Rethinking the Management of Corporate Patent Flexibility Evaluation Systems in International Patent Law

Author: USA IP Research Team                                                      Published date: 05/23/2026

Chapter One Introduction

Patent law is territorial in nature; patent rights granted by each country can only be enforced within its own territory, and “there is no such thing as a ‘global patent.’” A government’s decision on whether to grant a patent for a particular invention is essentially a matter of balancing competing interests. A patent is a time-limited exclusive right intended to encourage investment and innovation activities while promoting the public disclosure of innovative achievements. However, this incentive comes at the cost of limiting public access to and use of the relevant technology. Although different technological fields vary in costs and potential returns, modern patent law within a country is generally highly uniform. Therefore, the same exclusive rights and corresponding remedies usually apply across all technological fields and to all applicants; unless antitrust violations or other abuses of rights are involved, the specific manner in which the patent holder uses the patent is generally not considered.

Countries may choose to depart from this uniformity and tailor the law according to specific circumstances. Since the late nineteenth century Paris Convention, the first international treaty attempting to achieve a certain degree of patent harmonization, the “pendulum” of institutional development has continuously swung toward greater harmonization among nations, thereby promoting higher levels of domestic uniformity. Harmonization efforts have weakened the flexibility of states to adopt customized measures.

The mandatory provisions and enforcement mechanisms of the TRIPS Agreement may indicate that the international community is approaching the peak of this trend. Thereafter, some further harmonization efforts shifted toward establishing new arrangements, such as regional trade agreements and enforcement treaties. At the same time, developing countries and “least developed countries”—which have long been required to strengthen patent rights and infringement remedies—have formed a countervailing force. India has been at the forefront of this resistance, both during the TRIPS negotiations and through its broad interpretation of the flexibilities permitted under the Agreement.① Through legislation and judicial interpretation, India has excluded certain chemical substances from patent protection and permitted compulsory licensing for pharmaceuticals, both of which reflect a rejection of uniform patent law and thereby weaken global harmonization.

Nevertheless, developed countries continue to strongly promote international harmonization by negotiating international and bilateral agreements that establish high minimum standards of patent protection among World Trade Organization members. These agreements permit only limited exceptions and are backed by the powerful enforcement mechanisms of the WTO dispute settlement system. Furthermore, the flexibilities contained in TRIPS are largely based on existing customization mechanisms and leave little room for future changes. The international legal system is gradually moving toward the harmonization, unification, and rigidification of patent law, yet it lacks a method for analyzing and evaluating existing and potential future flexibilities. In particular, there is a lack of a “state-neutral” evaluation method that both recognizes the purpose and value of the patent system and accepts that customization mechanisms inevitably reflect different national policy choices.

At the same time, flexibility also has significant value, as it allows for targeted efficiency and accommodates diverse local interests, values, and needs. Flexibility also promotes experimentation and improvement in the law. Adjusting patent law for specific industries or issues helps address the inefficiencies inherent in a uniform system. In addition, different countries hold varying views on the balance between innovation incentives and access needs. Allowing flexibility reflects the reality that, while countries commonly recognize the value of the patent system in promoting innovation, they still retain differences. These differences may stem from differing evaluations of innovation and access values or may reflect varying developmental needs at different stages. From the perspective of federalism or new federalism, legal differences also embody a form of humility, recognizing that the law always has room for improvement and that improvement is often necessary.

Chapter Two Research Findings

2.1 Modern Patents and Their Limitations

Patents are rights granted by governments to inventors for the purpose of promoting scientific progress. In essence, patents grant inventors the right, for a limited period, to exclude others from making, selling, or using their patented products or processes. Most national patent laws require patents to possess novelty, non-obviousness, and utility, although the specific legal terminology may differ.

Patents are generally regarded as essential for providing incentives for innovation. The exclusivity embodied in patents is intended to protect informational achievements that can easily be acquired and copied by others, since such achievements are not depleted through use in the way tangible property is. By allowing others to be excluded from the market, the patent system encourages investment in innovation. Its social benefits include enabling innovations that might otherwise never occur; allowing prices to remain relatively high during the patent term but lower after expiration due to competition; and requiring inventors to disclose their inventions so that others may use this knowledge and engage in further innovation.

“The United States patent system largely represents the general form of modern national patent systems. At its core is the promotion of scientific progress through granting a limited-time right to exclude others in exchange for disclosure of the invention. This logic is consistent with the utilitarian justification for intellectual property and is also known as the ‘incentive theory.’”② This theory holds that patents are necessary incentives for innovation; otherwise, inventors might choose to retain inventions as trade secrets, thereby depriving the public and other innovators of access to knowledge. Patents can also strengthen investor confidence, enabling inventions to enter the market.

2.2 The Scope of Rights Granted by Patents May Also Be Restricted

In cases where patents are abused, exclusive rights will not be enforced. Moreover, even where patent infringement has been established, permanent injunctions are not automatically granted. Instead, courts consider multiple factors, including the harm suffered by the patent holder, whether monetary damages are sufficient compensation, and the balance of interests between the parties and the public interest, before determining whether an injunction is appropriate. Globally, many countries have established compulsory licensing systems that allow enterprises to bypass a patent holder’s refusal to license when the patent holder or existing licensees fail to meet market demand or refuse to license at “reasonable” rates.

Patent duration is also a limitation. The rights of patent holders terminate once the patent expires. Currently, patent protection lasts twenty years from the filing date, although this duration has changed several times historically.

U.S. patent law is generally regarded as a uniform law, meaning that it applies equally across all technological fields. In addition, patent-related rights and remedies do not depend on the identity or business choices of the patent holder. However, this view is subject to several important qualifications, which will be discussed further in Part Three of this paper. Any field of discipline must satisfy the requirements of Section 101 of Title 35 of the United States Code in order to qualify for patent protection; therefore, certain fields are excluded (such as mathematics), while others are consistently eligible (such as engineering). Nevertheless, Section 101 itself is technologically neutral, and the subsequent patentability requirements merely require that inventions be new, useful, and non-obvious, while also providing corresponding remedies.

2.3 TRIPS Imposes Strict Obligations on Member States, but This View Has Been Criticized

Actions taken by developing countries since the implementation of TRIPS indicate that they may have been more cautious in negotiations than initially recognized by observers. For example, they incorporated language that, in certain circumstances, leaves room for weaker intellectual property protection. It remains unclear whether such language reflects carefully designed nuances or merely the ordinary uncertainty of legal interpretation, but it is certain that developed countries’ interpretations of some provisions are being challenged. Furthermore, TRIPS largely does not address procedural harmonization. Thus, the Agreement merely requires countries to follow “reasonable procedures and formalities” in implementation, without specifying how implementation must occur. This leaves countries with considerable flexibility in achieving compliance with TRIPS requirements.

2.4 Suspended Benefits Need Not Relate to the Area of Violation

A country may suspend preferential treatment in an industry that has not benefited from non-compliant intellectual property laws. One theoretical explanation is that an intellectual property regime (or other measures violating WTO rules) benefits the country as a whole, and therefore the distribution of punishment is irrelevant. From a practical perspective, an industry that does not benefit from deviations from TRIPS standards but is nevertheless punished as a result is more likely to push for legal reform. Just as developing countries exchanged intellectual property concessions for access to other markets during TRIPS negotiations, the WTO remedy mechanism links intellectual property with trade, thereby complicating the analysis of patent measures solely from the perspective of innovation incentives and access. The connection between patent flexibility that violates TRIPS and potential retaliation in other trade sectors may reflect the increasingly globalized reality of patent law. Any modification to patent law will produce effects that cross national borders.

Chapter Three Discussion

Multilateral agreements and “TRIPS+” trade negotiations involving intellectual property have increasingly taken place outside the WTO framework in recent years. The shift toward bilateral and regional trade agreements arises from various reasons: structural reasons (the large number of WTO members makes consensus on reform difficult), practical reasons (certain issues are better addressed among regional or smaller groups of trading partners), and more realist perspectives (major powers can more easily influence smaller states within narrower frameworks). To some extent, all of these factors are valid. Regardless of the reasons, the number of regional trade agreements (RTAs) has increased rapidly since the establishment of the WTO.

The trend toward regional harmonization is reflected in attempts to establish a European unitary patent and Unified Patent Court system. This system aims to replace the currently fragmented mechanisms for patent application and enforcement. At present, inventors may file patents centrally through the European Patent Office, but they must select the countries in which they seek protection and enforce their rights separately in national courts. In some countries, litigation is further fragmented because infringement proceedings and invalidation proceedings are handled separately. The European Parliament has approved unitary patent rules. Although there remain issues such as certain countries withdrawing and the need to make “unitary patent protection optional and coexist with national patents and European patents,” the initiative continues to advance. Therefore, in the short term, this so-called unitary system may actually increase complexity, but in the long run, it may become an important step toward full unification of patent granting and enforcement in Europe.

Overall, the trend toward harmonization is evident. However, countervailing forces resisting international harmonization have also emerged in many developing countries. The strongest resistance often appears in technological fields affecting access to pharmaceuticals. A certain implicit anti-harmonization tendency also exists in developed countries, particularly when scholars and interest groups advocate differentiated patent systems to address the inefficiencies caused by applying uniform patent law across different contexts. These countervailing forces are reflected both in laws targeting specific technological sectors and in technologically differentiated interpretations of facially uniform laws.

3.1 De Facto Flexibility

Although significant progress in patent law harmonization has been achieved since the conclusion of TRIPS, true unification remains far from reality. Accompanying opportunities are countervailing forces of diversity and flexibility, which slow the pace of comprehensive unification across all stages from patent granting to enforcement. Beyond legislative differentiation, unavoidable differences also arise when patent law is applied across different technologies and actors. This is particularly evident in common law countries: laws are expressed through broad principles, while courts fill in the details, enabling the law to evolve gradually with new circumstances. In fact, courts in civil law countries also play similar roles to varying degrees. Therefore, even where legal texts are identical, their developmental paths may diverge when confronted with new factual situations. Furthermore, even when the same law is applied across different jurisdictions, courts may reach different conclusions regarding factual issues or mixed questions of fact and law.

Regardless of a country’s position on harmonization, its patent system usually contains some mechanisms for differentiation. In global patent law, flexibility exists both in institutional design and in practical application. Taking the United States and India as examples, these two countries—different in levels of development but both highly active in intellectual property—demonstrate the use of such flexibility, particularly in their policy objectives, implementation methods, and the breadth of stakeholder participation.

3.2 Flexibility in Design

Patent law has repeatedly undergone differentiated adjustments according to different technologies. Before TRIPS required patents to be granted without discrimination across all technological fields, such adjustments sometimes appeared in the form of legislation or administrative measures targeting specific sectors. Nevertheless, TRIPS still permits a certain degree of flexibility, including explicit exceptions to uniform patent granting and treatment, as well as room for differentiation through interpretation.

In the United States, as in other countries, various legislative measures exist that adjust patent rights for specific technologies. These “special regimes” are typically used for technologies that do not fully conform to traditional patent standards but are nevertheless considered worthy of protection. The most typical example concerns pharmaceutical inventions. Although pharmaceuticals themselves constitute patentable subject matter, the law extends their market exclusivity through so-called “quasi-patent” protections. The Hatch-Waxman Act represents a balance of interests between innovative pharmaceutical companies and generic drug manufacturers: on the one hand, it compensates for research and development time by extending patent terms or market exclusivity; on the other hand, it encourages generic drug manufacturers to challenge weak patents and enter the market promptly after patent expiration by providing certain incentives (such as limited periods of market exclusivity).

3.3 Flexibility in Application

“Customization” at the legislative level explains some differences across technologies or contexts, but the factual backgrounds associated with different technologies may themselves produce different outcomes under the application of uniform laws. Furthermore, especially within common law systems, the law evolves through continuous application and reinterpretation, thereby gradually forming different approaches to different technologies over time.

In the United States, the case of Diamond v. Chakrabarty, which recognized that genetically engineered bacteria could be patented, is regarded as a key driving force behind the development of the U.S. biotechnology industry. The case expressed a fundamental understanding that patents should apply to “anything under the sun that is made by man.”

However, the boundaries of patent eligibility remain contested. For example, disputes persist regarding the exclusion of living organisms, mathematical algorithms, business methods, and “laws of nature, natural phenomena, and abstract ideas.”

Similarly, in Association for Molecular Pathology v. Myriad Genetics, the court ruled that merely isolating naturally occurring DNA does not render it patent-eligible, whereas artificially synthesized cDNA may qualify for patent protection.

References

Peng Xuelong. “Analysis of the Independence and Intellectual Property Attributes of Domain Name Rights.” Legal Science, 2021(2): pp. 77–85.

Zhou Hanhua. “Research on the Structure and Rule System of Global Internet Governance.” International Studies, 2024(1): pp. 25–38.