Against Monopoly

defending the right to innovate

IP versus Research

Monopoly corrupts. Absolute monopoly corrupts absolutely.

Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.



One of the more scandalous forms of patents are patenting portions of the human genome. The BRCA1 and BRCA2 genes are known to be correlated with breast cancer in women. Unfortunately they have been patented by Myriad Genetics who take the idea of monopoly seriously - leading to a stoppage of genetic research in this area, as well as restricting access to genetic tests for breast cancer. Researchers - and women - finally got fed up with this and filed a lawsuit against the patent. You can find the complaint here. The plantiffs include the ACLU, the Association for Molecular Pathology, The American College of Medical Genetics, The American Society for Clinical Pathology, the College of American Pathologists and a number of individual researchers and women. Steve Silberstein draws our attention to The New York Times coverage.

In light of empirical evidence that patents do little to encourage or discourage innovation, I'm sometimes asked - why should we get rid of them? They don't seem to do any harm. If you'd like to see what harm they do, read the complaint.



There is a lot of biased research into patents that seem to indicate they do harm. However, bias is bias.

Several newer papers have been attempting to objectively determine whether patents and intellectual property in general have been beneficial or harmful to society. The most recent known to me is "Patent Rights and Economic Growth: Cross-Country Evidence," by Albert G.Z. Hu and I.P.L. Png.

In the conclusion, Hu and Png note:

Using an ISIC 3-digit industry level database that spans 54 manufacturing industries in over 72 countries between 1981-2000, we found evidence that stronger property rights were associated with faster industrial growth measured by value added. The impact of stronger patent rights was both statistically and economically significant in three of the four periods we analyzed: 1981-85, 1991-95, and 1996-2000, and had become stronger in the 1990s compared to that in the 1980s.

Our analysis also shows that the stronger patent rights promoted industrial growth through technical progress in the 1981-1985 and 1996-2000 periods and through more rapid factor accumulation in the 1991-95 period.

I also appreciated Hu and Png's analysis of the limitations of their study. Many authors with an anti-IP axe to grind fail at pointing out the areas where their studies have short-comings with suggested areas for additional research (though several such "studies" have couched their areas for additional research in terms that already lead one to believe the conclusion is inevitable - naughty, naughty).

This study is but one in a series of recent studies describing the benefits of IP based on objective analysis of empirical data. Even more recent was an article in the AIPLA Quarterly Journal pointing out that the fashion industry uses IP in both Europe and the United States, and has done so for many years, contrary to what some people seem to believe. The article pointed out that though IP protection of fashion designs is much stronger in the U.K., the level of innovation in both countries appears similar, though the U.S. seems to rely more heavily on the use of logos and unique patterns because copying of logos and unique patterns is not permitted in the U.S. If the latter statement is true, it means that weaker IP protection in the U.S. has limited innovation in some areas, as compared to a greater spectrum of innovation in Europe.

In other reports, one from China and one from the U.S., the positive affect of protecting plants has been demonstrated by the numbers of commercially useful plants created per year in both China and in the U.S. cotton industry. Prior to the implementation of IP, development of new plants in China to combat plant diseases was minimal, risking famine and higher prices by the importation of more expensive foreign grain. Similarly, several studies have pointed out that in the decade prior to the plant act in the U.S., 150 new plants were developed. In the decade after enactment of the plant act, 3,000 new plants were developed.

The problem with much of the "empirical evidence" is how the "empirical evidence" is analyzed. As a researcher, you know that you can always prove what you set out to prove. It is more difficult to take data, objectively review the data (or assume the opposite of what you want to prove - which is the typical technique in statistics), and let the objective analysis lead you to a conclusion.

Anti-IP people like to point with glee that there is little research into the value of intellectual property. That is true. However, such research will be conducted only if there is a question, and the value of IP has not been significantly questioned until recently. Because of the nature of IP, such studies require significant amounts of data over long periods of time. More research is being conducted into whether patents make economic sense, and the intial results of the papers that take the traditional scientific route (asking a question, generating a hypothesis, and testing the hypothesis) are finding that patents and protection of new plants, at least, appear to be generally beneficial.

Expect many more papers in this area.

Before we even get the question of whether there patents are beneficial or harmful to progress, we need to ask the question: "Is it patentable?"

In this case, my answer is a resounding NO.. One should not have the ability to patent genes, a natural product. What is even worse, Myriad Genetics is even claiming that other do not even have a right to study the gene. Dr. Nancy Snyderman, made the comment on NBC's Today Show that Myriad is essentially patenting knowledge. The video on Dr. Snyderman appearance on the Today Show is quite good.

Patents may be good, patents may be bad; but one should not have a right to claim ownership of natural products such as genes. Under the free market system, if research is uneconomical then it is not undertaken for profit. Period. To fill the "profit" void there is nothing wrong with Universities pursing research from money derived from grants and patrons where the knowledge falls directly into the public domain for commercialization.


The EU has already ruled on this issue, and their decision was that since the gene existed in nature that the gene itself could not be patented. The methods to discover the gene could be patented.

I think the base argument regarding a "discovery" is sound. Statutorially speaking, a "discovery" is not patentable. If a "discovery" is patentable, then could I patent a galaxy I find and charge royalties for anyone who looks at "my" galaxy? I just hope their arguments are well-researched. While this case may fail at the lower levels, I suspect this one might eventually find its way to the Supreme Court a few years from now.

As for your patron discussion, I find it interesting that the decline of the patronage system coincided roughly with the formation of copyrights. I wonder whether anyone has ever explored whether patronage decline as the Rennaisance progressed was as a result of copyright and patents or whether they were partially in response to the decline. Perhaps there is no connection at all. Regardless, it might be an interesting area for academic study.

Lonnie, good reply. One of my issues with how the free markets works today relates to the economics of implementing a project to make a profit. Simply put if one intends to make a profit and the project is unprofitable then it should NOT be implemented. Period.

However, we seem to have changed the free market system into one where, if it is unprofitable you go to our congressional supermarket to change the law in a manner that will make your endeavor profitable. In this case, getting a gene patent. Economically that is a distortion to how the free market is supposed to work. One could even equate this process (in a loose manner) to the failed communist system of implementing a planned economy.

I'm becoming a big believer in the development of an eminent domain doctrine for patent law (as with real property). I think, particularly in the area of medicine, there is a good argument for the application of eminent domain in non-national security patents.

Like anything else, the concept would allow those with standing to sue for the government to take a patent by eminent domain, whereby the court would determine whether a patent is 'critical to industry progress' using a multi-factor or multi-element test, then determine a reasonable royalty.

Upon a decision finding the patent 'critical to industry progress', a patent owner's rights would convert from a 'right of exclusion' to the 'right of contribution'. In essence, mandatory licensing at a court determined rate. This would reduce barriers to entry while still 'rewarding inventors for their creations.' Alternatively, maybe a patent owner could go to the USPTO and surrender the patent in exchange for a 'right of contribution', if they wished to avoid the court costs.

Any thoughts?

Doesn't go far enough. Abolish the blasted things. Now. And copyrights.

"Economically that is a distortion to how the free market is supposed to work. One could even equate this process (in a loose manner) to the failed communist system of implementing a planned economy."

Yes, only now, in the finest capitalist tradition, the ability to plan bits of the economy is up for grabs to the highest bidder!

Taking care of our health is very important. Being healthy allows us to do the things that we want and we need to do. Living in a healthy life can lead us to happiness. Human happiness is an odd thing. Some things bring happiness that you would expect, and some people find it in the oddest of places. The value of meditation to help maintain a clear mind and focused approach is given high importance in many religions. There are definitive medical benefits. The great thing is that you don't need any payday loans or money to do it. Money matters are never fun, are chief among the causes of stress, and rumored to be the root of all evil. You can take heart that you have options, like a payday loan for emergency cash, which will put things in order, which is one of the things that does bring happiness.
Objection: relevance?
Hey Nobody Nowhere

WTF are you talking about?




According to the Wikipedia article on "Eminent Domain", that doctrine applies in the cases of patents, copyrigts, and trade secrets.

So I gather that if a bunch of government bureaucrats decided that Coca-Cola's secret formula for its flagship product, or, perhaps more realistically, that Google's unpatented search algorithm were of vital strategic importance, perhaps vital to the "national security," then it would be legal for Uncle Sam to expropriate them, Comrade Chavez-style.

You might think that the Kelo decision was a good thing, but no libertarian does. And the only reason that there is freedom in the world is that there have always been enough libertarians to speak truth to the State's power. And one of those truths is that "intellectual property" is a State-granted monopoly.

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