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This paper will try to show that these problems cannot be solved, as sometimes is suggested, by denying protection of property rights on innovations, but by improving the procedures for awarding these rights and accompanying them with other measures such as liability rules governing potential damage and also antitrust measures.
This vision is often countered by an opposing one, which considers it inappropriate to assign private property rights to intellectual creations, since, the argument goes, knowledge is a public good which should be freely available to everybody for the well-being of human society as a whole.
Recently, protection of intellectual property rights on new knowledge has been advocated as the best means to promote technological progress.
The starting point of the argument is that once knowledge has been produced, it can be utilized by everybody at a very low marginal cost.
Knowing that any future research efforts would not guarantee appropriate returns will undoubtedly discourage such efforts. Price incentives are not the only type that encourage efforts to obtain new knowledge: there are others, such as personal satisfaction, the vocational calling to research, social recognition through reward, recognition and academic career advancement.
But price incentives are important, and they can be provided by awarding rights to the intellectual property of new knowledge. Assigning a property right to a producer of new knowledge excludes others from utilizing it unless they obtain a license from the right holder, obviously at a price.
This price must be higher than the marginal cost of utilizing the produced knowledge and high enough to be perceived as an incentive to produce new knowledge Maskus, ; Posner and Landes, Basically, there are two types of problems to consider.
First, the aim of protecting property rights on innovations is to create incentives towards research and innovation in general; the risk is that this may give vent to socially dangerous innovations.
However, 1 in most cases it is not easy to establish whether or not an innovation is beneficial or dangerous, especially because it may be subsequently utilized in many ways, some of which may be beneficial to society, others not so.
In this case, if the assignment of an intellectual property right does not guarantee the potential beneficial use of new knowledge, not assigning rights would not prevent its potentially dangerous utilization.
Applied to biotechnological innovations, these two types of problems emerge in all their complexity, involving in particular relations between developed and developing countries.
They will be discussed in the following sections, with particular reference to agro-biotechnologies.
I will try to show that these problems cannot be solved, as sometimes is suggested, by denying protection of property rights on innovations, but by improving the procedures for awarding these rights and accompanying them with other measures such as liability rules governing potential damage and also antitrust measures.
Social costs and benefits of biotechnologies, and protection of intellectual property rights. Nobody doubts that biotechnology is currently one of the most important expressions of technological progress.
As is well known, it embraces all technologies that use molecular and cellular biology for solving problems linked to agriculture and food, as well as human health.
Medical biotechnology has applications both in diagnosis and in producing new drugs. Biotechnologies applied to agriculture are used for producing and modifying plants, animals and micro-organisms.
Plants and animals have been modified 2 for the benefit of humankind for hundreds of years using conventional methods, such as grafting and selective breeding; biotechnology has now introduced an unprecedented qualitative change by enabling human beings to transfer genes from one species to another.
A debate is developing on the social benefits and costs of biotechnologies, with extreme opposite positions emerging: on the one hand, unconditional optimists maintain the widespread belief that technological progress in biotechnologies is always good and should be given free rein to develop; on the other hand, unconditional pessimists consider any biotechnological innovation dangerous simply because it is the result of unnatural human intervention in natural life processes.
These extreme positions are rooted in the premise that general brad-ranging propositions will be valid for any type of biotechnological innovation.
This is simply not the case because the social benefits of some biotechnologies are likely to be greater than their social costs; for others, the opposite is likely to be the case.
This is something not always easy to establish due to the high level of uncertainty resulting from a lack of scientific knowledge and the fact that most effects of the innovations will only become apparent in a distant future.
What should be done is to improve scientific knowledge by helping to better understand the effects of innovations and to use institutional channels to encourage those innovations which promise to be more beneficial and less risky to society.
The most commonly recognized benefits of biotechnological innovations are in resource productivity, considered both in terms of higher output per unit of primary resources and in a higher variety of outputs.
In the case of medical biotechnologies, the most important benefits concern the second point: for instance, production of proteins for curing and preventing diseases, and therapeutic applications of research using in vitro cultivation of stem cells.
Consider as an example herbicide-resistant GM plants. Herbicides contained in plants directly and indirectly enter the food chain, and can damage human health.
Water sources are also polluted when herbicides are discharged into them. Reducing the first type of negative effects, herbicide-resistant GM plants appears to be beneficial to society.
But the introduction of such an innovation is unlikely to reduce the use of herbicides; on the contrary, farmers are likely to use more herbicides to destroy weeds, as they are less concerned about the damage produced in the plants they grow.
GM plants could themselves begin behaving like weeds if their new, superior genetic characteristics give them a comparative advantage over neighboring wild species Dutfield, , p.
Pest-resistant GM plants are another example of agro-biotechnological innovation. They should lead to a reduction in the use of pesticides.
An important and much-debated effect of biotechnologies on the environment is on biodiversity. Biodiversity refers to the variety of biological species in a given ecosystem, necessary for its functioning.
It is eventually determined by the stock of genetic material found in the ecosystem itself. Biodiversity should be preserved because of its information value and because of its insurance value Swanson, Biodiversity is the result of the whole history of evolution, and offers an irreplaceable corpus of information on the possible directions which biological activity might take.
Biodiversity also has an insurance value, because it ensures smoother adjustment to the negative shocks suffered by an ecosystem.
In biological terms, we might say that a highly diversified ecological system increases its resilience to shocks; in economic terms, we can say that a rich portfolio of biological activities reduces the variability of their returns and the risk implicit to the biological structure.
Some believe that biotechnological innovations are a threat to the maintenance of biodiversity, since they represent a typical form of technological progress that substitutes natural capital with artificial capital, leading to an increase in biological specialization.
Others, on the contrary, believe that biotechnology can help maintain and possibly increase biodiversity since, through biotechnology, it is possible to transfer successful biological strategies between species and thus to obviate the erosion of genetic stock that may result from biological specialization.
The obvious question now is the following: how can society ensure that the protection of intellectual property rights, by promoting innovations unconditionally, does not lead to the introduction of excessively risky and socially dangerous biotechnological innovations?
The most frequently used mode of protection for intellectual property rights on innovations are patents. In principle, it is possible to prevent patenting socially dangerous innovations.
According to article However art. No 5 surprise that this specification has been strongly criticized by those opposed to awarding patents to biotechnological innovations Shiva, Opponents of patenting biotechnological innovations invoke the precautionary principle.
Their argument is that when there is any uncertainty regarding the effects of the innovation on the environment and on health, the innovation should be blocked, until research and science provide more information.
This is precisely the case with biotechnological innovations. The problem with the precautionary principle lies in interpreting the requirement that uncertain effects should be absent.
There is the risk that if the precautionary principle is always invoked, there will be no innovation at all.
To prevent this from happening, a probabilistic formulation of the principle should be adopted, requiring that the probability of negative effects is shown to be sufficiently low.
A recent example of a wise application of the precautionary principle is the Cartagena Protocol on biological safety required by article Although this example does not refer to patentability, it is useful as a constructive application of the precautionary principle, as it suggests that, before taking trade restrictive measures, every effort should be made to identify and appropriately assess the potential risks and decide whether or not any restrictions ought to be placed on developing the product.
It should be noted that no contradiction exists with the WTO agreements, as GATT article XX envisages that certain measures are justified when necessary, in order to protect the life and health of humans, animals and plants, and to preserve natural resources.
An important aspect to be considered is that awarding a patent does not automatically and unconditionally imply the right to transform an innovation into a product or a commercial process.
Commercial potential is a condition for awarding a patent, but that does not mean that commercial use is automatically permitted.
Moreover, it is important to realize that negative effects are not necessarily avoided by prohibiting patents, as this does not imply that an innovation will not be introduced and marketed.
Without an explicit and enforceable prohibition to the introduction and diffusion of a product, biotechnological innovations, as any innovation, can be developed and introduced without patents.
In doing so, potential negative effects are often concealed. Thus, paradoxically, if an invention is introduced and diffused without a patent being first awarded, the risk for human health and the environment can be higher.
Rather than adopting a general strategy of denying patents a priori, it seems more useful to qualify the procedure for awarding them and to accompany patents with other measures.
Alterations to patenting procedures should aim to carefully specify the characteristics of the product or process to be patented, and to take account of its potential effects on the biological world, on the environment and on human health.
Patents as a tool for stimulating innovations should be accompanied by efficient liability systems.
Knowing that someone who introduces a hazardous innovation will be held liable for any related damage, particularly if knowledge about this damage was concealed, is a clear disincentive for not revealing all the potential known consequences.
Intellectual property rights on biotechnologies and excessive exclusion power: a tragedy of anti-commons.
Protection of the intellectual property rights on an innovation always assigns a power of exclusion. There are two consequences to consider: one concerns the use of the innovation for further research; the other is the restrictions in the use of the innovation for commercial purposes.
The problem cannot be solved by denying patentability, but should rather be addressed by altering rules for procedures. Consider the example of decoding genes or gene sequences.
An objection against patentability is that decoding is not an invention, but a discovery of something existing in nature.
This objection does not convince because the novelty in this case lies not in what has been discovered, but in the fact that this is being presented in such a way that makes further utilization possible.
Another aspect of patentability should be mentioned. If patenting decoding means assigning the patent holder an exclusion right on any possible use of the decoded gene or sequence, the risk of preventing the development of further research is evident.
The excessive exclusion power derives from the fact that decoding by itself cannot be immediately associated with a specific function; it will have many different potential uses.
This is why the US Patent Office only grants patents of decoded sequences if applications specify which protein the sequences codify, or in the case of virus genome decoding, if patent applications specify the function of diagnosing a specific illness and therefore of finding a suitable vaccine.
In other words, patenting covers the discovery only in relation to a specific application that must be indicated. This means that the owner of the patent can use property rights towards others wanting to use the gene or sequence, only for the specific use described in the patent application.
Notice that in this way the patenting procedure can also ensure that patents do not create conditions for excessively risky and socially dangerous innovations.
Consider now the first stage of the production process of genetic material, such as genes or DNA sequences reproduced and proteins encoded from sequences using genetic engineering techniques i.
DNA recombining techniques. In this case too, the objection raised against patentability is that the process obtains something already existing in nature.
This objection can be countered by using the former argument; moreover, the 8 example can be cited of the recognized patentability of chemical substances existing in nature and obtained through synthetic processes.
This clearly discourages further research. The solution, even in this case, is not to deny granting a patent for the technique, but to acknowledge the right to patenting different products obtained with that same technique, and recognizing the novelty of the intellectual process which uses the technique to obtain the new product.
Likewise, the patent holder of a new product should not have a right of exclusion towards innovations that obtain the same product through different techniques.
Moreover, to ensure that research is not negatively affected, the holder of a patent on decoding a genetic sequence or on a biotechnology for producing a genetic product should not have the right to prevent the use of the gene in its natural form for further applications Correa, , p.
To avoid a scenario in which patents interfere with and impede further research development, exceptions can be made for the granting of exclusive rights to the patent holder if these exceptions relate to scientific experiments derived from the invention.
For example, scientific experiments on genetic material samples that were deposited together with the patent application.
These resources are considered as an international public good and hence they are made available to researchers in every part of the world and all adhere to the restriction that no intellectual property right protection may be sought on material received from the IARCs.
One tool used to encourage access to research is the authorization to use a patent without the patent holder's own authorization compulsory licences.
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