ICTSD Outputs and Activities on Biotechnology, Trade and Sustainble Development

Biotechnology: Addressing Key Trade and Sustainability Issues

B.4 Intellectual property rights

Q26 Is a strong intellectual property regime necessary to stimulate research and development in biotechnology?

Strong intellectual property rights, and patents in particular, are considered important to safeguarding investment in biotechnology because of the high costs of research (EuropaBio, n.d.). As the number and scope of patents on biotechnology products and processes continue to increase, however, so does the concern that, even if patents do play an important role in business strategies, they may be hindering rather than promoting innovation in the field. Moreover, the characteristics of patents on biotechnology may also be affecting the focus of research and development, with potentially negative consequences for food security and biodiversity.

Patents have been a foundational element of the biotechnology industry, driving the march of commercial investment as well as the practices of public research institutions (Cornish and Llewelyn, 2003). Patents are thus sought for a number of reasons, including to obtain income from licensing, increase share prices, and keep other companies out of potentially commercially rewarding fields. The rising intellectual property protection of biotechnology products and processes can be considered successful in this regard, as private sector investment in plant breeding has increased substantially since the 1980s. In particular, patent protection has been critical as a means by which large biotechnology companies can protect and strengthen their positions in the industry. Taking into account firm acquisitions and splits, the top ten patent assignees in agricultural biotechnology patents in the United States controlled over half of such patents issued through 2000 (King and Heisey, 2003). Barton, for instance, notes that in the case of agricultural biotechnology there is a greater "incentive to sue outsiders seeking to enter the industry than to sue other major participants" (Barton, 1998). As a result, while the upward trend in agricultural biotechnology patents may reflect the strategic importance of intellectual property protection, it does not necessarily indicate that they are promoting innovation or increasing research and development in the field.

On the contrary, patents may be hindering research in biotechnology and other fields. For example, given the particular nature of genetic material, transferring traditional patent notions to biotechnology may provide patents with excessive scope, which limits further innovation. The gene that regulates flower formation in rice, for example, on which patent claims have been made, is the same one that fulfils this function in other major cereals and plants in general.

In addition, biotechnology, as an enabling or general-purpose technology, has the ability to open up important avenues of research (Hirschhorn, 2001). Nobel laureate John Sulston, for instance, notes: "to the extent that the data are fundamental and important, they should be available to all on equal terms, not to the wealthy few" (Sulston and Ferry, 2002). However, if the novel methods of investigation are subject to patent protection, as is the case for biotechnology patents, access by researchers is subject to significant limitations. Research exceptions are available only for research on the patented subject matter itself, not for its use as a research tool. Moreover, the patenting of research tools also raises the problem of 'reach- through' patent claims, which seek protection for any processes or products that are prospectively obtained using these tools. While patent offices and courts seem to be disfavouring claims that endeavour to reach beyond their investigations, biotechnology patent holders are now resorting to reach-through license royalties, which tie the value of the research tool to the revenue stream generated by the product (Brodowski, n.d.).

The complexities and costs of licensing may be another obstacle to research created by biotechnology patents. Research on genetic material tends to follow a limited number of pathways which are increasingly clustered with patents, through which researchers must search with significant uncertainty and few resources (Cornish and Llewelyn, 2003). These "patent thickets" will become more and more complex, creating disincentives for innovation drawing on patented inventions and ultimately undermining the goals for which the patents were originally granted (Kesan, 2001). Other analysts, however, such as the International Food and Policy Research Institute, minimise the negative impact of licensing, as long as costs are reasonable.

Finally, even if patents do not pose challenges for continuing research in biotechnology, they may significantly affect the type of research that is undertaken both in the private and public sector. Research and development by industries, for example, naturally focuses on the major grains and industrial crops, which have the largest world markets (Tansey, 2002). As patents are increasingly used as incentives, the programs and activities of public research institutions also orient themselves towards enterprise and market needs (Washburn, 2005). The State of Food and Agriculture 2003-2004, a report prepared by the FAO notes, for instance, that agricultural biotechnology research and almost all of the commercialisation is being carried out by private firms based in industrialised countries, which "has important implications for the kind of research that is performed, the types of technologies that are developed and the way these technologies are disseminated" (FAO, 2004). These trends fuel concerns on the impact of patents on biotechnology for food security and biodiversity conservation, which will be analysed below. Nevertheless, given the fundamental role of public research and science in agricultural biotechnology and some of the challenges of management of intellectual property in the field, the relevance of public-private partnerships is likely to increase. The majority of collaborations in agricultural biotechnology are, in fact, cross-sectoral public-private arrangements (Graff et al., 2003).