PRIVATE OWNERSHIP OF INVENTIONS

As a historical matter, the Western tradition of protecting intellectual property has been justified by the argument for rights in tangible property put forth by the English philosopher John Locke (1632–1704): namely, that the individual who adds labor to a natural object should have rights in that object (Gordon). In the United States today, however, intellectual property rights are justified primarily on instrumental economic grounds, as a mechanism for inducing individuals to generate inventions that are expensive to create but easily copied once created. Because intellectual property protection prevents others from copying the invention, the inventor can capture as private value at least some portion of the social value represented by the invention. Although intellectual property encompasses patents, copyrights, and trade secrecy, patents represent the strongest form of intellectual property. Unlike a copyright, a patent protects the underlying idea behind the invention and not simply the particular expression the idea might take. Unlike trade secrecy, which protects only against misappropriation of the invention, patent protection also operates against those who may come up with the invention independently.

Public Funding and the Bayh-Dole Act

The most prominent alternative to intellectual property protection has been public funding. In the United States, public funding of science became particularly robust after World War II. By the turn of the twenty-first century, federal agencies such as the National Institutes of Health (NIH) were funding tens of billions of dollars of basic biomedical research each year. Although some of this research is performed intramurally, most of it is conducted extramurally, in university laboratories.

Until 1980, most federally funded research conducted in universities was put into the public domain. In 1979, for example, universities received only 264 patents (Mowery et al.). This figure has increased dramatically with the passage of the Bayh-Dole Act of 1980, which explicitly encourages university patenting. In 2000, universities received 3,764 patents. The rationale behind Bayh-Dole is not the conventional argument that patents are necessary to induce invention: In the case of federally funded invention, public funding has already provided the necessary invention incentive. Rather, the theory is that patent protection, coupled with exclusive licensing, is necessary to stimulate development of university research into commercially viable products.

As a consequence of Bayh-Dole, and the nearly simultaneous liberalization of patentability standards following the creation of a specialized patent appellate court in 1982, basic, or "upstream," biomedical research has increasingly become the subject of both university and private firm patents. Even when universities or private firms do not seek patents, they often impose proprietary restrictions on transfer of research tools, particularly research tools that are hard to replicate independently (NIH).

Impact of Proprietary Claims

For a number of reasons, these proprietary claims threaten to impede biomedical research. Most obviously, patents or other proprietary claims on upstream discoveries hinder subsequent research by permitting owners to charge a greater than competitive price. This feature of proprietary claims is particularly troubling for biomedical research given that researchers in nonprofit institutions, who are crucial to the progress of research, often cannot afford to pay large licensing fees. Upstream patents may also hinder biomedical research when a single broad patent gives a firm monopoly control over a significant new area of scientific territory. A monopolist is unlikely to see all of the different applications of its broadly enabling patent. One response to this argument, that the profit-seeking owner of a pioneer patent will find it in its interest to license the discovery to as many follow-on improvers as possible, is belied by historical examples in many industries, including the electrical lighting, radio, automobile, and aircraft industries (Merges and Nelson). The transaction costs that arise when people are bargaining under conditions of imperfect information with current or potential scientific and commercial rivals are likely to be quite high (Rai). Transaction costs can also mount quickly when the basic research discoveries necessary for subsequent work are owned not just by one entity but by a number of different entities (Heller and Eisenberg). Notably, because under the patent law an initial broad patent on a pioneering discovery does not preclude a proliferation of upstream patents related to that discovery, the problems of broad patent scope and proliferating patent rights held by multiple owners can arise simultaneously.

Efforts and Arguments against Proprietary Claims

Various private and public sector efforts have attempted to mitigate the negative impact on research of broad and/or numerous proprietary rights. Developments in patent case law suggest, for example, that broad biotechnology patents will be struck down (Regents of the University of California v. Eli Lilly & Co.). In addition, federal funding agencies such as the NIH have urged universities to refrain from patenting, or at least licensing exclusively, research tools that are likely to be broadly enabling (NIH). In certain cases, actions by the private and public sector that have put genomic data into the public domain have also preempted the possible proliferation of proprietary rights on that data (SNP Consortium; NHGRI).

Another set of arguments concerns the impact of private ownership of inventions on stakeholders other than researchers. Some have argued that those who contribute the raw material for development of commercially successful inventions should, as a matter of equity, receive some portion of the commercial proceeds that proprietary rights on these inventions provide (Boyle). At a minimum, the sources of the raw material should be informed of the commercial intentions of those who use their material. These arguments have been made on behalf of patients with particular diseases who contribute genetic material for research (Palmer). Similar arguments have also been made on behalf of less-developed nations that are sources of commercially promising biological diversity or traditional knowledge. In the case of less-developed nations, the 1992 Convention on Biological Diversity specifically asserts that genetic resources belong to nation-states as an element of national sovereignty (Rosendal). Various contractual mechanisms are now being used to ensure the sharing of short- and long-term benefits between developed and developing countries (Reid et al.).

arti k. rai

SEE ALSO: Conflict of Interest; Patenting Organisms and Basic Research; Profit and Commercialism; Technology

BIBLIOGRAPHY

Boyle, James. 1996. Shamans, Software, and Spleens: Law and the Construction of the Information Society. Cambridge, MA: Harvard University Press.

Gordon, Wendy. 1993. "A Property Right in Self-Expression: Equality and Individualism in the Natural Law of Intellectual Property." Yale Law Journal 102(7): 1533–1609.

Heller, Michael A., and Eisenberg, Rebecca S. 1998. "Can Patents Deter Innovation? The Anticommons in Biomedical Research." Science 280(5364): 698–701.

Merges, Robert P., and Nelson, Richard R. 1990. "On the Complex Economics of Patent Scope." Columbia Law Review 90(4): 839–916.

Mowery, David C.; Nelson, Richard R.; Sampat, Bhaven N.; and Ziedonis, Arvids A. 2001. "The Growth of Patents and Licensing by U.S. Universities: An Assessment of the Effects of the Bayh-Dole Act of 1980." Research Policy 30(1): 99–119.

National Institutes of Health (NIH). 1999. "Proposed Guidelines for Recipients of NIH Research Grants and Contracts on Obtaining and Disseminating Biomedical Research Resources." Federal Register 64(100): 28205–28209.

Palmer, Larry I. 2002. "Disease Management and Liability in the Human Genome Era." Villanova Law Review 47: 1–35.

Rai, Arti K. 1999. "Regulating Scientific Research: Intellectual Property Rights and the Norms of Science." Northwestern University Law Review 94(1): 77–152.

Regents of the University of California v. Eli Lilly & Co. 119 F.3d 1559 (Fed. Cir. 1997).

Reid, Walter V., et al. 1993. Biodiversity Prospecting: Using Genetic Resources for Sustainable Development. Washington, D.C.: World Resources Institute.

Rosendal, G. Kristin. 2000. The Convention on Biological Diversity and Developing Countries. Dordrecht, Netherlands: Kluwer Academic.

INTERNET RESOURCES

National Human Genome Research Institute (NHGRI). 1996. "Policy Regarding Intellectual Property of Human Genome Sequence." Available from <http://www.nhgri.nih.gov/Grant_info/Funding/Statements/>.

National Institutes of Health (NIH). 1998. Working Group on Research Tools. "Report of the National Institutes of Health (NIH) Working Group on Research Tools." Available from <http://www.nih.gov/news/researchtools/>.

SNP Consortium. 2003. Available from <http://snp.cshl.org>.