Conceptualizing the Breeding Exception to Patent Rights: A Legal and Economic Appraisal

Max Planck Institute for Innovation and Competition, Munich, Germany


The main objective of this chapter is to conceptualize the breeding exception in the broader framework of patent exceptions in international law. To this purpose, the first part focuses on patent exceptions permissible under national laws. An overview of their legal and economic framework will set the necessary theoretical background. The reader should take notice since now that an extensive examination of patent exceptions is beyond the scope of this work.1 Only those aspects that are relevant for qualifying the breeding exception will be considered. In line with this purpose, the research exception is deemed relevant and will constitute object of analysis.2 The relevance of this exception stems from its functional similarity with the breeding exception. Both these exceptions have a similar innovative role since they aim at using protected subject matter for the creation of further innovations. To better comprehend this role, the first part will provide an overview of the main legislations and court cases in order to determine the rationale underlying the adoption of research exceptions.

Based on the considerations of the first part, the second part of the chapter offers an understanding of the legal categorization of the breeding exception and explains the reasons for adopting a breeding exception to patent rights. In particular, it will be explained why some legislations might need to amend their patent laws while others do not have this necessity. Furthermore, it will be illustrated how the adoption of a breeding exception to patent rights reflects economic theory. The final aim of this analysis is to purport a thorough justification of the breeding exception based on legal and economic theory.

5.1 Defining Exceptions to Patent Rights

What are exceptions to patent rights? This simple question has for a long time afflicted scholarly research without a definite answer. With respect to intellectual property rights in general, the main concern has been the differentiation of ‘exceptions’ as a separate conceptual category from ‘limitations’. In this respect, Prof. Kur argues that there is no agreement or uniform practice on the international level.3 She sustains that there is no structural difference between the two terms and each provision containing whether limitations or exceptions should be interpreted in accordance with its aim and purpose.4 Indeed, studies have shown that countries make use of these terms in different ways.5 Courts have further added to the uncertainty characterizing the issue at hand. In the field of biotechnology, for example, judges have assumed that ‘exceptions to rights conferred’ could be regarded as encompassing exclusions of rights as well as limitations on those rights.6 This interpretation seems to elevate ‘exceptions’ to a higher and broader category able of defining both ex ante and ex post boundaries of intellectual property rights.

Recently, however, it has been proposed to overcome the failure to conceptualize these terms.7 In this respect, dictionaries facilitate shedding light on the issue. To begin with ‘limitation’, the Oxford dictionary connotes its meaning to ‘limit’. A ‘limit’ is itself defined as ‘one of the fixed points between which the possible or permitted extent, amount, duration, range of action, or variation of anything is confined; a bound which may not be passed, or beyond which something ceases to be possible or allowable.’8 Thus, a limitation sets the margins of the scope of patent rights.9 This means that the patent holder is, ab initio, not entitled to exercise his rights in the area covered by limitations.

Exceptions, on the other hand, are defined as ‘something that is exempted; a particular case which comes within the terms of a rule, but to which the rule is not applicable’.10 This allows us to conclude that contrary to ‘limitations’, the subject matter covered by exceptions falls within the scope of intellectual property rights. But in virtue of exceptions provided for in the law, acts that would otherwise fall within the exclusive rights of the right holder, become permissible. In other terms, exceptions remove liability for infringing IP rights.11 This general understanding on exceptions to IPRs applies to exceptions to patent rights as well. Exceptions may be referred in national laws as ‘defences’, ‘permitted acts’, ‘free uses’, ‘restrictions’.12 Exceptions may also be subject to the payment of a fee. Eminent examples are compulsory licenses.

5.1.1 The Rationale of Exceptions to Patent Rights

The following paragraphs provide an explanation of the two main reasons that underpin the existence of patent exceptions. These reasons are economics and public policy concerns. The main economic argument focuses on the importance of preserving the incentive to invest, while public policy considerations highlight the need to promote social interests in specific industrial areas. Economic Concerns

The question of the optimal design of patent law for promoting innovations has been thoroughly analyzed by Scotchmer.13 She sustains that the main challenge that economics faces for promoting innovations is providing the right incentives. In this context the core question is: how to reward innovators for the contribution they provide and at the same time enable other innovators to create new innovations? This question stems from the cumulative nature of innovations. The metaphor ‘standing on the shoulders of giants’ often used in the literature describes cumulativeness of innovations, which are a result of several steps of invention, modification, and improvement. Cumulativeness, therefore, implies that the research and development process of a particular innovation requires the knowledge and practice of prior art of the respective technological field. In this respect, access to patented innovations becomes crucial in order to promote new innovations. The facility of accessing patented innovations is proportional to the strength of patent protection. Strong patent rights put high barriers to access, whereas weak patent rights set lower boundaries. Weak patent rights, thus, might facilitate cumulative innovations. But it is not clear whether strong patent rights lead to more innovation in a cumulative context. This is mainly because strong patent protection has two main effects. Firstly, it increases return to R&D in the short run. According to the reward theory,14 this generates high incentives to invest and consequently, to innovate more. Secondly, it increases the costs for R&D activities in the long run for other innovators who would be forced to invent around or obtain a license on the protected invention. This means that cumulative innovation comprises a trade-off between the incentive to innovate and access to knowledge as a public good. It is worth emphasizing that accessing knowledge is crucial for cumulative innovation, even though this may be to the detriment of the first innovator.

This situation generates the economic concern of preserving the incentives of patent holders to invest in R&D. Economists have largely analyzed the issue by focusing on the division of profit.15 This analysis is important since the social value of early innovations includes the net social value of the applications it facilitates. Economic modeling suggests that if the first innovator does not collect that value of its innovation as profit, he might not invest. This may occur even when follow-on innovations are not direct competitors to the early innovation (for example, secondary market applications of the first innovation).16 These considerations imply that if an exception were to be introduced to patent rights, it should take account of welfare gains. This view reflects the basic trade-off of patent law between benefits and costs.17 Thus, if exceptions significantly weaken the incentives to invest, patentees will not be willing to invest in research and development and less innovation will accrue to society.18 In this case, exceptions would bring about greater costs than benefits and they would not be desirable for society. But when are exceptions desirable?

A cost-benefit analysis suggests that exceptions would be adopted when their benefits overcome losses for the society. A classical example is the patent exception for private uses. For instance, a 10-year old boy who acquires a patented seed for the purpose of creating a plant for a school project is exempted from patent infringement since legal remedies would bring about substantial costs compared to the insignificant damages of the ‘infringement’.19 Another rationale based on the cost-benefit analysis is related to transaction costs of licenses. In this regard, Gilat suggests that if consensual licensing is likely to occur, an exception will not be required. Conversely, when transaction costs are so high as to impede bargaining, an exception would be desirable.20 In his view, however, exceptions should be guided by public policy issues that best promote the purpose of the law.

Additionally, Moschini and Yerokhin argue that when R&D costs are low, relative to the potential returns, a broad exception may be desirable because it provides a large pool of innovators in follow-up inventions. On the contrary, when research is costly and risky, a broad exception may not render enough incentives to invest.21 This view recognizes the basic trade-off between static and dynamic efficiency inherent in patent law. In these context, the ‘desirability’ of patent exceptions stands on the dilemma between a weak and a strong patent protection. Weak patents may provide insufficient incentives, but strong patents may inefficiently restrict the use of an innovation. Here it should be noted that it is impossible to define the ‘right’ scope of patent rights since there is ‘no measured negative or positive correlation between investment in R&D and the breadth of experimental use exception’.22 Thus, the form and the extent of the optimal IPR system is still an open question and the economic implications of patent exceptions cannot yet be defined.

These reasons, together with the heterogeneity of the subject matter would suggest a specialized treatment for different types of inventions.23 Relatedly, economic studies on patent exceptions have focused on two main types of exceptions: exceptions that allow research to improve the patented subject matter and exceptions that use the patented subject matter as a tool in research. They will be examined below separately. The Economics of Patent Exceptions for Research on Protected Inventions

This type of exception is seen as positive for innovation since it avoids the transaction costs of licensing for research purposes on the subject matter. In addition, it enhances innovation by increasing the difference between the return from the new innovation and that from the old innovation. As a consequence, prices for consumers lower. Research on protected inventions seems to be more desirable when research is conducted for academic or non-commercial purposes. In this case, the low willingness of researchers to pay licensing fees, issues related with avoiding patent enforcement in academia and the large spillovers of academic research seem to justify the adoption of the patent exception.24 Considering the importance of academic research for the progress of science, it appears advisable to adopt a broader exception if patents on basic research are broad and vice versa.25 Moreover, even if ‘the commercial versus the non-commercial distinction is dropped and the focus is returned to the underlying goals of the patent system, the analysis of experimentation “on” the subject matter of an invention shows that it is essentially a species of enabling disclosure. Such disclosure enhancement promises to have beneficial effects on the pace of follow-on innovation for non-self-disclosing inventions and minimal effects on the invention for self-disclosing inventions.’26 Therefore, this type of exception has not been object of large controversy so far. The Economic Controversy on Research Tools

While there is general agreement between economists on patent exceptions adopted for conducting research on protected subject matter, they are more skeptical with respect to the second type of exception, which allows using patented inventions as a tool in the research process. The main controversial argument on the economic feasibility of an exception that makes use of inventions as research tools lies on the fact that ‘one man’s research tool is another man’s business’.27 There is common belief among economists that the use of research tools by second innovators might deprive the first innovator of substantial profit. This may be especially true for inventions with a significant market among researchers, but exempting even purely academic research from patent infringement could also deprive patent holders of a portion of their expected profits. Consequently, their incentive to innovate will be undermined.28 Those against the introduction of an exception on research tools further argue that there exists no barrier to licensing.29 They see no reason for the patent holder to refuse bargaining with other innovators, thereby, an exception to patent rights is deemed unnecessary.

Other commentators fear that, on the contrary, the first inventor might be granted too much power in the innovation process. This stems from the different characteristics of innovativeness embedded in research tools. While for most innovations, the contribution that the invention makes is the inventive idea, for research tools, is the tool itself.30 Therefore, the patentee might have more interest in ensuring a financial return from exclusive control of the research tools rather than from widespread commercial use of an embodiment of the inventive idea. If patentees control research tools in view of maximizing their own profits, technological progress will slower at the expense of the society.31 This might be particularly worrying when the research project is aimed at addressing important societal concerns, such as food or health issues. In this case, the societal harm resulting from a slower technological progress may be very severe while the private incentives to delay so as to keep a larger share of the monetary and nonmonetary benefits of the research may be stronger.32

This hypothesis generates worries because it weakens the primary function of research tools: the facilitation of technological progress. Hence, the relevant question becomes: how to provide appropriate returns for incentivizing inventions while spurring technological progress? In this regard, Mueller proposes a limited exception for experimenting with research tools that compensates the patentee for use of the tool through a compulsory licensing requirement.33 This proposal has been further elaborated by Strandburg, who subjects the exception to two conditions.34 The first condition requires that there must be no close substitutes for the research tool, while the second prohibits close substitutes for the research projects that require the tool.35 She suggests that only when the tool is of unique importance to a uniquely important problem, it will have an impact on the society. If researchers are relatively indifferent between problems requiring a patented tool and a whole host of interesting problems for which they do not need to use the tool, then the patentee will not exercise significant power over research progress.

These considerations allow inferring that economic theory on patent exceptions is centered around the incentive to innovate. Empirical studies, however, are not able to define the ‘right’ scope of patent exceptions given the lack of a direct correlation between R&D expenditures and the breadth of experimental use exception, and the heterogeneity of subject matter. Therefore, it is impossible to find a definitive answer in economic arguments. Nevertheless, economic reasoning provides useful guidelines for evaluating the effects and desirability of patent exceptions. This guidelines aim at increasing social welfare, which in turn is inspired by public policy issues. Public Policy Issues

‘Public policy’ is usually understood as ‘the governing policy within a community as embodied in its legislative and judicial enactments which serve as a basis for determining what acts are to be regarded as contrary to the public good’.36 Therefore, in terms of patent law, public policy considerations should aim at guiding the legislator towards the public good, which itself is the main underlying concept of patent law. Indeed, the rationale of patent law is not to remunerate inventors, but to promote the disclosure of their innovations for the benefit of society. The disclosure of inventions avoids duplication of R&D investments and facilitates follow-on inventions. In turn, more knowledge accrues to society. This makes it apparent that patent law is conceived for the good of the society.

In these terms, some exceptions can be considered as necessary to the patent system.37 For example, when inventions are not-self-disclosing, exceptions are considered necessary for the benefit of the public.38 This necessity becomes even more imperative when patents are granted on basic research given its influence on subsequent innovations. It is often suggested in the literature that when patents on basic research are broad, then the research exception should also be broad.39 The adoption of exceptions, in this case, recognizes the fact that the purposes of the patent system cannot be achieved due to the exclusive rights conferred upon the patentee. In any case, the exception should be granted in view of the public interest and the purpose of the exception.40

This view implies a balance of countervailing interests. Whenever a patent conflicts with an important social goal, the latter should be given priority. Important social goals may be represented but not limited to ‘national security and emergencies, such as the exception in the Bangui Accord that permits exploitation by an administration or organization authorized by the Minister of the Member State concerned, for the purposes of “vital economic interest, public health, defense other country’s needs”, subject to remuneration’.41 Thus, public policy issues guide the adoption of exceptions to patent rights whenever there is a need to disclose the invention for the benefit of the public. In this respect, a WTO panel has also stated that the absence of exceptions to patent rights ‘would frustrate part of the purpose of the requirement that the nature of the invention be disclosed to the public’.42 The relevance of public policy issues in judicial decision-making will be further explained when analyzing national practices on research exceptions.

5.1.2 Research Exceptions to Patent Rights: An Overview of National Practices

This section helps provide the reader with a general understanding of the research exception adopted by single countries. The following paragraphs will not thoroughly examine the issue of research exceptions, but will focus only on those aspects relevant for qualifying the breeding exception. The first part will outline the international legal framework and briefly describe national practices for research exceptions. Special attention will be dedicated to the research exceptions of France, Germany, Netherlands, and Switzerland in order to understand why they have incorporated a breeding exception into their patent laws. International Legal Framework

The most important international agreement on intellectual property law is the Trade-Related Intellectual Property Rights Agreement (TRIPS). Part II, section V of this Agreement provides for specific provisions on patent law. An exception to patent rights is formulated by its article 30 as follows:

Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

Vagueness of language is the first element to be noticed in this formulation. The second is the fact that this makes it impossible to draw conclusions with regard to the type of permissible exceptions as distinguished by economists. But another important and recent agreement for European patent law, the Agreement on a Unitary Patent Court (UPC), offers some guidelines in this context.43 Its article 27 is entitled ‘limitations to the effects of a patent’ and provides that inter alia the rights of the patentee should not extend to:


acts done privately and for non-commercial purposes;



acts done for experimental purposes relating to the subject matter of the patented invention;



the use of biological material for the purpose of breeding, or discovering and developing other plant varieties;


This article recognizes three types of exception: research for non-commercial purposes, research relating to protected inventions commonly known as research on protected subject matter and additionally, allows for a breeding exception. This is the first international legal instrument to provide for a breeding exception. As already explained in the previous chapters, only Germany, France, the Netherlands, and Switzerland have adopted such an exception in patent law prior to the coming into force of the Agreement on a Unitary Patent Convention. In this context, it appears that international law acknowledges established national practices rather than influencing them. Indeed, there is no internationally accepted definition of ‘research exception’ and all countries have drafted it in a variety of ways. The following paragraphs will briefly illustrate this issue. National Practices: Judicial and Statutory Research Exceptions

Countries have chosen to introduce exceptions to patent rights in two main ways. Some countries have developed research exceptions through judicial decisions, while others have provided for specific exceptions in their patent laws.44 Common law countries, such as, Canada, New Zealand, UK, and US, have usually developed exceptions through judicial decisions, whereas civil law countries have opted for statutory exceptions. But there is no uniform practice even in this regard. Australia, for example, is a common law country but it was unclear whether a research exception existed until 2012, when the Patents Act of 1990 was amended in order to introduce an exception for research purposes in its section 119C.45 Civil countries, on the other hand, have enriched the interpretation of their statutory provisions through judicial cases. These issues will be further explained below. Judicial Exceptions

Here the focus will be on the US research exception in order to provide an example of exceptions developed through judicial decisions. The choice of the US exception is based on the fact that that the US courts offer a rich and interesting jurisprudence for the purpose of the analysis. The birth of the research exception in the US is attributed to Justice Story, who affirmed in the Whittemore v Cutter case that:

it could have never been the intention of the legislature to punish a man, who constructed such a machine merely for philosophical experiments, or for the purpose of ascertaining the sufficiency of the machine to produce its described effects (emphasizes added).46

In the same year, he explained in Sawin v Guild that experimentation must not be with an intent to infringe patent rights and deprive the owner of the lawful rewards of his discovery.47 These two cases seem to create the basis for differentiating between experiments for research and commercial purposes. Whereas the former have been deemed permissible by courts, the latter have been strictly prohibited. A landmark case—Roche Products v Bolar Pharmaceutical 48 or so-called Bolar case has mitigated this view. The case will be briefly examined below in order to understand the circumstances that influenced the decision.

The defendant, Bolar Pharmaceutical, was a generic drugs manufacturer who aimed at marketing a drug covered by a patent of Roche Pharmaceuticals, the plaintiff. The marketing of the generic drug required a marketing permission from the health authorities. Since the process for obtaining this permission was time-consuming, Bolar decided to conduct clinical tests and apply for marketing authorization prior to the expiry of Roche’s patent. Roche filed suit. Bolar’s defense was based on the experimental use exception. But the appeal court said that it was not applicable to the concrete case since the exception is narrow and limited only to experiments which are not in any way motivated by commercial interests. This decision negatively affected the interests of drug manufactures which exercised pressure upon Congress to change the result of the decision. Less than 6 months after, the Congress emanated Section 271-e-1 of the Drug Price Competition and Patent Term Restoration Act, informally known as the ‘Hatch-Waxman Act’.49 This solution was a compromise between the diverging interests of the generic and proprietary drugs manufactures.50 Although it softened the categorical prohibition of experiments with commercial intent, it allowed a research exception solely for the purpose of obtaining regulatory approval. Patentees interests were safeguarded by enabling them extend patent rights beyond the statutory patent term of 17 years from the grant of the patent. In this way, they were compensated for their ‘loss’.

This decision is significant on an international level because it paved the way for other countries to adopt exceptions to patent rights for regulatory purposes.51 The compliance of such exception with the main international rules for IPRs has been clarified by a WTO panel.52 However, the exception is very narrow and limited only to experimental trials for obtaining regulatory approval for generic medicines. This was further reaffirmed in Embrex v Service Engineering, where the court of appeal indicated that they were extremely narrow in scope and could not be used to escape liability for infringement simply by cloaking infringing activities in the ‘guise of scientific inquiry’.53

A more recent case that supports this view is Madey v Duke University.54 Madey was a researcher at Duke University, who owned patents covering a new laser device, and left Duke University without licensing or assigning any rights to his inventions. After he left, the university continued to use his inventions without permission. The court found Duke’s research ineligible for the common law research exception because it ‘unmistakably furthers the institution’s legitimate business objectives, including educating and enlightening students and faculty participating in these projects’. This decision was justified by the fact that academic institutions have legitimate business objectives since the research they conduct increases the status of the institution and lures lucrative research grants. The court, however, reaffirmed that the research exception remains viable for experimental-use that is ‘for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry’. Such a restrictive interpretation of the common law research exception in the US has induced most commentators to argue that Madey v Duke signals an end to the common law research exception to patent infringement.55

The restrictive approach of US judges is further confirmed with regard to the interpretation of the statutory exception. In Integra Lifesciences v Merck, the court argued that basic scientific research not aimed at obtaining regulatory approval is not exempted under Section 271-e-1 of the Hatchman-Waxman Act since the research is surely not ‘reasonably related to the development and submission of information’ to the Food and Drug Administration (FDA) authorities.56

All these decisions seem to center around two core concepts: ‘philosophical’ inquires and ‘commercial’ intent. The first are deemed permissible by US courts whereas the second are considered to prejudice the rights of patentees, thereby not eligible for an exception. An exception to courts’ decisions is represented by the US statutory exception, which took the interests of pharmaceutical companies at large into consideration. With regard to the rationale of research exceptions, both courts and legislation appear to strictly reflect the predominant economic view on research done on patented subject matter and without commercial purposes. This narrow approach to research exceptions is perceived in Madey v Duke, which did not exempt academic activities given their potential commercial objectives. The prevalence of patentees’ interests can additionally be noted in a lack of specific attention to public interest issues by US courts. Statutory Research Exceptions

The research exception introduced in civil law countries is formulated in various ways. Although there are some differences in the language used, the practice followed by countries is to provide an exception for ‘acts done for experimental purposes’. In many EU States, for example, the statutory exception is identical or substantially similar to Article 27.b of the Agreement on a Unified Patent Court (ex art. 31 of the Community Patent Convention). The Czech Republic, Denmark, France, Germany, Ireland, Luxembourg, Spain, Sweden, and the UK all almost identically reproduce this provision relating to the research exception, namely ‘acts done for experimental purposes relating to the subject matter of the patented invention’.57 Other countries have chosen different formulations. Italy, for instance, exempts non-commercial or experimental acts aimed at obtaining regulatory approval for pharmaceutical products.58 Belgium, on the other hand, has adopted a broad exception by expressly permitting scientific acts done both on and with the patented invention.59 The particularity of this exception is its impact on protected research tools. The Swiss Patent Act also distinguishes between research on the patented invention and research with the patented invention.60 But only research on the patented invention is exempted since access to patented research tools is explicitly assured through non-exclusive licensing.61 Unlike most countries, Swiss law exempts research done for both non-commercial and commercial purposes, as long as the objective of the research is to generate new knowledge about the patented invention.62 Similarly, the Dutch exception relates solely to research on the patented subject matter. Article 53.3 of the Dutch Patent Act of 1995 provides as follows: ‘The exclusive right shall not extend to acts solely serving for research on the patented subject matter, including the product obtained directly as a result of using the patented process.’ The Dutch law, thus, clarifies that the scope of the research exceptions extends to the products of research.

This brief overview of statutory exceptions makes it apparent that civil law countries have adopted a liberal approach with respect to exceptions for research purposes compared to US practice. Civil law courts have further contributed to this approach by embracing a broad interpretation of the scope of research exceptions. Two German decisions, Clinical Trials I63 and Clinical Trials II64 are a cornerstone in this regard and they are often brought as an example in many EU countries when interpreting research exceptions.65 These decisions will be examined below. Clinical Trials

The German decisions on Clinical Trials are most relevant for giving an interpretation of Section 11.2 of the German Patent Law. The court argued that the language of Section 11.2 supports a broad interpretation of the scope of patent research exception. To support its argument, the court additionally clarified that ‘an experiment in the sense relevant here is any (planned) procedure for obtaining any information, irrespective of the purpose which the information gained is intended to serve’.66 The court explained that Section 11.2 exempts all experimental acts as long as they serve to gain information and to carry out scientific research into the subject matter of the invention, including its use. In Clinical Trials II, the court confirmed that the research exception covers acts for experimental purposes undertaken with the subject matter of the invention in order to discover the effects of a substance or possible new uses. It further explained that:

Since the provision makes no limit, either qualitative or quantitative, on the experimental acts, it cannot matter whether the experiments are used only to check the statements made in the patent or else to obtain further research results, and whether they are employed for wider purposes, such as commercial interests.67

With respect to the relationship between commercial activity and the object of research, the court noted:

… the commercial orientation does not from the outset turn the experimental activity into an impermissible patent infringement. Something else will then have to determine when it is no longer a matter of further elucidation of the conditions, effects, applicability, and producibility of the object of the invention, but of clarification of commercial facts such as the needs of the market, acceptance of prices, and possibilities of distribution.68

Most importantly, the court observed that ‘clinical experiments with a genetically engineered pharmaceutical will always be based on commercial considerations’ because of their immediate or potential application. According to the German judges, if the existence of a commercial interest were to exclude the applicability of Section 11.2, then the effectiveness of the provision on patent exceptions would be severely undercut. In 2000, the German Constitutional Court concluded that patent owners had to ‘accept such limitations on their rights in view of the development of the state of the art and the public interest’.69 Unlike the US courts, German courts seem to dedicate more attention to public policy issues. In this respect, they put importance on technological development for the benefit of the society. German judges have explicitly claimed that:

From the viewpoint of the further technical development in the general interest, which is the aim of patent law, it is therefore appropriate to exempt clinical trials and investigations with active substances on humans as experimental acts according to Section 11 Nr. 2 as long as these experiments are directly aimed at obtaining information.70

The court has further explained that it would be inconsistent with the purpose of promoting technical progress and stimulating the spirit of invention for industry in a profitable manner to exclude experimental acts which serve research and further technical development. In Clinical Trials II, the public interest in scientific and technological progress became evident when the court linked the ground for granting a patent with the public interest. On the court’s opinion, ‘the unlimited protection of the patent is not justified in a case where the further development of the technology is hindered’. The importance of public policy issues is implicit in the overall reasoning of the German courts. In Clinical Trials II, for example, when the court states that—trials must not be carried out for the sole purpose of demonstrating to a third party that the product works—the court seems to have in mind the beneficial outcome of the trials for the public as a whole. Without doubt, the reference to public interest requires a balance of different interests between patent holders and society. While allowing for a research exception, the court reminds that this exception creates no disadvantage for the patentee since the invention cannot be used without his final consent. This is how the German court acknowledges the rationale of patent law. It recognizes the importance of the economic interests of the patentee but countervails it with the general public interest.

5.1.3 Differentiating Research Exceptions to Patent Rights

Although there exists no uniformity across national jurisdictions with respect to the research exception, two characteristics seem to play a role in defining exceptions to patent rights: (1) research on or with an invention; (2) research for commercial or non-commercial purposes. The following paragraphs offer a brief explanation of their meaning. Research on or with the Patented Invention

Experimentation and research on the patented subject matter covers scientific research about the invention. It usually aims at verifying, designing around or improving upon a patented invention; challenging the validity of a patent; confirming the value for the purpose of licensing; experimentation for the purpose of improving the invention or finding its use; research for inventing around the invention, etc.71

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