduly surprising effect on production i.e. an effect
that was not expected and not obvious, then in some countries the invention might
be patentable as a so-called ‘selection invention’ If a patent were obtained it would
be difficult to enforce it if access to the infringer’s factory were required. However in
some jurisdictions the onus would be on the alleged infringer to demonstrate that he
is not using the patented invention.

(c) If the invention was made by professor Z during his research at the university,
then the rights to the invention and to file a patent application may belong to the
university – depending on the policy of the university, his contract with the university
and the relevant national law.

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1.7 Case Studies

Please read the following case studies which describe how various inventions
were developed and marketed in countries around the world over the past 20
years or so, including how patents were involved in the story.

Note the technical advances made and think about the role played by patents in
each case.

Each study includes the front page of a patent document. Access the full
documents at the recommended sites and choose one of them. Look at the main
headings in that document and see how it begins with a description of the
technical background and the problem to be solved and then goes on to provide a
detailed description of the invention, often accompanied by drawings. At the end
of the document are the claims which define in legally precise language the
technical area that the patent applicant wishes to protect i.e. the monopoly sought
or granted.

The key point to take away from this section is that patents, although considered
to be intangible assets, are all about real products, processes and people. Look at
the structure of your selected document and how the invention is captured in that
document.

It is also important to recognize that patents protect products and processes, but
they cannot guarantee market success; indeed many patented inventions never
reach the commercial stage.

1.7.1 Case Study 1: Burr Plug Singapore

People with head injuries who need surgical repair to their damaged skulls are
usually given bone harvested from another part of the body or a titanium plate.
Finding replacement bone often proves difficult; a titanium plate, although more
readily available, carries some risk of infection and is expensive.

A group of engineers and doctors from the National University of Singapore and the
National University Hospital, in collaboration with Temasek Polytechnic, has
developed a material made of biodegradable plastic to address this problem. The
biocompatible polycaprolactone (PCL) polymer provides a base for the bone of the
skull to regenerate and cover over a hole, says Swee-Hin Teoh, one of the principal
team members from the NUS Department of Mechanical Engineering. A soft- and
hard-tissue-compatible bioresorbable material, PCL has been approved by the US
Food and Drug Administration for a number of medical and drug-delivery devices.

M1v2.0 – page 6
By constructing a three-dimensional (3D) architecture with interconnected pores, the
scientists produce a scaffold that makes possible good cell entrapment, easy flow of
nutrients and waste removal, and long-term cell life.

The scaffold can be made to fit the patient’s defect and cut to size rapidly and
accurately. Small adjustments in shape can be made in the surgery room using
warm water since the PCL is a thermoplastic with a softening temperature just below
60oC. The slow degradation and assimilation of the polymer over 24 months allows
the bone to heal, provides adequate mechanical support, and maintains the shape of
the skull without problems.

Encouraged by this success, the group set up a company called Osteopore

International to market the new material at a price significantly lower than that of a
titanium plate. (See www.osteopore.com) The global market for the new material is
potentially huge and two patent applications have been filed.

Source: Innovation: Vol.6 No.1 by Lay Leng TAN

M1v2.0 – page 7
The complete patent document is available from Patentscope at:
https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2005048885&redirectedI
D=true

1.7.2 Case Study 2: Enviro Loo – South Africa

Toilets that require supplies of water, chemicals and electricity, and installations of
sewerage pipes etc, can be unsuitable for villages in remote areas.

Dr Brian la Trobe began work on solving this problem whilst working as a dentist in
his home town of Grahamstown in South Africa. He developed the ‘Enviro Loo’,
which firstly separates the liquids from the solids in human waste. The waste is
stabilized by aerobic bacteria and when dry can be transferred to composting bins.
The system is driven by radiant heat and wind power, needs neither electricity nor
water and does not pollute the ground water.

The Enviro Loo has been successfully distributed to countries around the world and
won many awards. See http://www.enviro-loo.com , http://www.enviro-loo.com and
www.wipo.int/pct/en/inventions/enviroloo/index.html

M1v2.0 – page 8
The complete document is available from Patentscope at:
https://patentscope.wipo.int/search/en/detail.jsf?docId=WO2004002283&redirectedI
D=true

1.7.3 Case Study 3: IBTech; UNAM Water Treatment - Mexico

A group of academics and entrepreneurs working in Mexico established a company

called IBTech to commercialize technology developed and patented by the
Universidad Nacional Autonoma de Mexico (UNAM).

IBTech is concerned with the treatment of waste water to avoid environmental

pollution. It aims to use sustainable methods to produce reusable water and other
useful byproducts. The company develops every stage in treatment plants for
industrial, agricultural and municipal waste water and has developed projects in
Mexico, Chile and Argentina.

The main technology used by the company is the product of a line of research begun
in UNAM, initially in cooperation with the Autonomous Metropolitan University (UAM)
and a French agency IRD. Nowadays, IB Tech has a technical team made up of 14
specialists (engineers, masters and PhDs in engineering). IBTech originally operated
under the umbrella of UNAM but then became an independent company. UNAM has
a number of patents which it licenses to IBTech and to other companies.

This is a good example of successful technology transfer from a university to

industry resulting in the commercialization of university R and D by private
enterprise.

See
https://translate.google.co.uk/translate?hl=en&sl=es&u=http://www.ibtech.com.mx/&
prev=search and
https://en.wikipedia.org/wiki/National_Autonomous_University_of_Mexico

The complete document is available at:

http://www.freepatentsonline.com/US6210578.pdf

M1v2.0 – page 9
M1v2.0 – page 10
1.7.4 Case Study 4: Hoodia Plant – South Africa

The San people have used the bitter flesh of the Hoodia plant (Hoodia gordonia) for
centuries to block feelings of hunger and give them energy when hunting or on long
trips across their inhospitable land. This practice was brought to the attention of the
South African Council for Scientific and Industrial Research (CSIR) , based in
Pretoria, (http://www.csir.co.za), which began to take an interest in the properties of
the Hoodia . The innovative environment in which the CSIR functions allows it to
carry out much important research and development. The work resulted in this case
in the discovery of certain properties of the Hoodia and its potential as an appetite-
suppressant and anti-obesity drug. The market potential of such a new drug is
considerable, particularly as it is derived from a natural product and, seemingly, does
not have the side effects of many such treatments. Thus the CSIR was able to
license its patented technology to Phytopharm, a UK-based company, for the
necessary investment needed to further test, develop and commercialize this new IP
asset. The CSIR filed an international patent application through the Patent
Cooperation Treaty.

Importantly – although after a controversial start involving some legal negotiation –

the role of San ancient knowledge and innovative activity in the initial discovery and
development of the properties of the Hoodia was recognized, explicitly
acknowledged by the CSIR, and set out in a memorandum of understanding (MoU)
between the CSIR and the San. The MoU was followed by a benefit-sharing
agreement, providing for the San to obtain 8 percent of all milestone payments
received from the licensee by CSIR as well as 6 percent of any royalties CSIR
receives on sales of the final product.

The development of this Hoodia-derived product had several important

consequences for the San. It resulted in the 100,000-strong San population
organizing and setting up the San Hoodia Benefit Sharing Trust, to ensure that the
monies received were used for “the general development and training of the San
community”. Immediate plans included buying land, building clinics and investing in
education and development projects.

Regrettably however things did not progress smoothly, as can be seen from
http://www.nutraingredients.com/Manufacturers/Phytopharm-Unilever-expect-
Hoodia-product-progress and https://tkbulletin.wordpress.com/2011/01/05/this-week-
in-review-%E2%80%A6-phytopharm-drops-research-on-hoodia/ . In essence,
Phytopharm dropped the research in 2010.

However this example does provide a model of how indigenous knowledge can be
developed and commercialized in the interests of national wealth creation. It also
underscores the role of IP rights – in this case, patents – in the benefit-sharing
process. It is this development of an economically exploitable asset that allows the
creation of an income stream to be distributed among beneficiaries such as the San.
On the other hand of course this case study demonstrates that having a patent does
not guarantee commercial success.

Source: WIPO Magazine November-December 2003

M1v2.0 – page 11
The complete document is available at
https://patentscope.wipo.int/search/en/detail.jsf?docId=WO1998046243&redirectedI
D=true

M1v2.0 – page 12
1.7.5 Case Study 5: UV Waterworks (UVW) – India

With disease spreading in the wake of the Asian tsunami, survivors desperately
needed access to safe drinking water. In some ravaged communities in Sri Lanka
and the Southern Indian state of Tamil Nadu, emergency relief arrived in the shape
of an innovative water disinfection unit, the UV Waterworks (UVW). This robust
device kills bacteria, viruses and parasites in water from any source, using nothing
more than ultraviolet (UV) light from an unshielded fluorescent lamp powered by a
40-watt power source (for example a car battery). Treating approximately 15 litres a
minute, each unit can deliver safe drinking water for a village of 2,000 for under
US$2 per person per year, including amortized capital costs.

The brains behind the UVW is Indian-born physicist Ashok Gadgil, who began
searching for a way to purify water cheaply in developing countries after an outbreak
of “Bengal cholera” in 1993 killed some 10,000 people within months. He has won
numerous awards for the UVW since developing the original technology in 1996,
most recently the 2004 Health Award from the Tech Museum of Innovation.

Dr Gadgil said “I was looking to see how one can inexpensively disinfect drinking
water for poor communities in the developing countries. The ability of UV light to kill
bacteria and viruses has been known for almost a century. I just determined how
best to use that ability to design a disinfector that is both robust in performance, and
efficient in operation.”

In response to a question as to how he decided to file an international application via

the Patent Cooperation Treaty (PCT), he said “I initially considered just putting up my
design on the Internet for all to freely copy. University of California/Laurence
Berkeley National Lab (LBNL) Technology Transfer Department (licensing and
patent officers) persuaded me of the advantages of patenting. Patenting would
protect against badly manufactured copies with corner-cutting fabrication that would
not then function as well as the genuine article.

The decision to file a patent application through the PCT for technology and products
derived from the traditional medicinal plant enabled the holders of the traditional
knowledge, their government and enterprises capable of commercially exploiting
the knowledge to establish partnerships under mutually beneficial terms . In this
case, partnerships were an international, public and private partnership. The PCT
system, as a tool for facilitating global patent protection, truly fitted the needs of the
international partners.

The complete document is available at:

https://patentscope.wipo.int/search/en/detail.jsf?docId=WO1998005367&redirectedI
D=true

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M1v2.0 – page 14
1.7.6 Case Study 6: Nicosan – Nigeria

Sickle cell disease is a painful hereditary disorder that strikes particularly hard in
Nigeria, where an estimated 100,000 children are born with it every year. The
disease is also prevalent among the African-American population of the USA,
affecting an estimated 1,000 newborns every year. The disease affects life
expectancy and its symptoms include extreme pain, severe infections, and organ
damage, including kidney failure and heart attacks

Nigerian scientists at the National Institute for Pharmaceutical Research and

Development (NIPRD), working with a traditional medicine practitioner, have
developed a new drug for treating the disease, derived from native plants. The drug,
a non-toxic, phyto-pharmaceutical, was originally developed under the name of
Niprisan®, but is being commercialized as Nicosan®.

The drug has been patented by NIPRD and an exclusive licence for global marketing
granted to a US based company Xechem International
(https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=37366
3 ) – after failure to find an interested local company. The Nigerian government has
been quoted as saying that the licence was granted in order to ensure mass
production of the drug and treatment of sufferers around the world

Charles Wambebe, who led NIPRD during the development of the drug, said that
developing countries needed to recognize the value of research and to understand
that investment in research does not necessarily produce immediate returns.
Ramesh Pandey, head of Xechem, urged developing countries to “look at your
strengths” and likened the biodiversity of Nigeria and many other developing
countries to gold, particularly in the light of increasing global interest in, and demand
for, herbal-based products.

The agreement between NIPRD and Xechem, which ensures that the country keeps
a stake in the further development and global use of its traditional medicines, could
be a model for other countries.

The complete document is available at

http://www.freepatentsonline.com/US5800819.pdf

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M1v2.0 – page 16
1.7.7 Case Study 7: FK Biotec – Brazil

In 1999, FK Biotecnologia S.A. became the first Brazilian biotechnology firm to

receive venture capital for the development of its innovative technologies
(https://translate.google.co.uk/translate?hl=en&sl=pt&u=http://www.fkbiotec.com.br/&
prev=search). Since then, the company has grown at a steady pace and is
considered a pioneering example of a successful biotech start-up in Brazil. Patent
protection and patent information have been important elements of FK Biotec’s
business strategy.

FK Biotec was established in CIENTEC, a technology incubator in Southern Brazil,

and focuses on research, development, production and distribution of
immunodiagnostics kits. In May 2001, the company received authorization from the
Health Ministry to begin the commercialization of its immunodiagnostics kits, and its
product line currently comprises over 70 items. Fernando Kreutz, Medical Doctor
with a Ph.D. in Biotechnology and founder of FK Biotec, estimated that the Brazilian
market for immunodiagnostics then amounted to US$1 billion and depended almost
exclusively on foreign imports or licensed foreign technology. This represented a
great opportunity for future expansion.

But FK Biotec’s most important technological development has been in the field of
vaccines for cancer; “an experimental vaccine composed of cancer cells, that work
as medical treatment as they are capable of stimulating the immunological system to
fight against cancer”, says Kreutz. The technique is similar to the one used in many
countries for the development of vaccines against melanomas. It was developed in
cooperation with local hospitals and universities and is the subject of a patent
application under the Patent Cooperation Treaty (PCT).

Kreutz believes his company’s know-how, ability to develop new technology and its
patent application have played a crucial role in motivating investors, government
funds and venture capitalists, such as the Companhia Riograndense de
Participaçoes (CRP) and an unnamed Canadian venture capital investor, in investing
in FK Biotec. To a large extent, this type of venture is a high-risk enterprise, since
such treatments must undergo clinical trials before they can be commercialized, but
promising results from the laboratory and the exclusive rights granted by a patent
provide a basis for attracting investment.

Kreutz is also an avid user of patent databases. “I am very surprised with the amount
of knowledge I am getting from patent documents” he points out. “Knowing the
legislation and regulations has made a difference to my company. Access to the
information has been my biggest problem, but with the Internet things have become
easier.” FK Biotec relies significantly on patent information for identifying new
technologies, niche markets and potential licensors from which to acquire leading
technologies.

Aware of the low use of patent information by some of his colleagues in other firms
or research institutions, Fernando Kreutz points out that there is a knowledge gap
that has to be filled: many researchers do not use patent information because they
do not know how much they can gain from it.

M1v2.0 – page 17
For a technology-based company such as FK Biotec, intellectual property may
represent one of their most valuable assets. FK Biotec has also invested in
registering its trademarks FK-Biotecnologia ® and Bioprospecta ® and considers
them a small but important investment, crucial for the development of the company’s
marketing strategy.

The complete patent is available from Patentscope at:

https://patentscope.wipo.int/search/docservicepdf_pct/0900636180042d64/PAMPH/
WO2001077301.pdf?psAuth=ZJYl2BbKitSp9iKfpCuehR4XPneU6BtZRRt6za14TVY

M1v2.0 – page 18
Before progressing to Module 2, please complete the Self-Assessment
Questions (SAQs) below. These SAQs will enable you to assess your
understanding of the module and whether the learning objectives set out at the
beginning of the module have been met.

NB: To receive the correct answer (s) and explanation, please complete the
SAQs online

1.8 Self-Assessment Questions (SAQs)

SAQ 1.1: What are the aims of the patent system?

1. to stimulate economic growth

2. to disseminate new technical information
3. to encourage inventors
4. to drive innovation

SAQ 1.2: What does the patent owner get out of the patent system?

1. the invention is kept secret from competitors

2. the invention is protected for as long as the inventor wants
3. an exclusive right to exploit the invention anywhere
4. a guaranteed financial return
5. an exclusive right to exploit the invention in those countries where a patent has been
granted

SAQ 1.3: Who can use an invention that’s been patented in just one particular
country?

1. in that country, only the patent owner can use the invention if the patent is in force
2. in that country, anyone can use the invention once the patent has expired or lapsed
3. in any other country, anyone can use the invention at any time
4. in any other country, anyone can use the invention but only once the patent has
expired or lapsed

SAQ 1.4: What are the advantages of a patent when commercially exploiting an
invention?

1. strong market position

2. a head start over competitors
3. a guaranteed financial return
4. options to license or assign the patent
5. additional value to the corporate brand

[End of Module I]

M1v2.0 – page 19