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3 JUSTIFYING UTILITY MODELS The traditional premise within market economies is that patents are necessary tools as they confer a protective buffer on inventors against other competitors. The consequent societal welfare is assured: labour is rewarded, the invention is divulged to the public, further technological innovation is stimulated, and a public knowledge base is incrementally strengthened, upon which a society’s future technological progress will be built.18

Nevertheless, this utopian vision only materialises within certain political, economic and social environments, where intellectual property rights are allowed to act as competitive boosts to innovation and growth. IPRs are often seen as being ‘a drain on learning and source of market power that is inimical to development’.19 Policy and economic rationales underpin the limits placed on national patent law, ensuring that not all inventive activities are embraced as being worthwhile of protection. Inventions must fulfil certain criteria under a rigorous examination procedure, while other types of subject matter are excluded ab initio from the patent regime so as to support complementary, or sometimes conflicting, policies in maintaining the public domain, competition, health and education. It is now accepted that the monopoly privileges and exclusivity arising from patents invariably affect other public spheres, and the rigorous eligibility standards are essential to prevent excessive patenting.20

Chinese AI developers struggle with the pressure to keep up with their U.S. counterparts. In August 2021, more than 100 researchers at Stanford collaborated on a major paper about the future of so-called foundation models, a category of AI systems that includes LLMs. Seven months later, the Beijing Academy of AI released a similarly lengthy literature review on a related subject, with almost as many co-authors. But within a few weeks, a researcher at Google discovered that large sections of the Chinese paper had been plagiarized from a handful of international papers—perhaps, Chinese-language media speculated, because the graduate students involved in drafting the paper faced extreme pressure and were up against very short deadlines.

Americans should not be haunted by the specter of an imminent Chinese surge in LLM development. Chinese AI teams are fighting—and often failing—to keep up with the blistering speed of new research and products emerging elsewhere. When it comes to LLMs, China trails years, not months, behind its international competitors.

But some indicators cannot be faked. To evaluate China’s economic capacity, for example, consider the proportion of worldwide profits in a given industry that one country’s firms account for. Building on the work of the political economist Sean Starrs, research by one of us (Brooks) has found that of the top 2,000 corporations in the world, U.S. firms are ranked first in global profit shares in 74 percent of sectors, whereas Chinese firms are ranked first in just 11 percent of sectors. The data on high-tech sectors is even more telling: U.S. firms now have a 53 percent profit share in these crucial industries, and every other country with a significant high-tech sector has a profit share in the single digits. (Japan comes in second at seven percent, China comes in third at six percent, and Taiwan comes in fourth at five percent.)

The best way to measure technological capacity is to look at payments for the use of intellectual property—technology so valuable that others are willing to spend money on it. This data shows that China’s extensive R & D investments over the past decade are bearing fruit, with Chinese patent royalties having grown from less than $1 billion in 2014 to almost $12 billion in 2021. But even now, China still receives less than a tenth of what the United States does each year ($125 billion), and it even lags far behind Germany ($59 billion) and Japan ($47 billion).

Ding ’23 [Jeffrey; June 7; Professor of Political Science @ George Washington University; Johanna Costigan; China File, “The U.S. May Be Overstating China’s Technological Prowess”; https://www.chinafile.com/reporting-opinion/notes-chinafile/us-may-be-overstating-chinas-technological-prowess; AS]

Jeffrey Ding: Innovation capacity refers to a state’s ability to pioneer new-to-the-world breakthroughs in science and technology. Diffusion capacity refers to a state’s ability to spread those innovations across a wide range of productive processes in an economy. I argue in my paper that we tend to gravitate toward measures of innovation and pay insufficient attention to diffusion.

However, we’ve also seen, not just in the surrounding counties, although we’ve seen in terms of downtown areas, but actually across the nation, a surge in businesses in the innovative intensive industries, exactly the same kind of innovative intensive industries that played such a big role in the productivity surge in the 1990s and early 2000s, particularly the information sector and the professional, scientific, and technical services sectors. Those are those are sectors that are STEM intensive sectors. And if we just ask ourselves what sector is now, in the most recent data, the kind of the most important sector in terms of where business formation is coming in, it’s actually professional, scientific, and technical services.

It’s worth noting, and I’m not saying this is all AI, but new AI businesses they’re going they’re going to be classified either in the information sector or actually many of them are classified in the professional scientific and technical services industry. So, I don’t actually have the microdata to tell you, oh, yeah, this is AI. But I can tell you these are exactly the sectors that surged in the 1990s with all that productivity growth. And again, the last time we saw anything like this was the 1990s.

Despite the upheaval caused by the COVID-19 pandemic—and partly because of it—innovation and digitization have been happening at a record-breaking pace. A McKinsey survey of top executives around the world found that companies accelerated their digitization of customer, supply chain, and internal operations by an average of three years.

Indeed, over the past two years, countries around the world have set records for new business formation, new patents issued, venture capital invested, and more. The US Census Bureau’s seasonally adjusted business formation statistics data show that through 2021, a record 5.38 million applications had been filed to form new businesses—an increase of more than 50 percent over prepandemic 2019.1 The brisk pace meant there were roughly 409,000 more US filings in 2021 than at the same point in prepandemic 2019. The World Intellectual Property Indicators also showed that aggregate global filing activity across 150 authorities grew in 2020, even amid the global health crisis.2 Venture capital flows have also boomed: in 2021, global venture capital more than doubled from 2020, rising 111 percent.3

How will states use such a newfound advantage? Technology rarely fundamentally changes the nature or objectives of states. More often, states use technology to advance preexisting geopolitical aims. Moreover, enhanced power can result in greater ambition. Given the geopolitical landscape described, it is likely the United States and its Allies and partners at the core [end page 66] of the international system will behave differently with new military technologies than will revisionist powers, such as Russia and China.

The spread of new technology to the United States and its Allies and partners would likely serve, on balance, to reinforce the existing sources of stability in the prevailing international system. At the end of the Cold War, the United States and its Allies and partners achieved a technological- military advantage over its great power rivals, with the US using its unipolar position to deepen and expand a rules-based system. They also employed their military dominance to counter perceived threats from rogue states and terrorist networks. The United States, its Allies, and partners did not, however, engage in military aggression against great power, nuclear-armed rivals or their allies.

Rather than aiming for the vague objective of slowing China’s growth, U.S. policymakers should pursue two specific goals regarding Chinese tactics: degrading China’s military and technological capabilities and countering its anticompetitive and coercive economic tactics. Fear that these policies will result in slower GDP growth in China should not hold Washington back. Slower PRC growth should already be baked into every policymaker and business leader’s calculus. The strategic importance of taking a strong stand against PRC brute force economics — and rallying allies and partners to pool their domestic market demand to counter the gravitational pull of the China market — outweighs the additional economic pain that those policies could cause on the margins.

Orienting to compete

Recently, analysts have argued that emerging technologies with military applications may undermine nuclear stability (see here, here, and here), but the logic of these arguments is debatable and overlooks a more straightforward reason why new technology might cause nuclear conflict: by upending the existing balance of power among nuclear-armed states. This latter concern is more probable and dangerous and demands an immediate policy response.

For more than 70 years, the world has avoided major power conflict, and many attribute this era of peace to nuclear weapons. In situations of mutually assured destruction (MAD), neither side has an incentive to start a conflict because doing so will only result in its own annihilation. The key to this model of deterrence is the maintenance of secure second-strike capabilities—the ability to absorb an enemy nuclear attack and respond with a devastating counterattack.

The system must also be adapted to deal with new issues that were not envisioned when the existing order was designed. Foremost among these issues is emerging and disruptive technology, including AI, additive manufacturing (or 3D printing), quantum computing, genetic engineering, robotics, directed energy, the Internet of things (IOT), 5G, space, cyber, and many others. Like other disruptive technologies before them, these innovations promise great benefits, but also carry serious downside risks. For example, AI is already resulting in massive efficiencies and cost savings in the private sector. Routine tasks and other more complicated jobs, such as radiology, are already being automated. In the future, autonomous weapons systems may go to war against each other as human soldiers remain out of harm’s way.

Yet, AI is also transforming economies and societies, and generating new security challenges. Automation will lead to widespread unemployment. The final realization of driverless cars, for example, will put out of work millions of taxi, Uber, and long-haul truck drivers. Populist movements in the West have been driven by those disaffected by globalization and technology, and mass unemployment caused by automation will further grow those ranks and provide new fuel to grievance politics. Moreover, some fear that autonomous weapons systems will become “killer robots” that select and engage targets without human input, and could eventually turn on their creators, resulting in human extinction. The other technologies on this lisgt similarly balance great potential upside with great downside risk. 3D printing, for example, can be used to “make anything anywhere,” reducing costs for a wide range of manufactured goods and encouraging a return of local manufacturing industries.61 At the same time, advanced 3D printers can also be used by revisionist and rogue states to print component parts for advanced weapons systems or even WMD programs, spurring arms races and weapons proliferation.62 Genetic engineering can wipe out entire classes of disease through improved medicine, or wipe out entire classes of people through genetically engineered superbugs. Directed-energy missile defenses may defend against incoming missile attacks, while also undermining global strategic stability.

Thanks in part to the reverse engineering provisions of the SCPA, semiconductor technology also continued to develop at an exponential rate after the passage of the Act. Early generation semiconductor chip designs typically utilized eight mask layers. By 1992, many designs utilized as many as sixteen or more masks.201 This increase in design complexity made it virtually impossible to effectively copy registered chip designs, which led to a reduction in chip piracy.202 As a result, within six years of the passage of the SCPA, designs were so complex that they were both difficult to copy and often eligible for patent protection. Much of the developed world was also involved in some type of semiconductor chip design and production by this time.203

Interestingly, while some scholars cite the globalization of semiconductor chip design204 and exponential advancements in U.S. semiconductor technology as evidence of the SCPA’s positive impact,205 others cite these developments as catalysts for rendering the SCPA obsolete.206 Nevertheless, for early generation semiconductor designs, such as small logic chips, the SCPA was indeed effective legislation that reduced piracy of these chips, enhanced innovation, and jumpstarted the rebound of the U.S. semiconductor industry.207

3.2 Preventing Free Riding and Promoting SMEs The nature of inventive efforts has evolved from technological breakthroughs to a greater focus on inventions that are incremental in nature; broadening patent protection to encompass such incremental innovations can be an accepted patent policy under certain circumstances, especially in encouraging follow-on inventors to secure rights on their cumulative improvements.29 A corollary factor is that in some countries, more innovations, both of the breakthrough and incremental varieties, emanate from local small and medium sized enterprises (SMEs) than from larger multinational conglomerates. Such inventions tend to have a lower standard of inventiveness, are prime candidates for free riding activities by competitors and deserve new hybrid intellectual property rights.

It is argued that sui generis regimes have historically improved the legal environment for incremental innovation, and consequently are good for the national economy. A related reason why utility models may be good for SMEs is that the cost factor may inhibit them from using the patent system as much as they would desire.

A. BACKGROUND As illustrated with the passing of the SCPA in the 1980s, Congress must explore sui generis intellectual property protection whenever a “progress gap” is created by attempting to protect new technology with existing intellectual property laws. The sui generis legislation will then bridge this gap and provide a set of exclusive rights for the new technology that creates an incentive to innovate while simultaneously enriching the public domain. One could question whether this evaluation is premature for isolated bioproducts since the PTO may allow the amended Thompson stem cell patent claims, and the Supreme Court may uphold the validity of the Myriad gene patents. This would eliminate, arguably, the need for sui generis legislation because isolated bioproducts would clearly fall within the scope of patent protection. Even if isolated bioproducts are patentable, however, the argument remains that they should be excluded from the Patent Act since patenting these upstream research tools creates an “anticommons” of knowledge, which impedes rather than promotes progress. Therefore, it is both timely and essential to explore an alternative propertization scheme for this material.

Professors Rebecca Eisenberg and Mark Heller, in their seminal article exploring how patenting basic research potentially deters innovation, assert that upstream biological research tools, such as isolated genes and stem cells, are misfits for patent law. They argue that they are misfits because the cognitive bias of patentees219 and potential licensees causes each to value upstream research tools differently. This inability to reach an effective “meeting of the minds” creates market failures for both basic licensing and “reach through”220 licensing agreements.221 Market failures and the multiple layers of patents obtained at the various stages of research (“patent stacking”) create intellectual property clearance problems, which delay the development of marketable downstream technology. Rather than having a “commons” of information created by effective licensing, we now have an “anticommons” where accessing knowledge becomes a Herculean task.222 Eisenberg and others posit that we must ensure that the privatization of these rights results in stimulating economic development and “the public goals of biomedical research.”223

Suthersanen 19 [Uma, holds a Chair in Global Intellectual Property Law and is the current Director of the Queen Mary Intellectual Property Research Institute. Uma was previously the Academic Director of the London Intellectual Property Law LLM (2012-2021), and the Paris Intellectual Property Law LLM (2012-2015). “Utility models: do they really serve national innovation strategies?,” chapter from The Innovation Society and Intellectual Property, e,dited by Josef Drexl and Anselm Kamperman Sanders, , ALB]

1 INTRODUCTION In the past two decades, there has been a growing belief within the intellectual property fraternity about the desirability for and the relevance of a further tier of patentlike protection within the general intellectual property framework. Such laws, usually referred to as utility model laws, are considered to be conducive to innovation and growth in two different economic environments. First, within established, developed economies, alternative sui generis regimes are viewed as a means of ameliorating the shortcomings of patent law, especially in relation to small and medium sized enterprises in nationally important socioeconomic sectors. Second, legal and economic scholars have praised the utility model regime as a necessary facet in promoting a sustainable development space to help struggling economies promote indigenous innovation.1

The European Union Fashion creators can find much more straightforward and encompassing protection in the European Union than in the United States. Since the passage of the European Community Design Protection Regulation in 2002, the European Union has had a unified design protection system. Unlike the United States attempts to modify its copyright regime, this system of protection is sui generis, thus does not interfere with the constraints of previously established intellectual property rights (see Beltrametti, 2010, p. 168). The regulation establishes two routes for protection: An automatic unregistered community design (UCD) and a registered community design (RCD;Beltrametti, 2010, p. 168). Both the UCD and RCD grant to the creator the exclusive right to use their designs in commerce, take legal actions against infringers, and claim damages (Beltrametti, 2010, p. 168). This protection is available uniformly across all European Union member states. (Beltrametti, 2010, p. 168).The requirements for both UCD and RCD protection require that designs be “novel” and have an “individualcharacter” (Beltrametti, 2010, p. 170). To be novel, the design must have a new impression upon the consumer(Beltrametti, 2010, p. 170). The RCD grants 5 years of protection with the option to apply for four more extensionsof 5 years each (Beltrametti, 2010, p. 169). The UCD grants 3 years of protection to designs that are made availableto the public, starting from when the design was disclosed (Beltrametti, 2010, p. 169). This is similar to the American trademark requirement that marks be in use, however, UCD disclosure need not be used in commerce. Displays in trade exhibitions and various media outlets also qualify (Beltrametti, 2010, p. 169).In determining infringement, designs that were independently created are not infringing. Further, in determining whether a UCD right exists, courts look to the overall impression on the “informed user,” who issomeone who has a good knowledge of designs of the relevant article previously available in the market(Darcy, 2013, p. 90).

For a long time different plant varieties used to take protection under the normal patent system, which when started creating technical problems, with the advancement of technology, countries at the domestic as well as international level realised breeders of a need of sui generis model of protection for plant varieties.

Though the issue involved in protecting biological materials, such as genes, and biotechnologies is very different than the issues that were involved in the cases of plant variety protection, but the similarity between both is the failure of regular industrial patent system in providing a concrete framework for granting of protection to them. Thus, in the same line of jurisprudence, the authors suggest the need of a sui generis model for protecting genetic developments. A sui generis system, satisfying the herein mentioned basic requirements, can be the solution to put an end to this debate. It has to follow:

Post Diamond v Chakraborthy, science has developed so much that the demand for enhancing the scope of patent protection has been increasing year after year. The most recent demand from the biotech labs is for giving protection to isolated genes, under patent law in respective jurisdiction. The paper mainly aims to answer the question that “whether the patentability criteria, as the jurisprudence regarding it exists today, are enough to evaluate the standard of patentability of isolated genes or not”. The authors have examined the laws of various jurisdictions in this regard and have analysed the ‘invention’ of isolated gene with respect to the tests of patentability, to determine if it fails or sustains the same. Arguments based on ethical considerations, which opposes the granting of patent protection to isolated genes, have been put forth for testing of validity. The requirement of enabling disclosure has also been tested, which is must to be filled with the application for the grant of the patent. The research leads to the finding that the present law is insufficient for extending the protection of patent to isolated genes, and thus a dire need of a sui generis protection is increasing.

Biotech is best protected via sui generis – semiconductors prove

No one can predict the outcome of the appeal of the Association for Molecular Pathology case or the new embryonic stem cell prosecution before the PTO. Nevertheless, the disputes over isolated gene patentability and invalidation of the WARF embryonic stem cell patents provide motivation to evaluate whether isolated bioproducts are properly placed within the patent intellectual property regime. In addition to current subject matter and non-obviousness problems, scholars have raised antitrust, utility, morality,31 and the need for greater access as grounds for excluding isolated bioproducts and other upstream bioproducts from the Patent Act.32

Removing these products from the patent regime, however, may prove disastrous to society. The biotechnology33 industry relies on bioresearch patent portfolios to attract venture capital, generate licensing revenue, and cover the cost of continued isolated bioproduct research and development.34 Arguably, a lack of corporate funding will stall this research because federal funding is insufficient to bridge any resulting gap.35 This, in turn, will stall economic growth and future development of much needed downstream bioproducts with specific utility.36

To provide a working analogy, Part III steps back to the 1980s and reviews how the semiconductor industry was able to persuade Congress to create sui generis intellectual property protection for semiconductor chips. The Semiconductor Chip Protection Act of 1984 (SCPA) contained a reasonable range of exclusive rights and a host of limitations which allowed greater access to semiconductors for research and development. In Part III, I outline how early semiconductor chips were a “misfit” for both the patent and copyright bargains, yet needed alternative intellectual property protection to fill the progress gap.44

Next, I analyze the test promulgated by Congressman Robert Kastenmeier and attorney Michael Remington (“K-R test”) to substantiate why sui generis protection is the only viable mechanism to achieve the constitutional mandate of incentivizing innovation while promoting progress through increased access.45 The four-part K-R test requires Congress to evaluate the following: (1) whether the change (new legislation) fits within the current intellectual property framework without violating existing principles or concepts; (2) whether the new interest clearly defines the scope of property rights provided; (3) whether the benefits of propertization outweigh the costs; and (4) whether the new interest enriches the public domain. I conclude Part III by analyzing how successful the SCPA was in deterring piracy and contributing to the overall growth of the semiconductor industry.

However, according to Hugenholtz, copyright in databases provides “thin” protection, as copying part of a database, without appropriating “selection or arrangement” of the data, does not amount to copyright infringement. Therefore, the most important part of the Database Directive is Chapter III, providing for legal protection via sui generis regime.31However, according to Hugenholtz, copyright in databases provides “thin” protection, as copying part of a database, without appropriating “selection or arrangement” of the data, does not amount to copyright infringement. Therefore, the most important part of the Database Directive is Chapter III, providing for legal protection via sui generis regime.31

The Directive distinguishes databases protected by copyright, which must satisfy the originality threshold, from databases which do not meet that threshold and which are entitled to sui generis right to prevent extraction or reutilization of a substantial part of their contents.32 “Extraction” means permanent or temporary transfer of all or a substantial part of the contents of a database to another medium, while “reutilization” is making available to the public the contents of a database by the distribution of copies, renting, online, etc. Besides, the first sale doctrine shall apply in case of a first sale of a copy of a database by, or with the consent of, the rightholder (Article 7 of the Database Directive).