Wednesday, March 27, 2013

Intellectual Property

Mark Thoma points us towards a potentially really important finding:

By linking a number of different datasets that had not previously been used by researchers, Williams was able to measure when genes were sequenced, which genes were held by Celera's intellectual property, and what subsequent investments were made in scientific research and product development on each gene. Williams' conclusion points to a persistent 20-30 percent reduction in subsequent scientific research and product development for those genes held by Celera's intellectual property.
As we have long discussed on this blog, the justification for intellectual property is to encourage and promote innovation.  There has long been a concern that the innovation would have happened with or without the patent (software patents are a good example of this phenomenon) but a general consensus that the profits from patents increase innovation (due to the rewards generated by a successful innovation).  However, if the granting of a patent were shown to decrease innovation then the argument for granting them would be weakened.

If granting a patent reduces future innovation and the patented innovations would have occurred with or without the patent then the patent process becomes pure rent seeking.  It's clear that these two conditions do not universally hold (i.e. medication discovery as currently constructed is too expensive without a clear path to future profits).  But the possibility that this could be true for same areas of technology is a sobering thought indeed. 

1 comment:

  1. The patent system is basically about avoiding competition on the merits of the product by providing a monopoly to the first person to file a patent claiming a solution. (It used to have something to do with actually developing a solution, but they've been hacking away at that for years and the relict branch was finally severed just recently.)

    On the plus side, having patents limited to twenty years or so results in a spurt of innovation when they expire. Look at Goretex which was a specialty fabric for ages, but is now found in a broad range of products such as dental floss. (Of course, if patent terms are further extended, this kind of innovation could be squelched.)