Wright ppt

Intellectual Property Rights in Agricultural Biotechnology: 

Intellectual Property Rights in Agricultural Biotechnology Brian D. Wright University of California, Berkeley Conference on Intellectual Property Rights: How Far Should They Be Extended?

U.S. Seed Industry: Pre-biotech: 

U.S. Seed Industry: Pre-biotech Largely public industry except hybrids Independent hybrid corn oligopoly and fringe Free access to most inputs including seeds Basic research from public/international institutions Chem/pharma (herbicides/pesticides) are complementary oligopoly input industries  Successful innovation Sustained yield increases since 1930s High social rate of return

Protection of Proprietary Seeds and Breeding Technologies: Pre-biotech: 

Protection of Proprietary Seeds and Breeding Technologies: Pre-biotech Hybrid technology Biological protection against replanting and breeding Problem: Exploitation of parental lines by competitors Plant Patent Act (1930) Just for clones (e.g., grafted trees, root crops) Plant Variety Protection Act (1970, revised 1994) Weak limits on replanting (“farmers’ exemption”) No limit on use for breeding (“breeders’ exemption”) Narrow scope: distinctiveness vs. nonobviousness An example of freedom from prior claims

Patenting of Agricultural Biotechnology: 

Patenting of Agricultural Biotechnology Crucial rulings Diamond v. Chakrabarty (1980): living organism ex parte Hibberd (1985): plants Protects Breeding technology: genes, markers, methods, seeds Hybrid parent varieties Made enforceable by concurrent biotechnology Initially high-powered incentive for innovative entrants

First Round Results: Ag Biotech Innovations: 

First Round Results: Ag Biotech Innovations Inputs to other innovations: research tools Similar to case of pharmaceuticals Output traits Input substitutes: Bt genes (for pesticides) Input complements/substitutes: herbicide tolerance (Roundup-Ready) Value-added traits: high oil/protein; plant vaccines etc. Final products: Genetically Modified Seeds Unlike pharmaceutical products, traits delivered in cumulative and complex package

Number of Bt Patents by Type of Innovator: 

Number of Bt Patents by Type of Innovator Source: De Janvry, Graff, Sadoulet, and Zilberman (1999), “Biotech and Poverty” ICABR conference, Rome

Forward Citations of Bt Patents by Age: 

Forward Citations of Bt Patents by Age Source: De Janvry, Graff, Sadoulet, and Zilberman (1999), “Biotech and Poverty” ICABR conference, Rome

Problems of Licensing Recognized after First Round: 

Problems of Licensing Recognized after First Round Cumulative technology: Multiple prior claims High transaction costs of licensing Uncertain, excessively broad, and conflicting IPR claims Difficulty of identifying valid licensors Much costly and slow litigation Liability, brand image, and externality control  Holdup problem: Refusal of commercial license to public/startups  Integration by ‘high bidders’: Crop protection oligopoly

Integration of seed industry(Ag crop protection oligopoly; disappearance of startups): 

Integration of seed industry (Ag crop protection oligopoly; disappearance of startups)

Issues for Further Attention: 

Issues for Further Attention First round of ag IPR: High-powered incentive Subsequent rounds: Transaction cost problems Acquisition of IPRs defended and extended crop protection oligopoly. Implications for long-run effects of biotech/IPR Are arms’ length contracts feasible for ag biotech? Strategies for public/international breeders? Can startup entrants reappear? Innovation slowed by increased concentration? Wild card: GMO fiasco

Alternative Seed-Use Restrictions: 

Alternative Seed-Use Restrictions “Bag label licensing” Restricts resale and use of seeds Similar to “Shrink wrap licenses” in software Technology use agreement Acreage license to protect seeds or genes Invasive enforcement: resented by farmers Trade secret (Pioneer v. Holden Seeds 1994) Protects hybrid breeders from expropriation Genetic Use Restriction Technologies (GURTs) V-GURT (terminator technology) vs. T-GURT

Number of Bt Patents by Type of Innovator: 

Number of Bt Patents by Type of Innovator Source: De Janvry, Graff, Sadoulet, and Zilberman (1999), “Biotech and Poverty” ICABR conference, Rome