Biotechnology - Genomic and Proteomics/Overview of Economics of Intellectual Property in BGP
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Where does the literature says IP works and does not work?
When IP does work
- When R&D costs are high
- “On average, a lack of patent protection would have prevented the development of 60% of pharmaceutical and 38% of chemical inventions. In most sectors, a lack of patent protection would have had little impact, resulting in 17% fewer inventions in machinery, 12% less in fabricated metals, 11% less in electrical equipment, and no effect at all in office equipment, motor vehicles, rubber, and textiles.” (Arundel pp. 11)
- “Only four chemical industries (drugs, plastic materials, inorganic chemicals, and organic chemicals) and petroleum refining rated process patent effectiveness higher than four on a seven-point scale, and only these four chemical industries and steel mills rated product patents higher than five.” (Levin pp. 796)
- When research methods can be patented (as in Biotech)
- research tools develop faster in biotech than in other industries - so there's a profit to be had just coming up with new research processes (Harison pp. 26)
- Current US IP law does not make a distinction between discovery and invention, could have possible impact on innovation (pp. 28)
- When patents can be used strategically
- “The patenting strategies of American firms appear to be strongly driven by the wish to block competitors and to prevent copying. The use of patents as a means of sharing information, for example through licensing or in negotiations, is less important for American firms than for European and Japanese firms.” (Arundel pp. 13)
When IP doesn't work
- When lead time is a primary competitive advantage
- von Hippel and Levin both found that companies preferred to protect innovations through secrecy and lead times (pp. 3)
- When the goal is spreading information
- only a small number (3%) of high technology firms use patent and copyright publications sources of new information. Compare to trade conferences: 70% (Arundel pp. 3,5)
- When there are other means of protecting competitive advantages (Levin pp. 794):
Processes | Products | |
Patents to prevent duplication | 3.52 (0.06) | 4.33 (0.07) |
Patents to secure royalty income | 3.31 (0.06) | 3.75 (0.07) |
Secrecy | 4.31 (0.07) | 3.57 (0.06) |
Lead time | 5.11 (0.05) | 5.41 (0.05) |
Move down the learning curve | 5.02 (0.05) | 5.09 (0.05) |
Sales or service efforts | 4.55 (0.07) | 5.59 (0.05) |
What are the other incentives mentioned by the literature?
- People are wary of using patents (Levin pp. 784):
- not perfect appropriable
- often not worth the cost of the application process
- patents considered easily circumvent-able
- As seen in above table, there seem to be other means of capitalizing on competitive advantage
is there data on "how much of an increase of the tendency towards enclosure".
sub-question: e.g. how much does the biotechnology field have patented? Has this movement increased over time?