Excessive IP isn’t just generally inefficient. It directly harms innovation – the smoking gun

It’s pretty obvious that if science involves standing on the shoulders of giants (and the odd pygmy) then exclusive rights to ideas can slow down innovation. Still it’s quite hard to demonstrate this. Some econometric studies are persuasive that it does. But there are presumably cases where patents do at least generate incentives which are instrumental in getting innovation funded. Pharmaceuticals is probably the best example, though patents may be far from the optimal arrangement even there. But the burgeoning of new areas like software and the extension of patents in other areas – the extension of patents to 20 years under TRIPs and patent extensions in pharmaceuticals – has been thoroughly craven and stupid public policy. Sad, but true.

And here’s some hard evidence of the damage gene patenting does.

Intellectual Property Rights and Innovation: Evidence from the Human Genome by Heidi L. Williams – #16213 (AG HC PR)

Abstract:

This paper provides empirical evidence on how intellectual property (IP) on a given technology affects subsequent innovation. To shed light on this question, I analyze the sequencing of the human genome by the public Human Genome Project and the private firm Celera, and estimate the impact of Celera’s gene-level IP on subsequent scientific research and product development outcomes. Celera’s IP applied to genes sequenced first by Celera, and was removed when the public effort re-sequenced those genes. I test whether genes that ever had Celera’s IP differ in subsequent innovation, as of 2009, from genes sequenced by the public effort over the same time period, a comparison group that appears balanced on ex ante gene-level observables. A complementary panel analysis traces the effects of removal of Celera’s IP on within-gene flow measures of subsequent innovation. Both analyses suggest Celera’s IP led to reductions in subsequent scientific research and product development outcomes on the order of 30 percent. Celera’s short-term IP thus appears to have had persistent negative effects on subsequent innovation relative to a counterfactual of Celera genes having always been in the public domain.

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Gavin R. Putland
11 years ago

The U.S. Constitution empowers Congress “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.”

It does not empower Congress to INHIBIT the progress of science and the useful arts. To the extent that U.S. patents or copyrights inhibit progress, they are unconstitutional.