In 2002 UNCTAD proposed [1] a categorization of “key issues” in biotechnology, which included (a) “building capacity for developing and managing biotechnology,” [2] (b) “biosafety and bioethics and the capacity for risk assessment,” [3] (c) “building awareness of biotechnology” [4] and (d) “accessing biotechnology and intellectual property rights” [5]. A number of perceived problems in the current regime of intellectual property protection and, more in general, of innovation policies has given fuel to several discourses on and around “alternative” methods to stimulate, protect and manage innovation in the biotech field. Following an earlier work on the subject [6], this paper aims to contribute to the conceptualization of the biotechnology innovation process, with specific attention to patent licensing practices, under the lenses of FLOSS [7] legal, economical, and cultural dynamics — what has been dubbed elsewhere as “Open Source Biotechnology.” [8] The discussion will be limited to a specific subfield — namely, the bio–pharmaceutical field — and to a limited set of players, i.e. profit–maximizing firms, with the desire to understand what are the obstacles and the options for a firm in use a “FLOSS model” in its research, development and commercialization processes.Contents
What is wrong with the current biotech innovation
What are FLOSS methods?
Available options for private and public action
Before, after and around patents
Limits of the market discourse
Conclusion
What is wrong with the current biotech innovation
When considering the pros and cons of “alternative” regimes and policies for any human activity, it only seems prudent — in order not to fix something which is not broken or, to put it in a slightly different way, not to waste scarce resources such as time and attention by analyzing something which, after all, does not need so much analysis — to ask whether the “non–alternative” versions of such regimes and policies sport any problem at all.
Such a basic, foundational question is further complicated by the fact that very different answers can be derived from the specific questions one decides to ask. Particularly when considering the field of interest here, i.e. biotechnology innovation, we might judge a certain regime as good or bad depending on whether we consider the rate of output of useful inventions as our primary metric, rather than the environmental externalities that are produced thereof; or whether we decide to focus on a strictly ethical perspective [9], consequentially applying moral judgments on the very basic policies that underpin biotechnology innovation — including, but not limited to, the act of patenting genes or gene–based inventions [10].
For the sake of clarity, I am specifically focusing here on profit–maximizing agents, namely biotechnology firms, and more specifically those biotech entities that operate mostly in the “drug pipeline”, excluding therefore those operating — for example — in the agricultural biotechnology field [11]. I consider such an approach particularly interesting in that it tries to frame a sort of “defensive programming” [12] scenario [13]; in other words, I do not assume that agents in the system are willing to internalize the negative outputs of their own activities; or even that they are able to properly predict such outputs; or even assuming that they are able do such predictions in general, that they are capable of assessing the extent to which they will suffer, willfully or not, the effects of such externalities [14]. Simply put, such agents try to maximize their profit, the question becoming whether “FLOSS methods” are a good way for them to achieve such goal.
I am further considering the output rate of useful [biotechnology] inventions, i.e. drugs, as the basic metric in the discussion that follows; more specifically, I am breaking such metric into two parts, i.e. “output rate” — which includes the number of inventions that can be produced in a given amount of time, itself a function of the costs that go into such production processes and of the expected revenues thereof — and “useful inventions” [15], which is admittedly an even harder parameter to evaluate, insofar as “usefulness” is a rather difficult concept to frame. To make a long story short: we are confident that the system is working properly when we have more [16], rather than less, inventions (i.e. drugs) and we are even more confident about the qualities of our system when these inventions are useful — or, to use a “soft” declination of the same concept as is actually the case in this paper, when we are confident that in the system there are no unneeded obstacles optimize such usefulness over time, whether this is done by modifying the invention or by employing the invention in a different way than it was originally envisioned. This metric — and its related sub–metrics — is used as the basis on which to explain why “alternative” regimes and policies might conceivably prove to be useful, given certain conditions, to optimize the overall results.
Last, not least, I focus specifically on policies related to intellectual property laws and regulations. Innovation processes are complex phenomena and their driving forces cannot be reduced — no matter what political discourses on all sides of the fence claim — to “IP puppets.” Even in the bio–pharmaceutical field, and even in the first R&D stages of the pipeline, other considerations — than how intellectual assets are regulated and, more specifically, how intellectual property rights are handled — are necessary in order to build any properly characterizing model of relevant behaviors and expectable trajectories and outputs [17]. Such reality notwithstanding, I am for the time being examining intellectual property — and more specifically, patenting — dynamics.
With regards to the first sub–metric highlighted above — the output rate — I focus on the costs that biotech firms must sustain in their innovation activities, which are one of the justification for granting exclusionary rights to such firms in the first place, on the sometimes misplaced assumption that firms will be able to internalize all the revenues generated by and through such rights [18]. More specifically, when innovation in a particular field is cumulative and incremental rather than characterized by “breakthroughs,” analysis in this field [19] suggests that two issues of particular relevance may come to light [20], i.e. the existence of “patent thickets” [21] and the conceptually related [22] emergence of “anti–commons properties.” [23] Although there is no general agreement whether such phenomena do indeed represent as large an obstacle as critics of the current patent regime argue, who maintain that private transactions remain an efficient solution to the problem [24], there seems to be a general acceptance that such problems are at least possible in principle [25]; which arguably justifies a discussion of whether and how “alternative” patent policies could help facing such problems, if and when they arise.
With regards to the second sub–metric — the usefulness of an invention or, to frame it in terms that do not risk generating confusion with the somewhat fuzzy interpretation of the term by patent offices worldwide, the range of uses that a particular invention can be put to — I suggest that in almost all fields of technology the original inventor is not necessarily in the best position to judge. This is due both to information–gathering costs, which can be admittedly be reduced by proper pre– and post–marketing efforts, as well as to a rational strategy of the original inventor, who might find it less than convenient to improve a certain invention or to use it in a different way than it was originally envisioned in order not to cannibalize the sales of its own existing products which embed the original innovation [26]. Although it could be argued that the focus of the discussion is on profit–maximization by a private party, and therefore the total welfare that could be lost due to such strategy is not particularly relevant, it should not be forgotten that a new use for an invention can — in certain conditions, namely that the original inventor keeps some level of control or is somehow able to internalize the benefits deriving from the new uses [27] — prove to be profitable, and generate revenues, for the profit–maximizing agent itself. The issue under consideration here — sub–optimal number of different usages for a particular innovation — is of potential and particular interest in the bio–pharmaceutical environment, where high fixed costs (due to manufacturing, marketing and regulatory approval costs) of the typical biotech firms’ licensees, i.e. pharmaceutical firms, tend to “tie” a firm along a certain trajectory, it being excessively expensive — both for internal management dynamics and for the cannibalization issues highlighted above — to change the target use of an invention “on the spot”, or to come up with new uses thereof. Even for a biotech firm, which usually does not incur the same level of fixed costs — a part of which are simply transferred to its licensees — the inability to properly foresee all potential usages of an invention is relevant, insofar as gene–based research and innovation is nowadays generally accepted to be characterized by non–linear dynamics; or, in other words, discovering that a particular gene seems to have a particular function (itself a loaded statement, which ignores the complex interactions that mark the way from DNA to protein, and from protein to final function) does not preclude that particular gene from having a number of different functions [28].
Having highlighted two — at least potential — sets of issues in the biotech innovation field, I will now discuss what could be the rationales and effects of “alternative” policies and strategies in handling IP, and specifically patents, in the field of biotechnology. Although the term “alternative” is by its very nature quite generic, the focus here will be on so–called “FLOSS methods”, with the aim to capture at least the spirit of the relevant dynamics in the field of software innovation. The focus is admittedly arbitrary, but I argue that it can be justified on two grounds: first, by a general interest for the cited field by different communities (academics and activists come to mind [29]); second, by the success of FLOSS in an information–intensive market such as the software one, or rather in certain sub–markets thereof, namely software–based consulting, network–centric services [30] and embedded/appliance systems [31].
But first, an analysis on what should we take as the proper meaning for “FLOSS methods” is necessary, in order to properly frame the discussion.
What are FLOSS methods?
Confronted with such a question, the first easy answer could be “any development methodology, in any field of innovation, which rests on contractual/licensing schemes modeled after the clauses to be found in FLOSS copyright licenses” and more specifically to the clauses which — in a slightly different way from license to license — grant the right of using the work for any purpose or goal, to study how it works, to modify and to redistribute it, whether in original or modified form. Such an approach, although somewhat alluring in its simplicity and its apparent capability as an overarching framework, has three basic flaws: first, that different fields of technology have different peculiarities, and that a copyright–based [32] contractual regime is not necessarily the best choice, or even a possible choice, when patents or other forms of intellectual property rights are considered; second, that the “FLOSS dynamics” that characterize software innovation are not necessarily a result of licensing/contractual regimes alone, or in general of legal rules, but live instead in a complex web of feedback relationships with social, cultural, political and economic forces; third, that such an approach takes somewhat the wrong direction, or in other words mixes one of the possible answers with the basic question, which is in the end “what social actors want to achieve?” — possibly using licensing/contractual mechanisms as a means to an end. Forcing a particular tool, such as FLOSS copyright licenses, over scenarios which have little to do with those that saw the birth and widespread usage of that specific tool would be, quite ironically, akin to considering intellectual property rights as an end in itself and not, as they should be properly characterized, as something which is sometimes useful to reach the goals that a social group wishes to achieve — but are sometimes useless, or even dangerous and counterproductive if they are abused.
The first flaw is probably solvable, insofar as it is sufficient (but not necessarily easy) to come up with licensing/contractual mechanisms that can be applied to other forms of intellectual property rights; after all, patents, trademarks and other entitlements are constantly being negotiated between private parties, so the main issue seems to be how to adapt the peculiarities of FLOSS licenses to a different environment, where “source code” does not necessarily mean anything significant [33], or the concept of “derivative work” must be properly declined. The BiOS project [34], a creature of the Cambia Laboratories [35], shows that such a license [36] can in principle be drafted; and although the project does not seem to be currently overconcerned with pharmaceutical biotechnology as such, the point remains that FLOSS-like patent licenses embedding the principles of sharing are indeed possible [37]. Whether or not this is a desiderable option is an open question — see the next Available options for private and public action for further discussion on this point.
Discussion on the second flaw requires a more extensive analysis, which will only be hinted at in this paper, and is arguably more difficult to tackle, as the general point that is being made here is that social phenomena, including the emergence of FLOSS, are always the result of a number of different factors. Legal instruments, no matter how cleverly drafted, are just that — instruments. FLOSS was not born when Eben Moglen and Richard Stallman drafted the first version of the GNU General Public License, the “mother of all FLOSS licenses”; rather, it was born when Richard Stallman could not modify the computer code that drove a printer he needed [38]; it was born when he wrote the GNU Manifesto [39]; when he wrote code that he later released to the world; when other persons noticed Stallman was up to, and decided that such acts coincided, or reinforced, or were compatible with their own set of beliefs on how the world around them should have been; when businesses took notice that it was possible, under certain conditions, to generate revenue from this “alternative” form of software production, sharing and usage, but even more so from the underlying–circumscribing social practices. Even more: FLOSS was born in nuce in the social practices and cultural theorization that grew around the “hacker’s culture” [40] of the ’70s. It was and continues to be born every time the “information wants to be free” meme flies from mouth to mouth [41]. All of this is not a enshrined in a license; it is a relationship between private actors, but copyright law has not much to say about it [42].
These considerations raise the question whether and how the same or similar practices could take place in the biotech field, considering its history, its culture, its social characteristics; or if what arose were dissimilar practices, whether the effects would be comparable. No further considerations on this matter will follow; but the general point is that viewing FLOSS only under the lenses of a legal — or rather, legalistic — discourse would arguably be limiting. It would of course be possible to take a reductionist approach and abstract only the legal principles contained in FLOSS licenses, or even the legal provisions themselves, and use them as the “ground zero” of any reflection over “FLOSS methods” in other fields, including biotech; but this this would probably not take the analysis very far.
The third flaw is central to the discussion being conducted here, and it does so by forcing a rethinking of what are the goals under consideration and what are the tools to reach them. As highlighted above, the FLOSS discourse did not originate out of a desire to write the wittiest copyright license around [43] or to make sure that copyright scholars would jump at each other’s throats to decide which of the clauses had to be considered unfair under contract law, or whether contract law should be considered at all [44]. Perhaps more surprisingly, it did not even start out of the desire to write efficient software; rather, the underlying goal was the sharing of information in the form of computer programs, seen as a moral imperative [45]. All the rest was, and is, just a very useful side effect.
Stallman’s thought might be the alpha of FLOSS, but it certainly is not the omega.
This characterization of FLOSS somewhat flies in the face of the initial assumption of this paper, i.e. that profit-maximizing biotech firms — and their needs — would be the stepping stone of the discussion. It is hard to conceive such an actor engaging in the same sort of reflections that arguably drove the early birth of FLOSS [46]; and consequently, it is hard to see how any kind of “FLOSS method” could be useful for a biotech firm, lest the FLOSS part is removed. However, Stallman’s thought might be the alpha of FLOSS [47], but it certainly is not the omega. The fact that profit–maximizing firms have started long ago to use FLOSS, and are still continuing to do so, suggests that its underpinning principles, as enshrined in a legal instrument, are good for businesses as they are for furthering a “hacker vision” of society. The ongoing and raging debate [48] between the supporters of “Free Software” and those who prefer to say “Open Source,” between community and business [49], is a debate that legally speaking is almost nonsensical, insofar as the set of copyright licenses which are considered “Free Software” is almost equivalent to the set of licenses that qualify as “Open Source”; but it highlights how political practices and socialization dynamics are indeed relevant when discussing about “FLOSS methods.” This debate, however, may potentially hide the fact that there are indeed some common principles underpinning both sides of the fence: they are just declined in a different way and used for a different purpose.
I suggest that such principles can be basically summarized in two statements: sharing of information and freedom of use.
The first concept — sharing of information — may appear to be non–controversial, at least judging by how much it is repeated by sources with the most diverse political backgrounds [50]. However, if one looks under the carpet of generalization and simplification, it turns out that the story is quite more complicated; first of all, because it is not so immediate to define what “information” is; second, because social actors can “share” with different degrees of intensity, willingness, efficiency, etc. [51] These two qualifying elements are not independent from one another; on the contrary, it can be argued that the precise nature of “what–is–being–shared,” including its strategic relevance for the sharing actor, has a deep influence over the way in which such actor will proceed to share [52]. In less abstract terms, it is possible to draw a clear distinction between software, where the “what–is–being–shared,” is a computer program, including its binary code (mostly functional) and its source code (mostly creative) [53] but not necessarily any related documentation that could be necessary to understand what the computer program does [54]. For biotech firms, simply having access to information related to the function of a gene might not be sufficient — it is not enabling per se, as the world of commercial biotech has other needs, including regulatory approval [55] (which depends on data that is usually not a part of a patent application) and access to biological material [56].[57] The point is the concept of “enablement,” i.e. in a FLOSS model — and particularly in its strongest form, a copyleft FLOSS model — what is being shared is something that “enables” the recipient (or the recipients) to perform activities that will, at a later stage, benefit the source [58] — such idea of sharing being compatible with the motives and goals of profit–maximizing biotech–firms.
For biotech firms, simply having access to information related to the function of a gene might not be sufficient ...
The second concept — freedom of use — relates to what has been characterized before (see the next Available options for private and public action) as an inability for an agent to properly understand ex ante all the potential usages of an innovation, and the risk that the very profit–maximizing nature of such agents might lead it to discard certain usages of an innovation which might be beneficial not only for third parties, but for the agent itself, to the extent the latter proves to be capable of internalization thereof. Here, freedom to modify is considered as a possible part of of freedom of use; possible, but not necessary or even useful in all fields, insofar as other considerations — such as the nature of the work, the level of expertise needed to endeavor in such modification activities, the possibility for such modifications to be actually used without significant risks for third parties, etc — come into play [59]. Whether, in a world riddled by technology–based “rights management systems“ [60] and generally inspired by a culture of control rather than of permission [61], it makes sense to clearly spell the freedom to modify as an independent and positive right of third parties is an open question [62].
The value of the “freedom of use” concept (or “freedom to use and modify,” or “freedom to tinker”) is closely related to the more general understanding in economic analysis of cumulative, incremental innovation [63], i.e. that under certain conditions property rights, and in general exclusive rights, especially when very broadly declined, can be actually an hindrance to society at large and, most importantly in this context, for the innovator itself. Although literature in the context of patents has focused more on the diminution in social welfare that over–empowerment of patent entitlements can produce [64], there are some examples of analysis focusing on the actual loss of private welfare either for producers as a whole, or even for the single producer [65].
Is this characterization of a “FLOSS method” useful, or even barely interesting, for a profit–maximizing biotech firm? Available data does not allow a final answer to this question; however, the nature of biotech innovation and the increasing complexity of the field — due, among other factors, to a better scientific understanding of the way in which gene–based processes work, going hand in hand with a final blow to the linear conception that was quite widespread before human DNA mapping revealed that human beings have substantially less genes that the number of known proteins — suggests that two of the issues mentioned above, i.e. the emergence of anti–commons effects and of patent thickets, could be more than a simple hypothesis. Theoretical — but grounded in empirical research — work on the nature of cumulative innovation and production of complex goods, moreover, suggests that in the particular field under consideration less, and not more, property rights are a better solution to speed up the pace of innovation, which in turn means — ceteris paribus — more revenues, and more profit, for the single firm. It should not be forgotten that biotech firms are generally quite small compared to pharmaceutical firms: the common tactics employed by the latter — including a massive recourse to marketing as a form of “inducement to consumption,” or forms of potentially anti–competitive practices such as patent pools and/or other types of horizontal agreements — are not necessarily efficient for the former. Whether the “less, rather than more, property rights” suggestion should be declined in terms of fixing the length, breadth or other characteristics of patent rights, or rather under the form of private bargaining between the actors (licensing) is yet another issue — although the two scenarios are probably non–exclusive (see the next Available options for private and public action for further discussion on this point).
However, it should not be forgotten that biotech firms, precisely because of their small size compared to pharmaceutical firms (to all extents, their preferential “customers”) value patents, and particularly strong version of patents, as bargaining tools. In this case, the profit–maximizing biotech firm will unavoidably have to conduct a careful examination of the pros and cons in lessening either the “power” of property rights in their patents and/or the exclusivity of their licensing practices against the loss of negotiating power that would arguably result, especially if the single firm found itself acting alone; but, at the same time, such an evaluation should be done considering the prospect of having to deal with a large number of other equally powerful agents on the market, a situation which would arguably raise transaction costs (and consequentaly reduce revenues) for the biotech firm.
Last, not least, care should be taken in properly understanding the role of patents in the complex dynamics of the bio–pharmaceutical innovation marketplace. Besides acting as entitlements, granting property or property–like rights, it has been suggested that patents can work as defensive tools, i.e. discouraging competitors from engaging in litigation over assumedly infringing patents under the credible threat that a counter–litigation on other patents that the competitors are (assumedly) infringing themselves, a strategy which due to the “fuzzy nature” of patents [66] and the cost of litigation in some jurisdictions does not require a massive patent portfolio to be successful — or more generally as signaling tools [67]. Lessening the power of patent entitlements, or engaging in non–exclusive, FLOSS–like licensing practices can arguably have an impact on both sets of practices; the point here is that when considering the advantages for a biotech firm in using “FLOSS methods” or pushing for such methods to be used by the industry as a whole (see the next Available options for private and public action) all the functions that patents have nowadays for the profit–maximizing firm should be taken into account.
Available options for private and public action
This paper started by choosing — in an admittedly arbitrary way — a macro–metric for judging the health of an innovation system, namely the rate of output of useful innovations. It then proceeded to highlight — again, arbitrarily — two potential sets of problems that could hinder the maximization of such goals. A discussion on how FLOSS principles in the field of software — sharing of information and freedom of use — could arguably be framed in the field of biotechnology, and more specifically as a desiderable goal for profit–maximizing biotech firms, ensued.
The focus, then, has to move on what are the available options for the actors under consideration, assuming they would like to pursue the goal of implementing a “FLOSS method” (or a set of “FLOSS methods”) in their activities. The discussion will cover not only what private, profit–maximizing firms would or could do in this context, but will also hint at the delicate and complex interaction that exists between private and public choices, between market–based transactions and policies that can encourage or inhibit such transactions, or a particular subset thereof.
A criticism could be made that considerations over public policy have little to do in a paper which started with a declared focus on the strategies that private parties would choose in order to maximize their profit. Such criticism, however, would be acceptable only if we ignored the extent to which private parties — including, but not limited to, private–maximizing firms — routinely engage in dialogues with public authorities with the goal to enact, repeal or modify legislation, or more generally to favor certain policies over others, as a strategy to broaden and make their options more efficient when contracting privately with one another. Whether or not we call such activities “lobbying” whether or not we consider them socially beneficial — a decision intimately tied to an evaluation whether these endeavors are conducted in open arenas or in the corridors of power, are done in exchange for money or other forms of “political currency,” and in the end are limited (or not) by the hic sunt leones of healthy democracies — do not change the simple fact that private and public actors’ strategies are linked, and it would be overly simplifying to analyze the former without considering the latter, whether actual or potential. If anything, and assuming the biotech firms could find it useful to achieve at least a part of the overall goals that “FLOSS methods” entails, it is reasonable to expect that they will probably not only rely on private transactions between themselves, but will rather push for policies that would facilitate the particular type of transactions they find desiderable (or, in parallel, would hinder the transactions they consider as penalizing).
More specifically, I suggest there are three — not necessarily exclusive — levels at which a discussion on FLOSS–like models for profit–maximizing biotech firms could be framed, namely patent law (which implies a heavy dose of public policy), private transactions over patents, and renouncing to the patent system altogether.
At the first level, both public actors and private parties — by way lobbying activities, as suggested above — have several ways to “toggle the knobs” of a patent system. Such lobbying needs not necessarily be directed at the legislator: Burk and Lemley [68] have proceeded to a comprehensive discussion of the way in which existing practices at the U.S. Patent Office or in courts (whether specialized or not) could substantially alter the extent to and the way in which patent rights are granted and enforced, and therefore modify — without actual legislative intervention — the landscape of patent and interactions thereof. Bostyn has engaged in a similar evaluation over the European patent system [69]. I will leave aside the issue whether it would make more sense for a profit–maximizing biotech firm to act at the legislative level or not; but in general, the advantage of an intervention of this type is that, assuming public action does not excessively suffer from regulatory capture by interest groups or subgroups, it would probably tend to create a leveled playing field for all actors, including the single biotech firm; the latter would not have to engage in a sort of “prisoner’s dilemma” scenario, renouncing to adopt FLOSS–like methods out of the fear that it would be the only one to do so and would therefore lose strategic advantages towards its competitors.
At the second level, private firms would autonomously engage in the sort of practices suggested in the previous sections by way of contractual agreements between each other; such agreements might — but not necessarily would [70] — take the form of patent licensing. The precise form of such licenses cannot be determined ex ante, although the licenses produced by the BiOS are probably a good model highlighting how the subject matter of such contractual agreements would arguably need to be broader than what one expects from most FLOSS licenses, as the subject matter is unavoidably more complex and variegated for biotech firms than for software firms. The big advantage of private action, either through licensing or other means, is the easiness with which firm can start operating — there is no need for lobbying here. The big disadvantage of this option, besides the transaction costs that licenses — including FLOSS licenses [71] — imply, and the open questions related to the legal validity of FLOSS licenses and/or of relevant provisions thereof [72], is the blockage that could arise from the inability of rational actors to commit to such form of licensing unless all — or the majority of — the actors involved would do the same — although using copyleft–style licensing provisions could arguably provide a work–around to such hold-up scenario.
At the third level, players would renounce explicitly to patent rights over biotech innovations, adopting instead other modalities of protection that are not based on property rights. The best known candidate in the latter category is the so–called “compensatory liability regime,” [73] itself an elaboration of the general approach to liability rules as opposed to property rules [74]. This is most probably a scenario which would need some sort of public intervention, as it seems quite improbable that private actors would willingly accept such a major transition. This is not the place to engage in a thorough discussion of the pros and cons of liability models vis–à–vis property systems, the first being presented here only as a plausible option on the face of the particular nature — cumulative and incremental, as well as arguably subject to anti–commons effects and patent thickets more than other fields — of biotech innovation.
It has been already suggested that the three levels of intervention need not necessarily be self–exclusive; neither are they ex ante, insofar as players who would want to change their private bargaining strategies might wish the public rules of the game to be either in favor, or at least not against, such strategies; nor are they ex post, insofar as private action is limited by the scenario imposed by public powers, if anything because — particularly relevant for the contracting/licensing framework suggested above — no one can dispose of rights that he does not own in the first place: if action at the public level would imply, or produce, a reduction of scope in patent or other exclusionary rights over subject matter that would be contracted over, this would obviously have quite an effect on the modalities in which private parties would negotiate. Plus, the law places limits on the range of option that are available for private parties when the latter dispose of rights they have, for example through the notion of unfair contractual terms, the doctrine of patent misuse [75] in some jurisdictions and/or the interaction with other bodies of law, of which most relevant in the context of patent transactions is antitrust/competition law.
Before, after and around patents
Until now, discussion has focused on “information sharing” as a central tenet of “FLOSS methods,” to be potentially applied by profit maximizing biotech firms; on intellectual property as the main policy area of concern; on patents as the particular form of entitlements to which a FLOSS methods could or should be adapted, either through private contracting or public action.
Although in this paper I will not — for reasons of space — substantially depart from the structure mentioned above, it has to be recognized that “Open Source Biotechnology” is much more than the above, for a variety of reasons and from a number of points of view.
First of all, when discussing about “information sharing” — whether or not one wants to subscribe to the “information wants to be free” meme or not [76] — the conceptual and practical differences between data, information and knowledge should always be kept into account [77]. The way in which the law defines what is data, information or knowledge has a deep impact on the extent to which elements pertaining to each category are protected, or whether they are protected at all. Moreover, as it has been suggested above, each rational actor will engage in strategic evaluations when deciding what to share or not; and while it can be argued that data could be shared without too many problems — as enforcing property rights over it would plausibly result in a rise of transaction costs and/or in “anti–commons” effects and thickets of exclusionary rights, the same cannot be said of information or even of knowledge; in the latter case, consideration should also be given to the costs of sharing such knowledge, insofar as it often lacks formalized representation, being based on substantial parts of “know–how.”
Second, intellectual property rights do not exhaust the overall list of policy concerns that arguably inform the biotech scenario. Implementing “FLOSS methods” in this area, and in general reasoning about any change thereof, including private– or public–induced changes, has to take into account a number of other bodies of laws and regulations, including — but not limited to — the need for regulatory approval before the output of biopharmaceutical research can enter the market (with resulting fights on “property rights” over that regulatory data), the liability to which biotech innovators could be subject to, the issue of public funding and subsequent patenting of research outputs, etc. [78]
Third, patents are not the only form of intellectual property rights — and in general of property rights — that are relevant for biotech firms. Copyright [79], trademarks, trade secrets and other forms [80] of IP or quasi–IP rights do play a relevant role in the dynamics examined here, which should not be overly simplified by assuming that — especially in those cases where “stacked rights” scenarios arise — it is possible to consider transactions over a particular IP right as completely independent from those over all the others.
Limits of the market discourse
As the previous section has highlighted the limits of modeling discussion over “biotech FLOSS methods” under excessively limited frames, here I intend to quickly highlight how, notwithstanding the intention to analyze the relevant dynamics from the point of view of the profit–maximizing biotech firm, a purely market–based discourse present several limits — even for the latter category of social actors.
First of all, it should be considered that a state, or in general the public authority — the source of any entitlement over intellectual property rights, including patents, that a private party might claim, as well as a rather central and functional element in any enforcement activities thereof — might enact laws and regulations in observance of its own duties, including being a party to international agreements. Such laws and regulations would not necessarily be functional for the private–maximizing firm, but the latter would arguably not find itself in a position not to obey them, unless cost–benefit calculations suggested that non–compliance would actually be the best option; but the point here is that exogenous activities have to be taken into account in the considerations covered in this paper.
Similarly, any profit–maximizing biotech firm, besides being a “selfish actor,” is an element of the wider society as well, which might find itself forced to internalize — maybe at a later stage — all those externalities that as a “selfish actor” it found convenient to produce as by–products of its profit–maximizing choices. Whether an agent is actually able to model its own choices considering not only the immediate pros and cons, but also the same pros and cons at later stages and as a result of other agents’ reactions is an open question, and needs much more than the simplified assumptions which neo–classical economic theories rest upon to be answered.
Third, no matter what firms claim about their R&D efforts, a large part of basic research — in the field of bio–pharmaceutical innovation as elsewhere — is still conducted by universities and other public, or publicly funded, institutions. Blindly applying principles of neoclassical economic analysis to the complex relationship between public and private funding — and related research endeavors — might prove to be dangerous even for profit–maximizing firms, who could arguably find themselves in front of an impoverished “commons” from which to derive their profit–making innovations [81].
Both issues can be arguably framed in terms of economic analysis; but the point here is that care should be taken into avoiding to excessively reduce the whole model to a purely market–based discourse, lest the overall analysis be impoverished and relevant questions are left behind for the lack of a market–based vocabulary to express them.
Conclusion
This paper has attempted to frame the general discussion on “Open Source Biotechnology” on a higher level of abstraction, i.e. by trying to see what are the relevant dynamics that can be “taken from” the experience of “FLOSS” as in “Free, Libre and Open Source Software” and transported into “FLOSS” as in “Free, Libre and Open Source Stuff”. Two key elements, namely “sharing of information” and “freedom to use”, have been identified as particularly relevant in subsequent analysis on the topic. Although I reckon that the lack of empirical data — with particular reference to the impact that “FLOSS methods” would have for profit–maximizing firms in terms of costs and revenues — is a major drawback of the analysis I conducted, I do hope that the latter will spur more discussion on the topic, which I believe is not only intellectually fascinating, but also potentially significant for all the players involved into a scientific and technological field that has so far spurred a vigorous debate at all levels.
About the author
Andrea Glorioso is a freelance ICT consultant on FLOSS technologies and an independent researcher on FLOSS socio–legal dynamics; since May 2006 he has been working as a researcher at the Dipartimento di Automatica e Informatica of the Politecnico di Torino (http://www.polito.it/). All the opinions expressed in this paper are his own and do not necessarily reflect the positions of any organization he has been or is working for or with.
E–mail: andrea [at] digitalpolicy [dot] it
Notes
1. See United Nations Conference on Trade and Development, 2002. Key issues in biotechnology (UNCTAD/ITE/TEB/10). New York: UNCTAD, at http://www.unctad.org/en/docs/poitetebd10.en.pdf, accessed 24 June 2006.
2. Ibid., p. 11, with specific reference to developing countries (“Application of biotechnology to meet the needs of developing countries requires the creation of an infrastructure for the transfer of relevant technologies, development of institutions with the capacity to adopt and develop the know–how required for successful application of biotechnology. This includes building capacity to understand their own ecosystems and to select, acquire, manage and further develop those biotechnologies that are most appropriate to national needs. Clearly, such efforts require investing in science and technology education and research. Given the scarcity of public resources in developing countries, various innovative avenues, including public–private partnerships, South–South cooperation and the use of information technology networks, should be explored. However, the starting point in building capacity is a needs assessment, which would lead to both a national strategy and the efficient allocation of scarce resources to meet those needs”, boldface added).
3. Ibid., p. 11 (“The Cartagena Protocol on Biosafety, the first international agreement specifically negotiated to deal with products of genetic engineering, is based on applying the Precautionary Principle to risk assessment of genetically modified organisms. This Principle holds that an absence or lack of scientific proof of risk should not be taken as conclusive evidence of the safety of any given organism and requires risk/benefit analysis. This gives some degree of reassurance to developing countries that are as yet unable to undertake comprehensive risk assessments. However, in the application of the Precautionary Principle, it must be argued that no technology is completely risk–free, and that the Precautionary Principle could be open to misuse as a trade barrier and as a barrier against further development of biotechnology. This suggests that there is a need to address concerns about the consistency of particular measures between the provisions of the Agreement on the Trade–related Aspects of Intellectual Property Rights and the provisions of the Convention on Biological Diversity”).
4. Ibid., p. 11 (“If biotechnology is to be used to provide benefits to a country’s population, then political support, as well as public awareness and acceptance of new technologies are essential. There is a wide range of potential applications, and decisions have to be made concerning the choice of technologies, according to national needs. The public has a constructive role to play in helping to make these choices, but in most countries, including industrialized countries, public awareness and knowledge about biotechnology are insufficient for ordinary people to have an effective and qualified voice in biotechnology development. Building public awareness and disseminating qualified and balanced information about biotechnology is a critical issue in most countries”, boldface added).
5. Ibid., p. 12 ((“[...] [I]t is felt by many that ownership rights of genes and other living matter, as intellectual property, is not morally acceptable. Furthermore, the patenting of gene sequences and biotechnology techniques with broad applications means that developing countries in particular may be excluded from affordable access to technologies that they urgently need. Against this, innovating organizations argue that without the limited monopoly rights to profit from their new products and processes that are conferred by intellectual property tights (IPRs), there is no incentive to invest in research and development. Moreover, some argue that where IPRs cannot be adequately protected, this will act as a barrier to technology transfer. In fact, very little systematic evidence has been collected in respect of the role of IPR regimes in encouraging or constraining the transfer of technology. Related to this, it is worth noting that biotechnology is knowledge–intensive, and much of the knowledge needed to develop and manage biotechnology is already in the public domain”, boldface added).
6. See A. Glorioso, C. Habib, and A. Izquierdo, forthcoming. “Alternative approaches to intellectual property protection of bio–pharmaceutical innovation from a FLOSS perspective,” In: Proceedings of the University of Torino/WIPO Academy LL.M. in Intellectual Property, at http://people.miu-ft.org/~sama/llm/paper-final.pdf, accessed 24 June 2006.
7. FLOSS — “Free, Libre, Open Source Software” — can be described as the set of all computer programs (software) whose licensing terms grant licensees the rights (a) to use the program for whatever purpose, (b) to study how the program works, (c) to copy the program and redistribute such copies, (d) to modify the program and redistribute such modified versions. For points (b) and (d) to have any meaningful sense, access to the source code — i.e. the preferred form of modification, usually consisting in a complex and large series of statements in a specific formal language — must be granted by the licensor; whether or not the same access must be granted by licensees when they redistribute the program or a derived work thereof depends on the specific provisions of the license, this being the dividing line between copyleft and non–copyleft licenses (see inter alia R.M. Stallman, 2002. “Copyleft: Pragmatic idealism,” In: J. Gray (editor). Free software, free society: Selected essays of Richard M. Stallman. Boston, Mass.: Free Software Foundation). For a more detailed discussion of FLOSS licensing, see inter alia L.E. Rosen, 2004. Open source Licensing: Software freedom and intellectual property law. Upper Saddle River, N.J.: Prentice Hall PTR; A.M. St. Laurent, 2004. Understanding open source and free software licensing Sebastopol, Calif.: O’Reilly.
8. See inter alia J.E. Hope, 2004. “Open source biotechnology,” Ph.D dissertation at Australian National University; and at http://opensource.mit.edu/papers/hope.pdf, accessed 24 June 2006; D.W. Opderbeck, 2004. “The Penguin’s Genome, or Coase and Open Source Biotechnology,” Harvard Journal of Law and Technology, volume 18, number 1 (Fall), pp.168–227; S.M. Maurer, A. Rai and A. Sali, 2004. “Finding cures for tropical diseases: Is open source an answer?” in 1(3) PloS Medicine, volume 1, number 3 (December), at http://medicine.plosjournals.org, accessed 24 June 2006.
9. This does not imply that an evaluation based on, inter alia, a rate–of–output metric is not itself inspired by “ethical” motives, insofar as it is indeed — whether the actors involved are explicitly conscious of it or not — based on a set of principles, whether normative or not, on what is to be considered a “good” or a “bad” action.
10. It is indeed quite possible to consider such patenting under two quite different, although not necessarily self–excluding, perspectives — i.e. considering whether applying property rights over genetic material is the most efficient way to reach one’s own goals, or it is rather an act which should be prohibited per se, in much the same way as most legal systems do not allow market transactions on one’s own organs, even though it is recognized that in principle this could be a more efficient way to address the chronicle lack of input material for transplants. See inter alia United Methodist Church. Genetic Science Task Force, 1991. “Draft report to annual and central conferences, Dec. 1990: an invitation to explore a frontier,” Christian Social Action, volume 4, number 1, pp. 17–27; M.J. Hanson, 1997. “Religious voices in biotechnology: The case of gene patenting,” Hastings Center Report, volume 27, number 6 (spplement), pp. 1–21 ; T. Peters, 1997. Should We Patent God's Creation?, In: T. Peters (editor). Playing God? Genetic determinism and human freedom. New York: Routledge, pp. 115–141; D.B. Resnik, 1997. “The morality of human gene patents,” Kennedy Institute of Ethics Journal, volume 7, number 1 (March), pp. 43–61; UNESCO, 1997. Universal Declaration on the Human Genome and Human Rights (11 November), at http://portal.unesco.org/shs/en/ev.php-URL_ID=1881&URL_DO=DO_TOPIC&URL_SECTION=201.html, accessed 24 June 2006 (“The General Conference [...] Bearing in mind, and without prejudice to, the international instruments which could have a bearing on the applications of genetics in the field of intellectual property, inter alia the Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886 and the UNESCO Universal Copyright Convention of 6 September 1952 [...] the Paris Convention for the Protection of Industrial Property of 20 March 1883 [...] the Budapest Treaty of the WIPO on International Recognition of the Deposit of Micro–organisms for the Purposes of Patent Procedures of 28 April 1977, and the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPs) [...] which entered into force on 1 January 1995 [...] [p]roclaims the principles that follow and adopts the present Declaration [...] [Art. 6] [t]he human genome in its natural state shall not give rise to financial gains [...] [Art. 11] [p]ractices which are contrary to human dignity, such as reproductive cloning of human beings, shall not be permitted. States and competent international organizations are invited to co–operate in identifying such practices and in taking, at national or international level, the measures necessary to ensure that the principles set out in this Declaration are respected [...] [Art. 12(a)] (a) [b]enefits from advances in biology, genetics and medicine, concerning the human genome, shall be made available to all, with due regard for the dignity and human rights of each individual”, boldface added); P. Baird, 1998. “Patenting and human genes,” Perspectives in Biology and Medicine, volume 41, number 3, pp. 391–408 (“patenting genes is seen as transforming them into a commodity, and this is viewed as being disrespectful of life”); M. Sagoff, 1998. “Patented genes: An ethical appraisal,” Issues in Science and Technology, volume 14, number 3 (Spring) p. 37, and at http://www.issues.org/14.3/sagoff.htm, accessed 24 June 2006; Parliamentary Assembly, Council of Europe, 1999. “Recommendation 1425 (1999) — Biotechnology and intellectual property,” Council of Europe Official Gazette (September), at http://assembly.coe.int/Documents/AdoptedText/TA99/EREC1425.HTM, accessed 24 June 2006 (“[The Assembly] [...] is aware that for ethical reasons there are also severe reservations against patenting living organisms [...] considers that monopolies granted by patent authorities may undermine the value of regional and worldwide genetic resources and of traditional knowledge in those countries that provide access to these resources [...] considers that the aim of sharing the benefits from the utilisation of genetic resources within this broader view does not necessarily require patent–holding but requires a balanced system for protecting both intellectual property and the “common heritage of mankind” [...] therefore believes that neither plant–, animal– nor human–derived genes, cells, tissues or organs can be considered as inventions, nor be subject to monopolies granted by patents [...] [f]or these reasons the Assembly recommends that the Committee of Ministers, in co–operation with the European Union, the World Intellectual Property Organisation, the Food and Agriculture Organisation, the World Trade Organisation, Unesco and in accordance with the Convention on Biological Diversity [...] discuss a suitable alternative system of protecting intellectual property in the field of biotechnology which would fit the purposes of the Convention on Biological Diversity and meet the needs of worldwide interests both private and public [...] consider the ethical aspects of the patentability of inventions involving biological and, in particular, human material”, boldface added); Parliamentary Assembly, Council of Europe, 2000. “Recommendation 1468 (2000) — Biotechnologies,” Council of Europe Official Gazette (June), at http://assembly.coe.int/Main.asp?link=http%3A//assembly.coe.int/Documents/AdoptedText/ta00/EREC1468.htm, accessed 24 June 2006 (“[The Assembly] [...] recommends that the Committee of Ministers [...] call on the member states of the European Union to request the renegotiation of Directive 98/44/EC of the European Parliament and Council of 6 July 1998 on the legal protection of biotechnological inventions, in particular Article 5, paragraph 2 thereof. The time thus gained, with immediate effect, would permit the necessary public discussion and the finding of an appropriate solution in conformity with the Council of Europe Convention for the Protection of Human Rights and Dignity of the Human Being with regard to the application of Biology and Medicine: Convention on Human Rights and Biomedicine (European Treaty Series No. 164). In this connection, those member governments which have already brought appeals against Directive 98/44/EC before the Court of Justice of the European Communities should be supported”, boldface added, whereas art. 5, paragraph 2 of Directive 98/44/EC reads “[a]n element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element”); Nuffield Council on Bioethics, 2002. “The ethics of patenting DNA,” at http://www.nuffieldbioethics.org/go/ourwork/patentingdna/introduction, accessed 24 June 2006 (“patents [over DNA sequences] raise a number of ethical concerns, which can be divided into three types of argument, namely that: i) patents that assert rights over DNA sequences, in particular human DNA sequences, should not be allowed by virtue of the special status or nature of DNA; ii) patents that assert rights over DNA sequences should not be allowed because they do not meet the legal criteria for patenting; iii) patents that assert rights over DNA sequences should not be allowed by virtue of the possible deleterious consequences for healthcare and research related to healthcare”, boldface added). In his 1998 article, Sagoff quotes T. Peters of the Center for Theology and Natural Sciences as maintaining that “policy should maintain the distinction between discovery and invention, between what already exists in nature and what human ingenuity creates. The intricacies of nature...ought not to be patentable”; this point is particularly interesting as it could be argued that such is already the case, at least in principle, for the U.S. and European patent system, with a slightly more conservative approach — again, in principle — in Europe. On this particular point see A. Glorioso, C. Habib, and A. Izquierdo, forthcoming. “Alternative approaches to intellectual property protection of bio–pharmaceutical innovation from a FLOSS perspective,” In: Proceedings of the University of Torino/WIPO Academy LL.M. in Intellectual Property [at http://people.miu-ft.org/~sama/llm/paper-final.pdf, accessed 24 June 2006], at n. 15, and references therein (“[a] common criticism to patenting practices in the biotechnology field [...] is that what is being patented is something that already existed in nature, and as such should be considered a discovery, rather than an invention, therefore excluding the possibility of patenting the subject matter altogether. We notice that such distinction is, by its very nature, linguistic; as in many other fields of law [...] it rests upon a ‘fiction’, i.e. a shared understanding of what is the meaning,, as well as the logical and practical consequences, of classifying a phenomenon as an instance of a certain abstract concept rather than another, such shared understanding being based, upon other elements, on the goals that a social system wishes to attain — in this case, goals pertaining to industrial and innovation policy. The doctrine, the jurisprudence and the practices of the EPO concur in not granting patents to something which has simply been ‘found in nature’. Coherently with patenting practices and case law in the field of chemical patents, a patent is granted when the substance [...] is isolated and produced, through a technical and repeatable process [...] in a purer form than the substance existing in nature”, boldface added).
The issue is further complicated by the broad subject matter that goes under the oversimplifying heading of “gene patents,” with some entities — such as the Vatican, or affiliate organizations thereof — assuming different positions with regards to patents over genetically–modified organisms for food production or, more in general, to gene–based technologies as applied to “nature” ( Pontifical Council for Justice and Peace, 2004. Compendium of the Social Doctrine of the Church, par. 473 — “in effect nature is not a sacred or divine reality that man must leave alone. The human person does not commit an illicit act when, out of respect for the order, beauty and usefulness of individual living beings and their function in the ecosystem, he intervenes by modifying some of their characteristics or properties”) vis–à–vis patents on human DNA, especially in case of human cloning technologies (Pontifica Academia Pro Vita, 1997. “Reflections on Cloning,” [at http://www.vatican.va/roman_curia/pontifical_academies/acdlife/documents/rc_pa_acdlife_doc_30091997_clon_en.html, accessed 24 June 2006] — “[h]uman cloning belongs to the eugenics project and is thus subject to all the ethical and juridical observations that have amply condemned it [...] [i]t represents a radical manipulation of the constitutive relationality and complementarity which is at the origin of human procreation in both its biological and strictly personal aspects [...] [i]n any case, such experimentation is immoral because it involves the arbitrary use of the human body [...] as a mere research tool. The human body is an integral part of every individual’s dignity and personal identity, and it is not permissible to use women as a source of ova for conducting cloning experiments”).
However, and something which is often missed by adversaries of the patent system, whether applied to human geens or not, it should be remembered that a patent does not, generally speaking, constitute an authorization or a license to do anything: it is only a negative right, an entitlement for the patent holder to exclude third parties from practicing certain activities over the subject matter of the patent. See S.J.R. Bostyn, “Patenting DNA sequences (polynucleotides) and scope of protection in the European Union: an evaluation: Background study for the European Commission within the framework of the Expert Group on Biotechnological Inventions,” [at http://www.ivir.nl/publications/bostyn/patentingdna.pdf, accessed 24 June 2006] p. 10 (“[a] legislator regulating the patentability of for example cloning techniques, without regulating the cloning techniques themselves is carrying out a deceptive policy, which will also probably be difficult to maintain [...] [t]his is because if for example cloning techniques are excluded from patentability because they are assumed to be contrary to ordre public and morality, the mere fact that the technique as such is not prohibited contradicts and annihilates the argument that the invention cannot be patentable because it is assumed to be contrary to ordre public or morality [...] [a]n activity which is allowed by law can never be contrary to ordre public or morality [...] [t]his makes a patent provision of the sort mentioned unpractical and thus worthless”); Association Internationale pour la Protection de la Propriété Intellectuelle (AIPPI), 2000. “Question 150 — Patentability Requirements and Scope of Protection of Expressed Sequence Tags (ESTs), Single Nucleotide Polymorphisms (SNPs) and Entire Genomes,” [at http://www.aippi.org/reports/resolutions/Q150_E.pdf, accessed 24 June 2006] rec. 9 (“[...] [t]here are many areas, for example pharmaceutical products, where the patentee has to obtain regulatory approval before he can market his product. The regulation of the use of such an invention, especially the question of whether the use of such an invention gives rise to moral or ethical problems should not be a matter to be decided by the patent office”); M. Ricolfi, 2003. “La brevettazione delle invenzioni relative agli organismi geneticamente modificati,” I Riv. dir. ind., pp. 13–16.
It could be argued that a discussion over “FLOSS methods” for gene–based biotechnology makes sense only when there is a basic agreement over the opportunity of patenting genes or gene–based inventions (unless one chooses another route than the patent system altogether, such as compensatory liability regimes — see Available options for private and public action above in this paper). Then, analysis should focus on the way in which “FLOSS methods” could foster, or inhibit, certain ethical positions on the matter — for example, as a matter of distributive justice (J. Rawls, 1971. A theory of justice. Cambridge, Mass.: Belknap Press of Harvard University Press; R. Nozick, 1974. Anarchy, state, and utopia. New York: Basic Books) — or are completely irrelevant for the issue at hand. Although extremely relevant and compelling, such analysis will not be pursued in this paper for reasons of space (and respect for readers’ patience and sanity).
11. From now on the term “biotech” will be used as a synonym for “pharmaceutical biotechnology”; likewise, the term “biotech firm” should be understood as meaning “firm whose activities rest mainly on the production of biotechnology–based innovation and inventions, whose results can be later used by pharmaceutical firms for producing drugs”; notice also how a “biotech firm” and a “pharmaceutical firm” must not necessarily be separate entities, although the current landscape seems to suggest that most biotech firms are indeed SMEs which engage into contractual/licensing relationships with pharmaceutical firms in order to market products that embed their inventions or innovations.
12. “Defensive programming is a form of defensive design intended to ensure the continuing function of a piece of software in spite of unforeseeable usage of said software [...] [d]efensive programming techniques come into their own when a piece of software could be used mischievously or inadvertently to catastrophic effect” (from http://en.wikipedia.org/wiki/Defensive_programming). See also E. Yourdon and L.L. Constantine, 1979. Structured design: Fundamentals of a discipline of computer program and systems design. Englewood Cliffs, N.J.: Prentice–Hall; B.W. Kernighan and P.J. Plauger, 1978. The elements of programming style. Second edition. New York: McGraw–Hill; D.T. Wang, 1982. “Defensive microprogramming,” Proceedings of the 15th Annual Workshop on Microprogramming, International Symposium on Microarchitecture, pp. 84–88.
13. I posit that any model — and even more so, any policy — which rests on the assumption that agents are selfish has more chances to describe the real world — and, conversely, to succeed in the real world — than any model or policy which assumes agents will routinely consider other agents’ well–being as a basis for their actions.
14. However, in Available options for private and public action above in this paper, I do consider the interaction between private and public agents, meaning with the latter qualification agents whose motives are — theoretically — based on different goals, and whose existence is — again, theoretically — justified on the basis of different considerations than profit–maximization.
15. The concept of “useful inventions” as I am using it should not be confused with the concept of “utility” in economic analysis (H.H. Gossen, 1854. Entwicklung der Gesetze des menschlichen Verkehrs und der daraus fliessenden Regeln für menschliches Handeln. Braunschweig: F. Vieweg und Sohn; J. Von Neumann and O. Morgenstern, 1944. Theory of games and economic behavior. Princeton, N.J.: Princeton University Press) although arguably both terms do share a certain resilience to useful definitions — pardon the pun.
16. However, it might be argued that the number of inventions (useful or not) is not by itself a desiderable goal for all social actors, at least for those who share the basic principles of bioeconomics (Nicholas Georgescu–Roegen, 1971. The entropy law and the economic process. Cambridge, Mass.: Harvard University Press) and in general for the proponents of “décroissance” or “de–growth” as a response to perceived long–term inefficiences of the current global economical paradigm (see inter alia M. Bernard, V. Cheynet, B. Clémentin and P. Ariès (editors), 2003. Objectif décroissance: Vers une société harmonieuse. Paris: Parangon; S. Latouche, 2004. Survivre au développement: De la décolonisation de l’imaginaire économique à la construction d’une société alternative. Paris: Mille et une nuits). This might lead to interesting questions — for example, whether “FLOSS methods” in different fields favour or inhibit the general goals de–growth proponents (or whether they are completely orthogonal to these issues). Such considerations, however, will not be pursued in this paper for reasons of space and focus.
17. See inter alia P.R. Mooney, 2001. The impetus for and potential of alternative mechanisms for the protection of biotechnological innovations (prepared for The Canadian Biotechnology Advisory Committee, Project Steering Committee on Intellectual Property and the Patenting of Higher Life Forms). Ottawa: Canadian Biotechnology Advisory Committee. This report, which focuses on agricultural biotechnology but whose basic considerations seem nonetheless useful in this context of this paper, suggests that due to several perceived deficiences in the intellectual property system, the industry has been studying several other strategies to maximize the return from their investments, including “biological monopolies” (ibid., p. 6: “Because patents on more technologies are unreliable and because litigation is both expensive and uncertain, transnational enterprises would be more than happy to find more reliable systems of monopoly control. New Enclosure mechanisms are being developed. Among them, negative technologies (“Traitor Tech”) are attractive because of their built–in exclusivity and long–range controls. One prominent variation of Traitor Tech are the “Terminator” patents. The Terminator version causes the planted seed to become sterile at harvest time so that farmers cannot save the seed for another growing season. Other Traitor technologies offer positive or negative traits in plant varieties that can only be activated or de–activated by the application of proprietary chemicals. Advanced industry strategies include the development of seeds that can be regrown but only if farmers purchase specialty chemicals that rejuvenate dormant seeds”, boldface added), “biosensors” (ibid., pp. 6–7: “[...] [t]he potential for remote and hand–held DNA monitoring devices usable in the crop, cannery or kitchen, is enormous and could ultimately rival patents as a mechanism for ensuring contract control of technologies. Some recent developments that point in this direction: GPS (Global Positioning System) are becoming an important tool in identity preservation (IP), if an experimental program in Australia succeeds. In Tasmania, 600 agricultural fields are being assigned special identification numbers associated with their unique GPS coordinates. Backers of the plan are pushing for all Tasmanian fields to be numbered in an effort to expedite information exchanges between growers, wholesalers, government, and consumers. (And patent lawyers?) Similarly, the Argentine government has launched an “eye in the sky” to halt tax evasion by using satellite imagery to monitor their crops [...] GeneScan Europe AG and Motorola are developing a new DNA detection tool for genetically modified crops. By utilizing Motorola’s eSensor DNA detection system (the “scan gun”), the eSensor could lead to “on site” analyses via a hand–held device. The eSensor uses organic molecules to form electronic circuits that can detect numerous DNA targets simultaneously [...] AviGenics, a U.S. biotech company plans to create a strain of chicken genetically engineered to have an extra large breast to yield more meat, with a DNA copyright tag inserted among its genes to stop anyone breeding it without permission [...] Some of the new technological strategies are designed to prevent GM products from infecting conventional crops. The results can still be worrisome. Researchers have recently announced a “safe sex seed” that would lead to a genetic modification of maize in order to resist foreign genes. In other words, if Monsanto has a sexually transmitted disease, the rest of the world has to wear a condom. Working with teosinte, a University of Wisconsin–Madison scientist has found a molecular barrier that is capable of completely locking out foreign genes [...]”) and/or “regulatory or contract controls” (ibid., pp. 7–8: “Yet another New Enclosure strategy comes in the form of government–enforced public safety requirements. Biosafety protocols can be used to impose monopoly under the assumption that the necessity to feed the world or safeguard the environment warrants the risk of employing a complex and potentially hazardous technology. Because of the risk, governments could legislate a private monopoly for the inventor company to manage the innovation. This would not be the first time that the state has guaranteed monopoly in the name of the public good. Another strategy involves reliance on contract law. Many companies now see contracts as a more reliable strategy. Pharmacia (Monsanto), for example, has employed extraordinary measures to prevent farmers from saving the company’s patented GM seed — including the use of Pinkerton detectives to monitor rural areas [...]”, boldface added).
With specific reference to the first strategy highlighted by the report, see R.A. Jefferson, D. Byth, C. Correa, G. Otero and C. Qualset, 1999. “Genetic use restriction technologies — Technical assessment of the set of new technologies which sterilize or reduce the agronomic value of second generation seed, as Exemplified by U.S. Patent No. 5,723,765, and WO 94/03619,” (UNEP/CBD/SBSTTA/4/9/Rev.1), at http://www.patentlens.net/daisy/bios/552/version/live/part/4/data, accessed 24 June 2006; see also A. Glorioso, C. Habib, and A. Izquierdo, forthcoming. “Alternative approaches to intellectual property protection of bio–pharmaceutical innovation from a FLOSS perspective,” In: Proceedings of the University of Torino/WIPO Academy LL.M. in Intellectual Property [at http://people.miu-ft.org/~sama/llm/paper-final.pdf, accessed 24 June 2006], at n. 31 (“[t]he sociopolitical and economic parallels between Technical Protection Measures in copyright law (see art. 11 WIPO Copyright Treaty, art. 18 WIPO Performances and Phonograms Treaty — see also, with reference to the European legal scenario, Foundation for Information Policy Research, 2001. Implementing the EU Copyright Directive. London: Foundation for Information Policy Research, at http://www.fipr.org/copyright/guide/eucd-guide.pdf, accessed 24 June 2006; U. Gasser and M. Girsberger, 2004. “Transposing the copyright directive: Legal protection of technological measures in EU–member states,” Berkman Center for Internet & Society, Harvard Law School, Publication Series number 2004–10, at http://cyber.law.harvard.edu/home/2004-10, accessed 24 June 2006) and Genetic Use Restriction Technologies in the field of biotechnology [...] and the way in which similar industrial trends could give rise to similar legal protection, therefore shifting the latter from contract law in the case of GURTs to patent law, much as TPMs entered the “sphere of protection” of copyright law, would deserve a closer look”).
18. There is not enough space here to discuss how such costs could be recovered, and in general innovation processed be funded, in other ways than by granting property rights to inventors — including, but not limited to, public grants or prize systems. For a brief introduction on this subject, see inter alia J. Love- and T. Hubbard, 2005. “Paying for public goods,” In: R.A. Ghosh (editor). CODE: Collaborative Ownership and the Digital Economy. Cambridge, Mass.: MIT Press, pp. 207–229. The relationship between public funding, grant of property rights and general issues of access to knowledge/innovation is further complicated by the practice — pioneered in the U.S. through the enactment in 1980 of the Bayh–Dole Act (35 U.S.C. 200–212) — to allow institutions to patent the results of research funded with public money; moreover, the particular dynamics of bio–pharmaceutical innovation processes, such as the need for regulatory approval spurred the approval in the U.S. of the Hatch–Waxman Act (21 U.S.C. 355(j)) and the creation of so–called “Supplementary Protection Certificates” in the European Union (Council Regulation 1768/92/EEC of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products and Regulation 1610/96/EC of the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products. Such examples of public policy further complicate the landscape of the interactions between public and private action; for a view on the Hatch–Waxman Act which clearly shows the very complex nature of public/private innovation policies and strategies in the pharmaceutical field, see “Proceedings from the Symposium on Bioinformatics and Intellectual Property Law, April 27, 2001 — Boston, Massachussets,” in 8 (265) Boston University Journal of Science & Technology Law, 2002, in particular the session on “The Proper Scope of IP Rights in the Post–Genomic Era” (“[Prof. Arti Rai speaking] [t]he most important feature of pharmaceutical protection that makes it different from protection in other areas is, as I have suggested, the Hatch–Waxman Act. Now, most people who have heard of Hatch–Waxman know that it extends the patent term for drugs. The idea is that because the drug’s patent term is typically running while the drug is in the FDA approval process, manufacturers need to be compensated for the unprofitable, and, in fact, costly, time they spend in that process. This is hardly the most anti–competitive feature of Hatch–Waxman, however [...] The features of Hatch–Waxman that are of concern to me are those features that provide incentives for drug manufacturers to seek not just one patent on a drug but multiple patents, particularly several years before the basic patent that has received the Hatch–Waxman extension is set to expire. These additional patents that drug companies seek are often quite frivolous [...] No matter how frivolous a patent is, however, it can provide a defense against competition. Normally, it would be difficult for a truly frivolous patent to provide a defense against competition because if the party wanted to enforce the patent, for example with a preliminary injunction, it would at least have to make a colorable claim showing that the patent could be valid [...] however [..] [the] Hatch–Waxman [act] sets up a regime in which the patent statute is linked to the FDA regulatory approval process, and as soon as a brand–name manufacturer brings a claim of patent infringement against a generic competitor, the approval process for that generic competitor is automatically stopped. In fact, there is an automatic thirty–month delay in the FDA approval process for the generic competitor at that point. Essentially, what the brand–name manufacturers get is the equivalent of an automatic thirty–month preliminary injunction, without having to prove anything, and that is not even the worst of it. During this thirty–month period, brand–name manufacturers often succeed in further delaying generic competition by entering into settlements with the generic manufacturer not to market the drug until all the applicable patents, frivolous or not, have expired. Because of Hatch–Waxman, the brand–name manufacturer [...] only has to settle with the first generic competitor because that first generic competitor is given a 180–day exclusive marketing period, and this marketing period is not even triggered until generic marketing actually begins. The bottom line is that settling with a single, generic competitor forestalls all competition from any competitor until 180 days after the relevant patents, frivolous or not, have expired or are declared invalid by a court. [...] Now beyond Hatch–Waxman, drug manufacturers also enjoy a significant subsidy because the basic research it uses is often funded by the federal government. Because of the technology transfer legislation passed in the early 1980s, drug manufacturers can often seek, or at least acquire, exclusive rights in this research. The rationale for these tech–transfer statutes, as Rebecca Eisenberg has discussed at great length in her work, basically follows Edmund Kitch’s view of patents as prospects for development [...] To the extent that bioinformatics does produce efficiencies in the drug development process, we could think about altering the protectionist regime for pharmaceuticals that I have described [...] If very significant reductions in research and development costs are realized, particularly at the preclinical stage, we might then think about the federal subsidy for pre–clinical development provided by Bayh–Dole and other technology transfer statutes. In that context, perhaps it might be advisable to consider the idea that some percentage of the profit from drugs that are based on federally funded research should go to a fund that provides insurance subsidies for patients that do not have insurance for drugs”, boldface added).
However, when discussing whether granting property rights such as patents over subject matter that has been produced through public funding is a good idea or not, care should be taken in evaluating the scenario in all its complexity. See inter alia W.M. Landes and R.A. Posner, 2003. The economic structure of intellectual property law. Cambridge, Mass.: Harvard University Press, p. 310 at n. 24 (“A foreseeable and, it appears, an actual effect of the change in policy [after the introduction of the Bayh–Dole act] has been to provide windfalls to universities in the form of royalties for inventions financed in large part by the federal taxpayer and to encourage universities to shift their research emphasis from basic to applied research [...] The effect is complex. By increasing the university’s revenues, the patenting of the fruits of applied research generates funds that can be used to support basic research, and by providing additional income to university researchers may avoid losing them to industry–, boldface added). I dare to complement Prof. Landes and Prof. Posner’s considerations: granting free access to inventions funded with public money and/or denying the possibility to be given property rights (two faces of the same coin) might mean that more public money needs to be raised in order to cover the costs developing such inventions, with a potential effect of even greater inequalities depending on the particular type of taxation scheme used — which moves the discussion into another (and quite different) area of research.
19. Analyzing the relationship between the breadth, scope, duration of patents and other property rights on one hand, and the rate, pace and efficiency of the innovation process on the other, is a tricky issue; economic analysis suggests that in those fields where incremental innovation is the rule rather than the exception (and the question remains whether bio–pharmaceutical innovation is characterized more by “breakthroughs” or by incremental innovation and/or whether, even assuming innovation is indeed incremental, firms’ cost structure as due to exogenous factors, such as regulatory control, calls for policies more akin to “breakthrough” scenarios) care should be taken in not overprotecting, in terms of breadth and scope, initial innovators. See inter alia S. Scotcher, 1991. “Standing on the shoulders of giants: Cumulative research and the patent law,” Journal of Economic Perspectives, volume 5, number 1, at p. 33 (“[a] system of property rights that might seem natural would be to protect the first innovator so broadly that licensing is required from all second generation innovators who use the initial technology [...] [b]ut such broad protection can lead to deficient incentives to develop second generation products. When the licensing agreement in negotiated after a patent has been granted, research costs have already been sunk [...] [a] second innovator who cannot market the next generation product without a license has a very weak bargaining position [...] broad patent protection might inefficiently inflate incentives for the first innovation [...] [i]f the first innovation reduces the cost of achieving later innovations, but is not the only possible vehicle to achieve them, the first innovator’s share should not exceed the cost reduction. If it does, the first innovator will be overrewarded”, boldface added); ibid., at p. 34 (“[...] if breadth of the first patent could be interpreted to depend on the expected costs and benefits of a second generation product, we could insure that the the second innovator’s expected profit would be zero. If not, some second generation products will be stymied even though they would contribute positively to joint profit and to social welfare, and the second innovators who invest will typically make positive profits”); J.R. Green and S. Scotchmer, 1995. “On the Division of Profit in Sequential Innovation,” RAND Journal of Economics, volume 26, number 1 (Spring), at p. 25 (“In the case of isolated inventions, it would be optimal [...] for the patent life to be just long enough to cover the costs of R&D. But [...] this principle does not apply when two stages of innovation are undertaken by different firms, because not all the profit can be transferred to the first innovator. If the patent life is just long enough to cover total R&D costs [...] the first innovator will in general not enter because he could anticipate negative profit. Nevertheless, the more profit we can transfer to the first innovator, the shorted the patent life required to stimulate research [...] [a]s to the breadth of patent protection, we have shown circumstances in which the first patent should be broad, but other circumstances in which the a broad patent reduces the first innovator’s profit because it increases the later innovator’s bargaining power. It does this by giving the later innovator a credible threat not to undertake a profitable investment unless the first innovator is willing to share the costs. Counterintuitively, the first innovator can be better off with a narrower patent when the patent’s life is fixed”, boldface added); R. Cooter and T. Ulen, 1997. Law and economics. Second edition. Reading, Mass.: Addison–Wesley, p. 121 (“[t]o appreciate this contrast between broad and narrow patents, consider a typical relationship between research and development [...] [r]esearch sometimes yields a pioneering discovery with no immediate commercial value, but with large commercial potential. To realize its potential, a pioneering discovery must be developed and ‘brought to market.’ Development involved a series of small improvements [...] [t]he legal question is whether a patent for the pioneering discovery extends to the application. Broad patents encourage foundamental research, and narrow patents encourage development [...] [i]n reality, questions of breadth are decided in law according to the ‘doctrine of equivalent,’ which refers to a series of court findings about how nearly equivalent two inventions must be before finding patent infringement [...] [i]deally, the fundamental research and commerical [sic] development would be joined together in a single firm [...] [p]roblems arise under the realistic assumption that transaction costs impede bargaining between suppliers of fundamental research and commercial development. Two legal remedies are available: lubricate bargaining (normative Coase theorem) or allocate rights to the party who values them the most (normative Hobbes theorem) [...] [w]hat particular [patent] life is optimal? [...] In general, the shape of the curves [the optimal patent life] varies from one invention to another [...] [i]deally, there would be a different patent life for each invention. Such a scheme of individualized patent terms is impractical, but practical alternatives exist to granting a 17–year patent for every invention. Germany, for example, has a two–tiered patent system. Major inventions in Germany receive full–term patents, while minor inventions and improvements receive petty patents for a term of three years”, boldface added); T. O’Donogue, S. Scotchmer and J. Thisse, 1998. “Patent breadth, patent life, and the pace of technological improvement,” Journal of Economics and Management Strategies, volume 7, number 1, at p. 2 (“[s]hould patents be long–lived but narrow, so that they effectively expire at an endogenous time when a better product is made? Or should they be relatively broad but short–lived, so that the effective patent life coincides with the statutory patent life? It turns out that the two policies are not equivalent, even if both lead to the same rate of innovation. To sustain a given rate of innovation, the effective patent life in the first policy must be longer than the effective (statutory) patent life in the second policy, which exacerbates the inefficiencies due to market power”, boldface added); ibid., at p. 2 (“When technology grows cumulatively, there may be a large discrepancy between the social value of an innovation and the profit collected by the innovator [...] [i]n such an environment the statutory life of a patent may be irrelevant. In this paper we introduce the notion of effective patent life, which is the expected time until a patented product is replaced in the market. We argue that effective patent life depends on patent breadth as well as on statutory patent life, since patent breadth determines which products can replace the patented product”, boldface added); ibid., at p. 25 (“[t]he patent recommendation in this paper is that leading breadth [[that] protects against competition from products with higher quality] should be granted when the hit rate of ideas is high; that is, there is an exogenous force toward rapid turnover in the market. Of course one must ask what the patent authorities must observe in order to implement such a policy. The main consideration is how quickly an innovator would lose his market position in the absence of such protection. However, such considerations are not part of the patent statute, and one could even see how the patent authorities might reach the opposite conclusion: An active investment climate can be seen as prima facie evidence that ideas are ‘obvious’ and therefore not protected at all. We point this out in order to emphasize that the effectiveness of patent law in supporting research is seriously impeded by the fact that it does not refer to costs or market structure in how patent protection is circumscribed”, boldface added).
20. This is not to mean that these two issues are the only ones, or even that they are the most relevant on an absolute scale; they are, however, most relevant for the discussion here. For a (more) complete list of issues that arguably characterize the biotechnology innovation scenario nowadays, see Organisation for Economic Co–operation and Development (OECD), 2002. Genetic inventions, intellectual property rights and licensing practices: Evidence and policies. Paris: OECD, at http://www.oecd.org/dataoecd/42/21/2491084.pdf, accessed 24 June 2006; and, Nuffield Council on Bioethics, 2002. “The ethics of patenting DNA,” at http://www.nuffieldbioethics.org/go/ourwork/patentingdna/introduction, accessed 24 June 2006; but see also S.J.R. Bostyn, “Patenting DNA sequences (polynucleotides) and scope of protection in the European Union: an evaluation: Background study for the European Commission within the framework of the Expert Group on Biotechnological Inventions,” [at http://www.ivir.nl/publications/bostyn/patentingdna.pdf, accessed 24 June 2006], for a discussion (and some methodological and substantive criticisms) of the analysis conducted in the first two reports.
21. “An overlapping set of patent rights requiring that those seeking to commercialize new technology obtain licenses from multiple patentees” (C. Shapiro, 2001. “Navigating the patent thicket: Cross licenses, patent pools, and standard–setting,” A. Jaffe, J. Lerner and S. Stein (editors). Innovation policy and the economy, volume 1. Cambridge, Mass.: MIT Press). Shapiro suggests that in certain conditions — namely, in the production of “complex” goods, i.e. goods that embody a large umber of different technologies over which competing parties have property rights, including patents — the existence of even limited numbers of patents can lead to blocking situations, in turn causing an upheaval of transaction costs and, consequently, the impossibility for an innovator to put to market the innovation. On a similar note, Bessen argues that using patent rights for certain complex technologies may produce issues, even in the absence of transaction costs and no “hold–up” problem as described by Shapiro, because “[...] ownership is shared and the rents earned on an innovation are shared as well. This means that innovation incentives are too low even with efficient contracting and ignoring entry deterrence. Moreover, patents do not merely fail to provide sufficiently strong incentives in this case; they may also destroy the market–based incentives of lead time advantages. In effect, with low standards and complex technologies, patents serve to subsidize the losers of innovation races (paid by the winners), especially if those losers are large patent holders in mature industries” (J. Bessen, 2003. “Patent thickets: Strategic patenting of complex technologies,” ROI working paper, at http://www.researchoninnovation.org/thicket.pdf, accessed 24 June 2006).
22. Burk and Lemley suggest that the main difference between patent thickets and anti–commons scenarios lie in the presence (or lack thereof) of overlapping rights, i.e. anti–commons properties emerge when there are a number of property rights, including patents, that cover different products or goods, or different, non–competing facets of the same good (D.L. Burk and M.A. Lemley, 2003. “Policy levers in patent law,” Virginia Law Review, volume 89, number 7, pp. 1575–1696).
23. For the basic definition of the anti–commons phenomenon, see M.A. Heller, 1998. “The tragedy of the anticommons: Property in the transition from Marx to markets,” Harvard Law Review, volume 11, pp. 621–688 (“In an anticommons [...] multiple owners are each endowed with the right to exclude others from a scarce resource, and no one has an effective privilege of use. When too many owners hold such rights of exclusion, the resource is prone to under use — a tragedy of the anticommons [..] Anticommons property may appear whenever governments define new property rights in both post–socialist and developed market economies. Once an anticommons emerges, collecting rights into usable private property bundles can be brutal and slow”); relevant for this paper, anti–commons properties have been theorized in modern biomedical R&D and production activities — see M.A. Heller and R.S. Eisenberg, 1998. “Can patents deter innovation? The anticommons in biomedical research,” Science, volume 280, pp. 698–701 and in F.H. Miller (editor), 2003. Rights and resources. Aldershot, Hants, England: Ashgate/Dartmouth; A.K. Rai, 2001. “The information revolution reaches pharmaceuticals: Balancing innovation incentives, cost and access in the post–genomics era,” University of Illinois Law Review, pp. 173–210.
Burk and Lemley (“Policy levers in patent law,”, at note 22) argue that anti–commons issues could be characterized as either horizontal or vertical (“Complements or anticommons problems can arise either horizontally or vertically in an industry. The problem arises horizontally when two different companies hold rights at the same level of distribution — say, inputs into the finished product. It arises vertically if a product must be passed through a chain of independent companies (such as a monopoly manufacturer who must sell through an independent monopoly distributor), or if patents on research tools or upstream components must be integrated with downstream innovation in order to make a finished product”). Moreover, they characterize the anti–commons phenomenon as a particular instance of a more general problem, known in economics as the issue of complementarity of goods, which can in turn produce effects of double (or triple, or more) marginalization, i.e. the fact that when granting economic actors the possibility to impose monopoly prices on each of the complementary goods that are needed to create a “complex” good, the price of the integrated product will be inefficiently high (or the product will not be produced at all, which is a case of the “hold–up” problem posited by Shapiro, 2001. “Navigating the patent thicket: Cross licenses, patent pools, and standard–setting,”, at note 21). For a technical discussion of the inefficient pricing of products that integrate complementary patents, see. See also C. Shapiro, “Setting compatibility standards: Cooperation or collusion?” paper prepared for presentation at Intellectual Products: Novel Claims to Protections and Their Boundaries, Conference of the Engelberg Center on Innovation Law and Policy, La Pietra, Italy, June 25–28, 1998, revised on 8 June 2000, available at http://faculty.haas.berkeley.edu/shapiro/standards.pdf).
24. See inter alia D.E. Adelman, 2005. “A fallacy of the commons in biotech patent policy,” Berkeley Technology Law Journal, volume 20, at http://btlj.boalt.org/data/articles/20-2_spring-2005_1-adelman.pdf, accessed 24 June 2006; J.J. Doll, 1998. “The patenting of DNA,” Science, volume 280, number 5364, p. 689, at http://www.sciencemag.org/cgi/content/full/280/5364/689, accessed 24 June 2006; R.A. Epstein and B.N. Kuhlik, 2004. “Navigating the anti–commons for pharmaceutical patents: Steady the sourse on Hatch–Waxman,” University of Chicago Law School, John M. Olin Law & Economics Working Paper, number 209, at http://www.law.uchicago.edu/Lawecon/WkngPprs_201-25/209.rae-bk.anticommons.pdf , accessed 24 June 2006; J.P. Walsh, A. Arora and W.M. Cohen, 2003. “Working through the patent problem,” Science, volume 299, number 5609, p. 1021, and at http://www.sciencemag.org/cgi/content/summary/299/5609/1021, accessed 24 June 2006; J.P. Walsh, A. Arora and W.M. Cohen, 2003. “Effects of research tool patents and licensing on biomedical innovation,” In: W.M. Cohen and S.A. Merrill (editors.) Patents in the knowledge–based economy. Washington, D.C.: National Academies Press.
25. The 2002 OECD report on genetic inventions and related licensing practices (OECD, 2002. Genetic inventions, intellectual property rights and licensing practices: Evidence and policies. Paris: OECD, at http://www.oecd.org/dataoecd/42/21/2491084.pdf, accessed 24 June 2006) quotes a third source (Signals Magazine, “Is the Alliance Deck Becoming Anti–Stacked Against Innovators?” 29 May 1998; Signals Magazine, “Homestead 2000: The Genome,” 3 March 2000) as reporting that “royalty exposure to net sales of a given product can in some cases exceed 20%”.
26. Although such strategy is sometimes included under the general analysis of “path dependence” (see inter alia M. Katz and C. Shapiro, 1986. “Technology adoption in the presence of network externalities,” Journal of Political Economy, volume 94, number 4, pp. 822–841; J. Farrell and G. Saloner, 1986. “Installed base and compatibility: Innovation, product preannouncements, and predation,” American Economic Review, volume 76, number 5, pp. 940–955; W.B. Arthur, 1994. Increasing returns and path dependence in the economy. Ann Arbor: University of Michigan Press; W.B. Arthur, 1989. “Competing technologies, increasing returns, and lock–in by historical events,” Economic Journal, volume 99, number 394, pp. 116–131) economic analysis has not yet come to a shared understanding of what are the relevant characteristics of such phenomenon, its constituent elements, the reasons why it might arise and/or the effects it could produce — see S.E. Margolis and S.J. Liebowitz, 1998. “Path dependence,” In: The New Palgrave’s Dictionary of Economics and the Law. London: Macmillan (“[p]ath dependence is a term that has come into common use in both economics and law. In all instances that path dependence is asserted, the assertion amounts to some version of ‘history matters.’ Path dependence can mean just that: Where we are today is a result of what has happened in the past. For example, the statement ‘we saved and invested last year and therefore we have assets today’ might be more fashionably expressed as, ‘the capital stock is path dependent.’ [...] Unfortunately, as path dependence has been borrowed into the social sciences, it has taken on several different and often conflicting meanings. Sometimes it means only that history matters in the very narrowest sense, and other times it means something more [...] Several very different types of claims appear in the literature as path dependence. Unfortunately, although these different claims may have vastly different implications, discussions of path dependence have not always distinguished among them”, boldface added); S.J. Liebowitz and S.E. Margolis, 2000. “Path dependence,” In: B. Bouckaert and G. de Geest (editors). Encyclopedia of law and economics. London: Edward Elgar (“[f]irst–degree path dependence is a simple assertion of an intertemporal relationship, with no implied claim of inefficiency. Second–degree path dependence stipulates that intertemporal effects propagate error. Third–degree path dependence requires not only that the intertemporal effects propagate error, but also that the error was avoidable [...] Since it is only this third form of path dependence that can be understood as market failure, it is important to maintain the distinctions among these various forms. One must take care not to extend the plausibility of instances of ordinary durability — first– and second–degree path dependence — to third degree claims”, boldface added).
Using the term calls for further precautions because of its adoption in other fields than economics (S.E. Margolis and S.J. Liebowitz, 1998. “Path dependence,” In: The New Palgrave’s Dictionary of Economics and the Law — “[p]ath dependence is an idea that spilled over to economics from intellectual movements that arose elsewhere. In physics and mathematics the related ideas come from chaos theory. One potential of the non–linear models of chaos theory is sensitive dependence on initial conditions: determination, and perhaps lock–in, by small, insignificant events. In biology, the related idea is called contingency — the irreversible character of natural selection [...] In mathematics, path independence is a condition for the existence of exact solutions for differential equations. In probability theory, a stochastic process is path dependent if the probability distribution for period t+1 is conditioned on more than the value of the system in period t”, boldface added; H. Schwartz, 2004. “Down the wrong path: Path dependence, increasing returns and historical institutionalism,” unpublished manuscript, University of Virginia, at http://www.people.virginia.edu/~hms2f/Path.pdf — “[t]he synthetic model of formal [path dependence] I derive [...] stands on three logically connected legs: [f]irst, it assumes that small contingent causes at the beginning of a path can have large and long–term consequences. Second, it argues that increasing returns to political and social institutions explain actors’ reticence about changing those institutions. Third, it analogizes between [path dependence]’s critical junctures and evolutionary theory’s idea of punctuated equilibrium”).
Without entering the debate on what “path dependency” exactly means or whether the phenomenon exists in reality or is just the lunacy of theoretical economists, the fact remains that profit–maximizing actors might be unwilling to put an improved version of their products on the market if the total revenue they could derive from it would not be sufficient to cover the sunk costs deriving from the first, non-improved version of the product. For an accessible discussion on this and related concepts, see C. Shapiro and H.R. Varian, 1999. Information rules: A strategic guide to the network economy. Boston, Mass.: Harvard Business School Press.
27. Which is, by the way, what happens with copyleft licenses, i.e. software licenses (and, if we stretch the concept a bit, licenses for other works, such as the Creative Commons licenses with a “ShareAlike” clause) that grant licensees use, modification and redistribution rights if and only if the licensees grant back their improvements to subsequent licensees — the original producer is therefore able, in principle, to internalize the benefits thereof.
28. The practice of some patent offices, most notably the European Patent Office, to require the “industrial use” of a particular gene sequence to be properly disclosed and specified could be construed as a potential solution to such problem, insofar as the resulting patent would be “tied” to the function described and would not therefore block other patents, which claimed the same gene sequence for a different function. See S.J.R. Bostyn, “Patenting DNA sequences (polynucleotides) and scope of protection in the European Union: an evaluation: Background study for the European Commission within the framework of the Expert Group on Biotechnological Inventions,” at http://www.ivir.nl/publications/bostyn/patentingdna.pdf, accessed 24 June 2006.
29. Admittedly, the business community does not seem to be particularly interested in “FLOSS methods” applied to biotechnology; however, a reason of this lack of interest could be a general lack of clarity on what we should actually understand with the term.
30. Such as the services provided by Google Inc., Microsoft Corporation Inc. through its “HotMail” Web–based e–mail service, Amazon.com Inc., all of which provide value–added services on top of FLOSS. It can be argued that a reason for the success of FLOSS in this particular sub–market is the fact that one of the basic obligations of copyleft licenses, namely the obligation to provide the source code of a program when the latter is distributed to third parties, does not kick in in those cases in which the software is not distributed but simply used to erogate services on top of it — producers in this market obtain all the advantages of FLOSS without having to pay one of the most obvious prices. At the times when of the first discussions on the new version of the GNU General Public License were circulating, it was suggested that this scenario — the so-called “ASP loop–hole” (where ASP stands for “Application Service Provider”, the standard term for this kind of services before the “Web 2.0” meme spread around) would be somehow addressed in version 3 of the license. However, the current draft does not contain any provision on the topic (see Free Software Foundation, 2006. “GPLv3 First Discussion Draft Rationale,” unpublished manuscript [16 January], at http://gplv3.fsf.org/rationale.pdf — “[...] consider the treatment of software designed for public use on network servers. Given the variety of needs and concerns in this area, in which different parties have disparate and strongly–held positions, we have chosen not to add requirements about public use of modified versions in the GPL itself. Instead we have made a variety of possible license requirements compatible with the GPL, through an enhanced compatibility provision; thus we leave individual developers scope for choosing among requirements to apply for public use of their code. We have intentionally done nothing that might threaten to divide free software developers from free software users”).
31. Such as the Nokia 770 portable tablet or the TiVo home entertainment system, just to name two of the most succesful examples of FLOSS being used in embedded/appliance platforms.
Notably, the strict relationship between hardware and software in the case of appliances has given rise to an interesting twist to the freedom to modify the program that is a tenet of FLOSS licenses (see supra note 7); namely, the software per se might be modifiable, but the hardware will not allow running any such modified version unless they are digitally signed, a process for which a secret key will be needed — of course, the vendor will not release such keys to the general public as a matter of common business practice. This trend, which presents some interesting parallels to the attempts by several large biotech firms to add a layer of technological measures to the basic protection granted by patent law (see supra note 17) is the reason why why the current draft of the new version of the GNU General Public License contains explicit provisions in this sense (Free Software Foundation, 2006. “GPLv3 First Discussion Draft Rationale,” unpublished manuscript [16 January], at http://gplv3.fsf.org/rationale.pdf — “[GPLv3] doesn’t limit what technical jobs the software can do, because that’s another principle of free software, people should be able to use the software and run it for any purpose, and change the software to do whatever they like [...] we focussed on a different aspect of DRM, which is, stopping the users from controlling the software that runs in their machine. Treacherous Computing is designed such that if you modify the software, it won’t be able to do the job. They use things like checksumming the software and checking whether it has been signed and authorised, and so if you modify the program and you install it, since your version hasn’t been signed by them, your version isn’t really authorised, so either it won’t run, or it won’t be able to open the files that you want to open or the network server will refuse to talk to it, or in one way or another you will be blocked from really doing the job that the original version was set out to do. So what we’re doing in GPL version three is, we’re saying they’re welcome to design free software to do whatever it is they want, and they’re welcome to set up the machine such that it won’t run a program unless it’s been signed, but they have to give you the signature key so that you can sign your own version. They must give you the signature key so that you can authorise your version at least to run on your machine”). Will licenses for “FLOSS biotech” be forced to employ similar strategies when the “new enclosures” of technological/contractrual measures will become widespread in the biotech arena?
32. And this does not consider the fact that copyright is not necessarily the best choice even in the field of software, whose dual functional/creative nature does not stop posing serious conceptual and practical problems in trying to adapt copyright to innovations which did not exist (and this would be the minor problem, as intellectual property law has shown a certain ability to adapt itself to new and unenvisioned subject matter) and were not even conceivable in principle at the time the first copyright regimes were being modeled.
No attempt will be conducted here to summarize the long debate that led to the choice of copyright as the “best” way to legally protect computer programs. As an introduction to these developments, focusing on the potential for a sui generis protection see P. Samuelson, R. Davis, M.D. Kapor, and J.H. Reichman, 1994. “A manifesto concerning the legal protection of computer programs,” Columbia Law Review, volume 94, number 8, pp. 2308–2431 (“[i]n brief, we have concluded that while copyright law can provide appropriate protection for some aspects of computer programs, other valuable aspects of programs, such as the useful behavior generated when programs are in operation and the industrial design responsible for producing this behavior, are vulnerable to rapid imitation that, left unchecked, would undermine incentives to invest in software development. These aspects may need some legal protection against cloning that existing legal regimes cannot provide. Most of the considerable controversy about software protection, within the software industry and the legal commmunity, has arisen when software developers have tried to use existing legal regimes to protect these kinds of program innovations. The authors have been among those who have opposed efforts to stretch the bounds of existing legal regimes to protect these aspects of programs [...] [i]n this Article, we argue that the software controversy has focused on the right problem, but has raised it in the wrong legal milieu. The problem is that behavior and other industrial design elements of programs are often expensive to develop and inexpensive to copy. This makes it possible for an imitator to produce a functionally indistinguishable program — a clone — that the imitator can sell at a lower price. Competition from these clones can destroy incentives to invest in software innovation. None of the existing legal regimes is well–suited to solving this problem”) and references therein.
33. However, the definition of “source code” in the GNU General Public License version 2, i.e. “the preferred form of the work for making modifications to it” (see Free Software Foundation, 1991. “GNU General Public License version 2” [June], at http://www.gnu.org/licenses/gpl.txt) is surprisingly broad in its simplicity. Other FLOSS licenses, including the BSD License (see http://www.opensource.org/licenses/bsd-license.php) are more software–specific; even the first draft of version 3 of the GNU General Public License, in its attempt to counter some of the recent technological trends of the software industry, including Digital Rights Management and Trusted Computing, loses some of this genericity in its definition of “Complete Corresponding Source Code,” i.e. “all the source code needed to understand, adapt, modify, compile, link, install, and run the work, excluding general–purpose tools used in performing those activities but which are not part of the work. For example, this includes any scripts used to control those activities, and any shared libraries and dynamically linked subprograms that the work is designed to require, such as by intimate data communication or control flow between those subprograms and other parts of the work, and interface definition files associated with the program source files [including] any encryption or authorization codes necessary to install and/or execute the source code of the work, perhaps modified by you, in the recommended or principal context of use, such that its functioning in all circumstances is identical to that of the work, except as altered by your modifications. It also includes any decryption codes necessary to access or unseal the work’s output. Notwithstanding this, a code need not be included in cases where use of the work normally implies the user already has it” (see Free Software Foundation, 2006. “GNU General Public License, Discussion Draft 1 of Version 3” [16 January], at http://gplv3.fsf.org/draft). For the rationale behind this and other changes between version 2 and version 3 of the GNU GPL, see Free Software Foundation, 2006. “GPLv3 First Discussion Draft Rationale,” unpublished manuscript [16 January], at http://gplv3.fsf.org/rationale.pdf.
34. Biological Innovation for Open Society — see http://www.bios.net/. See also CAMBIA, 2004. The “CAMBIA BiOS Initiative — Biological Innovation for Open Society,” at http://www.bios.net/daisy/bios/10/version/live/part/4/data.
35. See http://www.cambia.org/daisy/cambia/home.html.
36. The BiOS project has actually produced two patent licenses to date: the “BIOS Plant Enabling Technology License” (draft text available at http://www.bios.net/daisy/PELicense/751) and the “BIOS Genetic Resource Technology License” (draft text available at http://www.bios.net/daisy/GRITLicense/750); plus, there is an accompanying agreement to the licenses, the “BIOS Technology Support Services Subscription Agreement,” v. 1.3 (text available at http://www.bios.net/daisy/TechSupport/252/253). The very existence of such ancillary agreement is a proof of the different needs that arise in fields other than software, and how the application of FLOSS licensing principles in these fields must necessarily depart somehow from the “purity” and “simplicity” (in relative terms) of FLOSS copyright licenses. In the case of BiOS, the reasons for such an additional agreement are both practical, as it makes no sense to share certain biotech technologies without the accompanying physical material and regulatory data — re
