One of the best parts of the Maize Genetics Meeting is the opportunity to have discussions with scientists working in a variety of fields from academia, industry, and NGOs. Conversation this afternoon veered towards intellectual property (IP) and biotechnology for a bit. It’s a contentious subject for a lot of reasons, but some new ideas I’d never thought of before came up today. I don’t have a background in IP, so please feel free share your thoughts and ideas in the comments!Developing a biotech trait does require a lot of funds, similar to developing a new medicine. There’s testing and trials, safety and regulation – all of it costs money. In order for a company to invest funds and people into a project, they have to have some reassurance that they will be able to make a profit after al that expense. Intellectual property protection, whether on a new widget, medicine, plant variety, or even movies and music, helps ensure that no other company or person will be able to collect profit that the inventor or creator deserves.
Of course, patents and other forms of intellectual property protection (IPP) do have their limitations. Right now, IPP may be at once too strict and too lax.
IPP is too strict in that patent holders must pursue violators of their patents, or risk loosing the patent. In other words, to follow the law, patent holders must go after even the smallest violators. This may be a waste of time for the patent holder and penalizes small patent violators who can’t afford a court case. The requirement is necessary, though, an attempt to prevent a company from sitting on a patent but not doing anything with it. One possible solution would be to make IPP more lax by creating a bottom threshold limit of the income a violator is making from the protected IP. In the case of agriculture, small farmers who willingly or accidentally violate biotech patents or plant variety protection would only be subject to a suit if their income or benefit from the IP is above a certain amount.
IPP is too lax in that there are situations where patents can be violated but the patent holder has little recompense. In agriculture, this could happen if one company used another company’s germplasm in their breeding program, although this has become more and more rare as markers have started being used to identify members of a plant’s lineage. Another example from agriculture is protected methods that a rival company might be able to use without anyone knowing.
This idea of too lax IPP came up in conversation about how to help African countries develop their own seed production facilities. Companies like Pioneer have donated germplasm and traits royalty free for use in breeding programs in Africa. Their goals here are partially altruistic – they can help people while having only a tiny effect on their own bottom line – and partially self-interested – farmers who can start making money today may be customers tomorrow.
The donor companies have legitimate concerns that existing or startup companies could take those traits and germplasm and develop new products that would eventually compete with the patent holders. As I said, this is less of a concern than it used to be because markers can increasingly be used to determine the varieties that were used to develop a new variety. It might not be so easy to track a patent protected method that was used to develop new varieties.
Marc Albertsen of Pioneer Hi-Bred International gave an exciting talk today about a new way to develop male sterile plants for hybrid production that doesn’t involve cytoplasmic male sterility (look forward to a post about it soon!). Pioneer might be interested in donating this technology to researchers developing improved crops for Africa, but with no way to track the method, they might fear that another company could access and their hard work without paying for it. I’m not sure what would be potential solutions to this problem, but potentially a more strict IPP for companies that willfully use another company’s work could be an answer.
Too lax, too strict – what do you think?
It looks like there needs to be some leeway around whether or not a company persues legal action against a violator of patent law – or at least some sort of get around, like granting rights to use the patented technology after the fact in areas where it has been used either wittingly or unwittingly, but in a manner that the patent holder doesn’t particularly care about.
On laxness – I think that if you’re giving tech away royalty free then this should just be a risk you assume – huge companies like Monsanto and Pioneer shouldnt have too much to worry about in terms of their germplasm being used by breeders to make a competing product – their resources are such that by the time a competing product comes along it isn’t likely to be competitive anymore – anything more tangible like a patented gene being given royalty free won’t suffer from this as a gene is eminently traceable and therefore patent enforcement outside of the royalty-free framework shouldnt be hard (although would probably be a minefield of issues outside this – such as proving where the patented gene came from (the whole chain) whether or not its presence was known (for instance a gene inserted into a QTL could be selected for completely by accident in a breeding program) etc etc
Germplasm and genes are one thing – but what about methods? I don’t see how a company could donate a method while having some protection that competitors won’t use it without paying. That’s frustrating because there are a lot of methods out there that could be used by non-profits like Gates Foundation or Harvest Plus and by academia in ways that wouldn’t infringe on profits but I can’t blame companies for not being more free with them.
That’s where leeway should exist – or some system, not unlike the plant protection act which allows varieties to be tested by academics but not utilized by competitors, once the method is patented anyone who wanted to sneakily “steal” it could – giving it royalty free won’t change a thing (as far as I know) and it will be as easy to chase down infringement as the patented method itself – profits from using the method are obviously a tad more difficult to keep track of (ie a breeding method used to create a variety which is then sold to a third party and used for profit – what’s the IP stance there?) but honestly, when these methods are being donated particularly into third world areas where the primary goal is highlighted as being humanitarian I think big companies should just bite the bullet and accept the possibility that their patented inventions might profit someone else, and take solace in the fact that this profit is likely to be beneficial to the area they were being so magnanimous with in the first place. With research institutions etc it shouldnt be too hard to come to some sort of agreement whereby any subsequent patents from utilization of a patented method are either partly in the name of the company who holds the patent on the method, or a part of the profits are designated to the holder.
Let me first say that I am no expert in bioengineering (I can’t even spell QTL) and come to this blog only because a friend who is interested these issues sent me a link. I do, however, have an interest in intellectual property laws and public policy, which is why I feel qualified to comment.
I think that the conversation here is framed in a way that largely misses the forest for the trees. The question is not whether patent protections (and it is important to note that we are only talking about patents here, and not distinctly different legal phenomena which are all confusingly grouped under the catch-all phrase “Intellectual Property”) are too strict or too lax. Rather, we should be questioning whether patents should be in existence at all.
This is a public policy tradeoff, and we need to look at historical evidence to weigh the costs and benefits of both having and not having patents. A thorough review of the record has been conducted by economists Boldrin and Levine. In their book “Against Intellectual Monopoly” they conclude, “Creators’ property rights can be well protected in the absence of “intellectual property,” and that the latter does not increase either innovation or creation. They are an unnecessary evil.” Reviewing their arguments would be outside the scope of a blog post, but suffice to say that I think their view is powerful, if not the correct one. (The book is available online: http://levine.sscnet.ucla.edu/general/intellectual/againstfinal.htm and in print.)
Another flaw in the blog post, I believe, is the unquestioned assumption that all technological innovation is done in the context of a company that needs to recover some cost. Reviewing the history of high-technology developments reveals quite a different story. Computers, computer networks, jet engines, etc. were developed primarily under the auspices of government funding. Only after the technology was sufficiently mature was it then spun off to corporations for private profit. This pattern is repeating itself with biotechnology. For further discussion, please see Noam Chomsky’s “The Pentagon System” http://www.thirdworldtraveler.com/Chomsky/PentagonSystem_Chom.html
The blog post also discusses the extension of the American patent regime internationally. I would like to make a couple comments about this.
First, I am continually surprised by the willingness of some to ascribe altruistic motives to international corporations. The reason corporations are set up is for profit and profit alone. A company engages in “altruistic” actions merely because doing so increases profits in a roundabout way — say, by increasing sales via a PR campaign highlighting the lofty goals of the organization. There are a minuscule number of exceptions, but this is the general rule.
Second, the choice to extend the American patent regime to foreign countries has consequences — namely, retarding true international development to the end of increasing profits for (mostly American based) international corporations. Quoting from Chomsky’s “Profit Over People”:
“Consider again the case of [The North American Free Trade Agreement] … it shares with the global agreements such antimarket principles as “intellectual property rights” restrictions of an extreme sort that rich societies never accepted during their period of development but that they now intend to use to protect home-based corporations: to destroy the pharmaceutical industry in poorer countries, for example — and, incidentally, to block technological innovations, such as improved production processes for patented products allowed under the traditional patent regime.”
In sum, I think the questions of patents in technology (and foreign affairs) go beyond the narrow scope that the post discusses. Before we argue about the range of patents’ reach, we should discuss more fundamental questions.
Danny,
consider GMOs in IP light. There’s a much floated around figure that it takes $100M to take a GMO from conception through regulatory to full commercialization (we’re talking corn, soy, cotton traits here – those traded globally). $100M. That’s a significant private investment into something if there is no end of the day protection for the invention for a given period of time. I think Pam has stated elsewhere here that in a reasonably equipped lab the actual cost to produce a single transgenic event is somewhere in the order of $500. For ‘simple’ traits such is insect protection and herbicide tolerance then what is the sensible course for a business to take? Spend $100M in research, development, regulatory and safety approval, or to wait for someone else to do it, spend say, $50,000 and maybe another $100,000 or so in field testing, and sell exactly the same product?
That $100M is not funded by governent research (although there may be aspects of the development which play off of prior research funded either by the government or done in academic labs), that $100M is the cost to the company developing the product.
Unless there is evidence that this technology was produced under government funding and then spun off (perhaps it was, but my knowledge of the situation is that Monsanto in particular bet heavily on biotech research early on (and if you look at stock price history almost paid dearly for that bet) and now reaps the benefits) then that arguement may well apply to the broader arguement around IP but clearly doesnt fit into the discussion around the specifics of IP surrounding GMOs and hybrids in general.
On PR moves and altruism – clearly any corporation not making money is not going to be a corporation for very long, however I don’t think everything every corporation does has to be profit driven (so long as profit is being made) – from the inside it definitely appears (and here I may be being hoodwinked) that there is a strong urgency to ‘do the right thing’, be that supporting projects like WEMA (pushing GM into africa!!!), matching employee contributions to charity ($100,000 to Haiti last I checked) taking a ton of time every year for participation in United Way events (much fun to be had dunking members of the senior biotech management in water) down to individual teams globally helping out with safety endeavors in local schools etc (I forget the exact story, it was very touching though, and not publicized externally as far as I’ve seen)
Danny:“A thorough review of the record has been conducted by economists Boldrin and Levine. In their book “Against Intellectual Monopoly” they conclude, “Creators’ property rights can be well protected in the absence of “intellectual property,” and that the latter does not increase either innovation or creation. They are an unnecessary evil.” Reviewing their arguments would be outside the scope of a blog post, but suffice to say that I think their view is powerful, if not the correct one. (The book is available online: http://levine.sscnet.ucla.edu/general/intellectual/againstfinal.htm and in print.)”
Thanks for the link Danny. I will look into that. Can you elaborate what might be other protections for investors (private, government, or otherwise) in the meantime? How would that work in the case of biotech? I don’t think it’s out of the scope here.
Ewan R,
I reiterate that I have no experience in biotech. But I will try to address your questions anyways.
First, you say the $100M figure is “much floated around.” By whom? Is there any objective evidence to believe that this is the case? Or is this some arbitrary amount propagated around by industry who has an incentive to inflate figures like these in their quest for stronger patent protection and public funds?
Furthermore, you’re going on the assumption that this money is fronted by a profit-seeking corporation who needs to recoup costs. As I said in my earlier post, there is reason to believe this need not be so.
But let’s take the scenario on assumption. You say the general patent arguments are inapplicable to GMOs, but there is nothing that distinguishes the GMO argument from any other pro-patent argument: “We want to make product X that will benefit society that will cost Y dollars. Y dollars is a lot of money! How are we going to produce Y dollars by ourselves? We are but a meek corporation with humble financial resources. Therefore, we require the government to step in and give us a monopoly on the market via a patent.”
The “Pentagon” article contains evidence to support the claim that the government played a heavy involvement in the birth and growth of the biotech industry, if you want to follow up on its references. The Pentagon itself might not be funding biotech research, but I’m sure there are others (being a non-expert I can’t name these organizations offhand — I’m guessing NIH, NSF — but maybe you can answer the question by asking who might fund your research or employ a student after graduation).
On PR moves and altruism: a few things. First, ask yourself a question: if my company’s market goes south tomorrow and they need to cut costs, which will come
first, the essential processes of the company or the charity contributions / company parties / famous chef at the cafeteria / etc.? Second, having happy employees is critical to a company’s productivity — your company’s charity drives are part of this effort. (I concede that the employees of the company, as human beings, are completely capable of altruistic acts, regardless of who they might work for. However, I can not say the same of a corporation.)
pdiff,
I think a better question is, why should investors be “protected” in the first place by the government? High tech comes with risky investments and investors should be prepared to win big on some bets and lose on others. (I think it goes without saying that I am assuming a minimal level of “protection” that is provided by the SEC, law enforcement, trademark, etc.)
The $100M figure floated out there is a figure I’ve heard from Monsanto, although I’ve also heard higher. Biotech may have had some initial funding from government (all the prior academic work was probably funded to some extent by govt, and a lot of ag research is funded by the USDA) however given that Monsanto alone spends somewhere over $1M a day on research – which isn’t government fudning, I don’t think that the $100M pricetag is at all unlikely. You still haven’t begun to explain how Monsanto could recoup $100M of cost to bring a trait to market sans some sort of patent protection, or why they would even bother.
Lets assume a new herbicide tolerance gene is released tomorrow, which cost $100M to bring to commercialization, given your system of no patent protection the trait itself is likely to be generic within a year of release, so you have a season to recoup your costs before everyone and their brother can simply take your trait and utilize it – this clearly isn’t possible, as a new trait to market will have relatively low penetrance in its first year while the ag market gets a feel for it (farmers being generally conservative when switching over to an untried technology) – which essentially means there is no way whatsoever to make back the $100M, next year all your competitors reap the benefits of your technology without any of the costs.
The pentagon article argues that biotech (and that’s a pretty big umbrella) had some government funding, although I’m not seeing how plant biotech really fits into the mix there as it appears to be primarily spinoffs from health and space programs which are the target there – all encompassing claims like that don’t really get to the meat of the issue under discussion here – did RR, Bt, and the current slew of technologies under development by Monsanto and other biotech companies really get funded by the government? I’m utterly unconvinced. Do Monsanto use some technologies which may have originally stemmed from government funded work? Absolutely – I can pretty much guarantee that anyone working in science will utilize techniques which to some extent or another were initially funded by government, or are spinoffs of such projects – does this mean everything everyone ever does is public property? I know currently who would fund my research, same company that pays my paycheque – and I know that Monsanto funds scholarships also, so government isn’t the only source of investment into research (Monsanto collaborates on a pretty wide scale globally with top researchers)
On which will come first – an interesting question, Monsanto recently went through a reorganization which was publicized pretty widely (at least locally) shedding a number of positions (fun times, let me tell you) but as far as I have been able to ascertain the charitable side of things didn’t particularly change at all, despite internal budget cutting etc etc there was no move to stop donation matching schemes and the like, WEMA wasn’t cancelled, participation with FFA and so on remained strong.
I’d agree that a corporation per-se cannot act altruistically (in that it cannot act at all) but given that the people who work for the corporation act altruistically as a group, through the corporation, I think the distinction is a tad pedantic – it’s like saying well, yes, everyone who works for your company is good people, but your company is evil. It just doesnt add up.
Also keep in mind (I’m sure you know this) that a patent offers a monopoly for a price, and for a limited time. You get ~20 years (of which a bunch is “wasted” during development and regulatory approval) of monopoly, the price you pay is absolute full disclosure of how your invention works (non-disclosure of information invalidates the patent and gets you in some pretty hot water) which is useable by anybody at all after expiration of the patent – ag biotech is such a new phenomenon that we are only now reaching the point where patents are starting to expire (RR soy is the first I know of, goes off patent in the next 2 years, and will be followed pretty much by patents dropping off at an ever increasing rate from that point onwards) – it can be argued I suppose that initially patents are not for the benefit of all, but given that most of this technology would not have been developed at all but for the protections patent law provides (or developed in some way that it was kept secret, although how that’d work would take some doing) and given that in upcoming years it is essentially free for anyone to use who is “skilled in the art” time will tell how the benefits play out.
I remain unconvinced that without some form of IP protection, granting monopoly type status (perhaps with modifications which force utilization of the monsanto model of broad licensing rather than a total monopoly), that many of the major innovations in biotech would be anything other than a pipe dream, and the continued funding of the research would also be a major factor in impeding the advancement of the technology (Monsanto currently ploughs ~10% of profits back into research if I remember the figures right, split pretty evenly between biotech and breeding (although given the direction breeding is going these days the two will shortly be very hard to differentiate)
Danny,
I had a quick read of the Levine book. Very interesting thoughts there and I think I agree with one of their conclusions regarding reality. Dropping protection altogether and immediately is not advisable or practical. While they give several examples of IP-less free markets working, they also note the bottom lines are smaller. Whether you like it or not, this is a capitalistic society and any proposed solution, short of a revolution, will have to exist in that environment, at least initially. It is reasonable then, to aim for middle ground where some level of protection is necessary.
In addition, biotech is not like cranking out a record or movie. The initial development costs and the requirements from regulatory agencies can impose conditions where the product is exposed to competitors and delayed from release. This is very similar to the pharma example they discuss. Their “solutions” for pharma may well have application here too. Essentially you are protected and hidden during the regulatory phase. Once passed, you are granted short term protection (starting from that date) and extensions are unavailable or hard to come by. I also liked the idea of funding the later regulatory phases publicly, farming out the work via competitive bids to universities and labs. That helps to standardize and open up the regulatory process and give cost relief to the developer.
I am also intrigued by the idea of the Open Innovation Network (OIN) where entities pool IP through a foundation. As I understand it, the foundation freely licenses the IP to anyone, provided they don’t use IP attacks against the foundation or its members. The foundation vigorously protects the IP pool itself. One can imagine then a system where corporations, governments, NGOs, and possibly even individuals freely access and exchange IP while still maintaining some level of protection.
pdiff,
“While they give several examples of IP-less free markets working, they also note the bottom lines are smaller. Whether you like it or not, this is a capitalistic society and any proposed solution, short of a revolution, will have to exist in that environment, at least initially.”
I think you’re missing my point. There are many different ways to structure patent law and, to a larger extent, society in general. Are we willing, as a people, to privilege corporate profit margins above all else? Surely there are alternative arrangements. This would not require a “revolution” — it’s a public policy decision. Indeed, current policies that provide significant public funding to high-tech industries are already being carried out. It’s simply a question of how we want taxpayer money to be spent and how we want society to be governed. This is a democracy, after all — it’s our choice.
“I am also intrigued by the idea of the Open Innovation Network (OIN) where entities pool IP through a foundation.”
It is a good idea, but merely in the short term. The OIN does allow member organizations to use patents without any fear of legal reprisal from others. But what it also does is disallow anyone outside of that club from using those patents. Essentially, this creates a two-tier system of haves and have-nots, preventing any new entrants into markets. This arrangement is not too dissimilar from one without the OIN and with patents, except the exclusion is happening on a group instead of an individual level.
“I think you’re missing my point. There are many different ways to structure patent law and, to a larger extent, society in general. Are we willing, as a people, to privilege corporate profit margins above all else? This would not require a “revolution” — it’s a public policy decision. … This is a democracy, after all — it’s our choice. “
I was not suggesting we “privilege corporate profit margins above all else.” I was suggesting treading lightly when around dragons. Drastic changes would not be wise public policy decisions and should not be the choice we make. We are not talking about the piss-ant tactics of the recording or movie industries here, we are talking about taking on the entire patent system at once and threatening the bottom line of some of the most powerful people in country/world. If we really expect to start the wheels of change moving, we need to pacify, or at least diminish resistance from, corporate interests, lobbyists and shareholders who have considerable power over the process. Giving them a paletable option is necessary. I believe our choice would be much wiser if we gradually push the system in a desired direction.
“The OIN does allow member organizations to use patents without any fear of legal reprisal from others. But what it also does is disallow anyone outside of that club from using those patents. Essentially, this creates a two-tier system of haves and have-nots, preventing any new entrants into markets.”
Perhaps I misinterpreted Levine here, but he says:
“Patents controlled by OIN will be freely available to anyone
agreeing not to assert her own patents against other users who have
signed a license with OIN …”
I don’t see the two-tiered system here. As long as I agree to not use my patents against foundation members, I can access the foundation’s IP. Yes, I have to join the “club”, but all I have to do to join is agree to behave well. I don’t see the exclusion being as strong as you make it out to be. Am I wrong here?
Ewan R,
“You still haven’t begun to explain how Monsanto could recoup $100M of cost to bring a trait to market sans some sort of patent protection, or why they would even bother.”
There is an answer to your question in one of the sources I linked to, the Boldrin and Levine book:
“This argument may sound smart and “oh-so-common- sense” right when you hear it the first time – but pause for a minute, and you will realize it makes no business sense. Picking only winners means waiting until it is clear who is a winner. Well, try it: try getting somewhere by imitating the leaders only after you are certain they are the leaders. Try ruining the poor pop star by pirating her tunes only once you are certain they are big hits! Excuse us, we thought that “being a hit” meant “having sold millions of copies.” Try competing in a real industry by imitating the winners only when they have already won and you have left them plenty of time to make huge profits, establish and consolidate their position – and probably not leaving much of a market for you – the sleek imitator.”
The argument is given in the context of copyright, but it generalizes to patents as well.
“I can pretty much guarantee that anyone working in science will utilize techniques which to some extent or another were initially funded by government, or are spinoffs of such projects”
Right, that’s the point of the article. Monsanto would have to spend a lot more money to produce all the science behind their products. And this is intentional public policy. The public pays, and Monsanto (or whoever) reaps the benefits.
“from the inside it definitely appears (and here I may be being hoodwinked) that there is a strong urgency to ‘do the right thing’”
Hoodwinked, indeed http://en.wikipedia.org/wiki/Monsanto#Criticism My whole point is that corporations are motivated by profit, not by the needs of other people. I suspect that the perks that you mention are there to boost employee morale. But even if they weren’t, I’m speaking in generalities here, and one or two examples to the contrary do not alter the fundamental nature of the system. Monsanto is not a charitable organization; it exists for returns to stockholders.
“given that in upcoming years it is essentially free for anyone to use who is “skilled in the art” time will tell how the benefits play out.”
I predict the benefits would be marginal. Imagine if the computer industry developed with strong patent protections. If I wanted to make a product today, I wouldn’t even be able to use a web browser (Netscape Navigator launched in 1994). The benefits that public disclosure has are rather insignificant, economically speaking. Again, I’m no expert in the biotech industry, but I would wager that the technology developed 20 years ago is ancient history. I could be wrong.
Thanks for your comments. You have all provided much food for thought. At the end, though, I think this discussion comes down to one problem. If we removed IP, what would motivate companies to spend $100 million or whatever to develop new biotech traits or new medicines? It would be nice if we could depend on government to conduct more research, but we all see how well that’s working in the US.
Danny, not buying your wikipedia link as anything other than the typically poorly researched biased junk that wikipedia spits out on Monsanto on any occasion (although in this instance it appears that most the claims at least have the counters to them, such as the india farmer suicides etc), the first claim is around the pig marker patent, which is a perfectly valid patent (and not owned by monsanto anymore), the India complaints are largely spin – yes farmers don’t like paying more for seed, however they do, and Bt cotton is now ubiquitous in India – yes tolerance has started to appear, yes bollgard II is a) a good business shift for monsanto and b) a way around resistances (in the short to mid-term) so no, my hoodwinked comment was more a throwaway line, rather than something which is likely to be based on fact. If Monsanto wanted to make workers feel better, and this is from first hand, I’d far rather they’d cut all charitible work last year and not cut jobs, rather than vice-versa – there’s nothing moral building around layoffs, and no amount of charity work is going to change that.
You can’t really say that because the benefits in one sector of something going off patent are marginal (as with netscape navigator) that the benefits in another industry will be that way. Glyphosate, to stick close to the ag industry, is a prime example – it went off patent and generates literally billions of dollars a year for companies which had no hand whatsoever in discovery or development, it remains a mainstay of crop protection systems. Likewise, RR soy, which is due to go off patent in a couple of years, could well start a complete shift in HT seed traits – anybody will be able to utilize the RR1 trait in soy, combine it with their own traits, their own germplasm, for the first time legally save GM seeds from one year to the next – the only hurdle is that the current regulatory framework requires reregistration of traits periodically – where is the cash for this going to come from (and here I’d hope that government or a private partnership amongst utilizers of the tech may step up) given that you’re talking about regulatory approval across multiple countries to maintain the viability of the trait as a commercial success. Likewise in 20 years time when traits for better oil content, improved yield (assuming the increased yield genes translate into increased yield in hybrids released 10-15 years after the initial trait release) improved drought tolerance, improved NUE etc etc go off patent – they will still have utility, particularly in marginal fields where the farmer may not want to spend absolute top dollar (currently single, dual, triple and eight stacked gene products all get grown on the same farm dependant on field conditions and historical performance – the computer analogy doesn’t work, unless you’re running a computer lab which has 30+ different systems from different eras all capable of only a certain level of software (ie netscape is the best that works on computer 1, the newest IE on computer 2, computer 3 only works on a precursor to LINUX (and here my lack of computer type knowledge no doubt shines through….) etc etc)
A gene doesn’t have to already be a hit before the utility is obvious. You develop a herbicide resistance trait and it is most likely going to be a success on some level. If you can simply hook the gene into your own product without having to go through development you stand at a massive advantage compared to the poor saps who actually went to the trouble to screen genes, discover promoters, engineer proteins, work out application rates and get regulatory approval. Traits which work aren’t as subject to the fickle tastes of music fans, if I say I have a trait that resists a herbicide, or that kills a certain class of insect with great efficiency, or reduces nitrogen use by 30lbs/Ac, or increases yield by 10-15% – it isn’t rocket surgery to know that it’d be a good idea to jump on that bandwagon.
The whole taking of prior technology also isn’t quite as simple as you make out – a lot of research done is patented and these patented genes or techniques are licensed (at pretty hefty cost) by industry for further development/use – I can think of a handful off hand, although due to the draconian nature of industry can’t discuss specifics. It also doesn’t particularly make sense – it seems a little silly to me that because a method or technology was developed outside of a given company, that use of this method or technology somehow invalidates a future method or technology developed using the prior tech – it would almost be like arguing nobody can profit from new electronic devices because they didn’t go through all the work of developing basic physics, then developing the first transistors, discovering new alloys and production techniques, developing basic math, advanced math, communications technology etc etc etc – I guess in essence this is the arguement, it just doesn’t make sense to me – everything anyone does in the modern world is built off such a base and patent law explicity makes it clear that unless your development is actually novel and non-obvious (and hasn’t appeared in the public (a point hammered into Monsanto scientists by patent folk as often as they can)) it isn’t patentable.
Hey all -
I’m Danny’s friend, the one who’s interested in these issues and pointed him at this post. I just want to interject a few thoughts briefly.
Those of you who are defending biotech IP against Danny’s criticisms seem to generally share the premise that without patents biotech companies would not produce the wonderful products they do now because they would have no way to recoup costs. Now I agree that a patent does allow companies to recoup costs, but I think that something is a bit out of whack when we’re talking about supporting companies being the *purpose* of patents. I’d like to point out that:
1) Patents are a societal bargain that we made by way of the constitution. We (society) offer monopoly *in exchange* for something else – supporting scientific progress.
2) Not everything a company does to produce a product is patentable.
3) There are ways for companies to make money without monopolizing knowledge and/or technology.
The language used in the constitution to establish patents and copyrights is “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” We offer a patent monopoly ostensibly to ensure the progress of science. Notice that it does not say “To promote the creation of useful products and services by profit making corporations…”
My point here is *not* that we should stop supporting companies in various ways or awarding them patents. Rather, I’m simply saying that before we talk about extended patent rights we should recognize the societal bargain inherent in IP regimes. Perhaps we can take a moment and think: why do we award patents? what really constitutes an invention? what sort of patent scheme responsibly balances our desire for progress and our desire for an open, mostly unencumbered scientific discourse.
Avi
Welcome Avi, thanks for stopping by!
I don’t think anyone defending IP is saying that the purpose of patents is to allow companies to recoup costs. Rather, patents are there to encourage innovation, exactly as it says in Section 8 of the Constitution. Of course, the way that patents encourage innovation is to allow companies to recoup costs of R&D and to make a profit. These ideas are intimately connected. Maybe there are other ways that patents can encourage innovation without allowing for companies to recoup their R&D costs but I can’t think of any.
I’d love to see all patents disappear to allow for that open, unencumbered scientific discourse and for the development of innovations that actually serve people instead of companies. The problem is: who pays? In the realm of biotech, China is solving the problem by investing heavily in research. The resulting traits and crop varieties are owned by the Chinese government, thus by the Chinese people, which I think is wonderful. I’d love to see this happen in the US – but it does require seriously increased funding for applied scientific research. Still a drop in the bucket compared to the defense budget and things like Medicare, but this so far has not convinced anyone that more dollars for research is a good idea. If not the government, then who? NGOs like the Gates Foundation are funding applied research, which is wonderful, but even their funds are not enough.
Anastasia –
I understand that someone needs to pay to make products and that making new biotech products can be expensive, but I think you are conflating a number of issues when you offer IP protection in the form of patents as the only viable means of allowing companies to recoup costs.
1) You treat the status-quo (that biotech products and their components, such as individual transgenic crops and genes, are effectively patentable) as a presumptively right situation and you discount how truly new and different it is from previously known patent systems.
2) Are we (American society as constituted by the federal gov’t) really in the business of ensuring that companies can recoup costs? How often should that be our priority? At what cost do we make that choice?
The current state of affairs in biotech IP is actually pretty new – the current biotech patent regime seems to have gotten it’s start with Diamond v. Chakrabarty in 1980 (a 5-4 decision that might easily have gone the other way). Many countries (India, for example) don’t allow the patenting of biological material, even isolated from it’s natural environment. Graham Dutfield’s book “Intellectual Property Rights and the Life Science Industries” has a pretty good summary of the history of patent protection for biotech.
By effectively expanding biotech patent coverage through the last few decades we (the US) basically said we are super committed to individual biotech companies making money. And now you write a post saying that we need even more protectionism for biotech companies in the form of stronger IP. So I ask: why? and at what cost? Isn’t our current system plenty protective? Doesn’t it create a lot of friction in biotech research (i.e. with the BRCA genes)?
It seems to me that your argument – that we don’t have enough public investment in biotech and that biotech companies need to be able to recoup costs so they’ll make stuff – really says nothing about innovation at all. What you are saying is that, because our country is not encouraging innovation in the ag-biotech field at the same rate that China does, companies should be protected when they do expensive biotech things. It is very possible for companies to make new expensive things that aren’t terribly innovative – do we really want to make those things patentable? Do we really want to have even more lawsuits flying around? So expensive…
I’d ask that you separate these issues: patents and public-sector investment are different public policy tools with different costs/benefits.
Hmm. I’m not sure why the paragraph breaks aren’t appearing in posted comments. Hopefully we’ll get that fixed soon.
I’d also like to point out I dont see patents as a means of supporting companies – I see them as a means of promoting innovation, whether that be by individuals or by corporations – in terms of massively expensive undertakings like commercial GM traits the debate does get limited to talking about corporations (although given US patent law there is no reason that an individual working from a relatively makeshift lab could be the first to conceive and persue an idea and scoop a multinational corporation – assuming their paperwork was well kept and they had things to back up date claims on conception and followup work on their invention – so to make the big bucks get generating ideas around genes and promoters that could work, get notes made, and get to work making transgenics in your lab at home – once a big multinational applies for the patent in the US, scoop them with your dated documents and make your millions licensing the technology to them – stick it to the man with the system which allegedly supports them) – in this area there’s a rather awesome movie about the guy who invented variable speed windshield wipers, which in my mind shows both what a frustrating mess patent litigation can be, and also why patent law is important not only to protect big companies (and you didn’t really get much bigger than Ford) but also to protect individual inventors from big companies – it’s also a pretty good showing on why patenting of genes etc the way biotech companies do it makes perfect sense.
In terms of pure unadulterated science – it’d be awesome if the world worked in such a way that anyone could research whatever they wanted, and had the resources to do so, perhaps some form of patent which allows for academic research to be done, but only allows this research to profit the patent holder so long as they hold the patent… or somesuch – it’s tough – at least coming from a capitalist background I don’t see innovation being strongly driven without some kind of profit motive, particularly where the initial costs are so high.
If there is a better way to encourage innovation than to allow companies to recoup costs, I’d really like to hear it. Really.
“If there is a better way to encourage innovation than to allow companies to recoup costs, I’d really like to hear it. Really.”
According the link/book Danny gave above, Michele Boldrin and David K. Levine point to several factors affecting this. They first note, however, that there are several historical cases where patents have appeared to restrict, sometimes severely, innovation on the part of the patent holder, as well as, third parties. Patent holders have no incentive to improve their designs while protected and others can’t gain access to the invention to tweek it. Therefore, the public does not benefit from the patent, which is the main rationale Boldrin and Levine imply that should be used to issue patents. So, to directly answer your question, they would say that patenting does not encourage innovation and, hence, only exists to generate money for the patent holder.
That said, however, one means that costs are recouped has to to with the cost itself. While the book does not cover biotech specifically, they do cover the pharmaceutical industry which is similar in costs and regulatory issues to GE tech. Their premise is that the majority of development costs (such as Ewan’s 100M figure above) are tied up in regulatory phases. I do not know for sure, but suspect this could be true for GE. They suggest that the regulatory costs and responsibility for testing could be burdened onto the public, presumably through the FDA. I mentioned that earlier, but Danny did not address it. For the developer, however, the cost of development is thereby reduced and there is substantially less to recoup. In addition, the developer is financially freed to pursue multiple products, reducing their overall risk.
Another means relies on free market principles. They note that, historically, those who market first often gain market advantage and that this is sufficient to essentially maintain monopoly over the product without protection. Likewise, a superior innovation in a product can have similar affect.
A third means is to rely less on selling the product itself and rely instead on selling services related to the product. Not sure how this applies to biotech, but it has worked well in some sections of the software industry. The software is free to use or sell, but support for the software only comes from Company X. In ag for example, one might imagine a company selling a freely available GE variety for a higher price, but with that price, the grower gets free assistance with growing the crop, some form of crop insurance, as well as the marketing muscle of the company to sell the crop at the end of the season. Some growers may find it economically advantageous to “bundle” services and product like that rather than saving the seed themselves or buying a cheaper equivalent seed and providing everything else themselves.
As always, my interpretation of these things (Boldrin and Levine) may be skewed
Thanks, pdiff, for the summary!
I did notice your idea that regulatory burden be placed on the public. If it is true that regulation is the most expensive part of development of biotech traits* then this would reduce the cost of developing said traits and allow for innovation without the need for patents to allow for recoupment of regulatory costs. I think this sounds great. And it has a lot of other benefits as well – you get unbiased testing both in fact and in perception! The problem then is – why should taxpayers foot the bill for every company who wants to try out some new thing? I don’t know a way around that one. Maybe if we streamline the testing process.
I agree that in some ways patents have slowed down innovation – just think of the gene gun! Academic research was severely hampered until the patent ran out recently. But as I suggested in this post, if patents were somehow made more stringent to allow companies to prosecute other companies for using a protected method then the creating company (or individual) could more freely share those methods with academia and govt research.
* I’ve heard it both ways. Some say regulatory requirements are most of the R&D costs for biotech, but I’ve heard others say it’s gene discovery that’s the biggest part. I suppose it depends on what sort of trait you are looking for. I can imagine quite a few traits that wouldn’t be very difficult to find.
” … The problem then is – why should taxpayers foot the bill for every company who wants to try out some new thing? I don’t know a way around that one. Maybe if we streamline the testing process.”
Suppose public funding would only kick in at the later levels of safety testing? Not every product is going to be getting that far, only those with good market potential, e.g. good potential for public benefit. In addition, testing is bid out to public universities, thus the public sees some benefit from investment in the university systems (without the potential for corporate coercion normally associated with direct “Big Business” university investments). This is not a model without precedence. The federal government itself, for example, has the final say in safety ratings of all vehicles. The public evidently does not mind paying for that.
“* I’ve heard it both ways. Some say regulatory requirements are most of the R&D costs for biotech, but I’ve heard others say it’s gene discovery that’s the biggest part. I suppose it depends on what sort of trait you are looking for. I can imagine quite a few traits that wouldn’t be very difficult to find.”
Gene discovery is, no doubt, expensive. I would view this, however, as a capital investment, no different than equipment, facilities, personnel. It is not necessarily related to one product and may lead to multiple products. It’s cost should be viewed over all potential products.
“But as I suggested in this post, if patents were somehow made more stringent to allow companies to prosecute other companies for using a protected method then the creating company (or individual) could more freely share those methods with academia and govt research.”
But what about the legal costs. Suppose you, Anastasia.com, just had monster corp, Duosanto, steal your patented gene? How could you possibly afford to challenge a giant like Duosanto in what will inevitably be an endless series of legal actions (a common practice in such things is to drag out legal challenges as long as possible in order to bankrupt your opponent). A desired solution should avoid litigation rather than encourage it. Academia as well, should not be assumed to be the nice player either. Take a look at this article I just happened to come across.
http://blogs.forbes.com/sciencebiz/2010/03/a-patent-purely-about-greed/
A pharmaceutical in cahoots with Harvard and MIT tried to enforce a human gene patent that would affect a huge array of drugs. They were demanding millions in royalties. Fortunately, this has been thrown out in court (for now). What you are suggesting relies on the benevolence of both corporates and academia, neither of which I believe deserve such reliance, as this shows.
Interestingly in this vein I just read that the BRCA1/2 patent was overthrown – “Because the claimed isolated DNA is not markedly different from native DNA as it exists in nature, it constitutes unpatentable subject matter”
Have to wonder how this will impact other biotech patents – my assumption is that a lot of transgenic crops etc won’t fall under this same description, as promoter+gene+terminator sequences are not native to nature (although the individual parts are, but that’s a different arguement) however things like genetic markers would appear (at least to me) to be completely covered by the not markedly different from native DNA as it exists in nature – as that is somewhat the point of a genetic marker.
Can’t find too much other info around the subject, but expect a post soon from you guys! =p
pdiff – Hm. I didn’t see it as encouraging litigation. Instead, I thought it would be like a deterrent. Yes, I do tend to assume that most entities are going to play nice
Of course, I know that’s not the case.
Ewan – The BRCAI/2 case is fascinating. I’m trying to convince a friend who has slightly more experience with IP than I to write a post about it and its potential ramifications for biotech. You care to take a swing at it?
Abolutely not =p I snipe from the sidelines
The BRCA decision is well worth skimming as it wrestles with many of the same issues that have come up in this discussion.
http://graphics8.nytimes.com/packages/pdf/national/20100329_patent_opinion.pdf
Also – Anastasia – in answer to your terse statement “If there is a better way to encourage innovation than to allow companies to recoup costs, I’d really like to hear it. Really.” I think pdiff and Ewan have covered many of the points I wanted to – that more IP can actually raise costs, that expanded patent scope encourages companies to defend existing patents rather than innovate, that bigger companies are more equipped to prosecute any patents (even crappy ones) than smaller companies (adding lots of unfairness), and that I am not arguing for the elimination of biotech patents, but simply better scoping.
I’d like to see fewer patents of the BRCA sort, where the patent adds a lot of friction to the breast cancer research and testing markets and doesn’t seem to cover an invention of any sort. I’d prefer more methodological patents (the best examples I can think of here are the PCR and transfection patents) as encouraging these substantial inventions moves research forward.
Avi – I wasn’t terse, I was earnest. I just really want to know what are realistic alternatives.
I don’t like the idea of methodological patents at all! Those are the ones that really slow research down, causing less innovation rather than more.
One point raised by Avi on patent encouraging defence rather than innovation – at least from my perspective, the patent system itself does push innovation within a company, particularly one with longer term goals – a virtual monopoly may seem like a great thing, indeed is one if you’re the company that has it, but the very scary thing, from a business perspective, is having a monopoly which has a defined end point, and not having a product ready to take over from your monopoly position – this is the stuff corporate nightmares are made of, for a biotech company to rest on its laurels because it has a monopoly in trait area X means that for say, 10 years they are number one, but it also means that at the end of that 10 years, if they rely solely on that product, they are going to be in severe straights when it comes to explaining to the shareholders why last year’s $1.5bn profit margin is now down to $200M and showing no signs of improvement.
Also in fairness, when you look at how the biotech industry operates, there does appear to be a boatload of money in small companies with patents licensing to big companies (and big companies cooperating on patented products etc) – from my perspective it at least seems that ‘stealing’ of patents by big from small is not a common occurance (I may be wrong here, operating from a biased viewpoint as I do), and it is more likely that individual researchers (I know of a couple) from academia will hold a patent and make a buck or three when big biotech is interested in exploring that particular patent for efficacy (and considerably more should that gene make it to commercialization).