On the Priority of Intellectual Property Rights, Especially in Biotechnology

Politics, Philosophy & Economics

Volumn 3, Issue 1, 2004, Pages 77-95

  Rosenberg, Alex ^a  

^a DUKE UNIVERSITY   (United States)

Author keywords

decreasing marginal productivity; patent system; welfarism

Indexed keywords

EID: 34248054976     PISSN: 1470594X     EISSN: 17413060     Source Type: Journal    
DOI: 10.1177/1470594X04039983     Document Type: Article

References (21)

1. This is suggested in order to exclude fanatics and others who might withhold an innovation in order massively to reduce human welfare. I owe thanks to a referee for a counterexample that suggests this proviso.
2. For an influential early exploration of how great is the excess of benefits over costs that is produced by good ideas, see Zvi Griliches, ‘Hybrid Corn: An Exploration in the Economy of Technological Change’, Econometrica 25 (1957): 501-22.
3. Indeed, this fact about good ideas is part of an argument for intellectual property rights which must appeal strongly to proponents of Locke's account of chattel property. The ‘Lockian proviso’ that property is morally permissible when one mixes one's labor with it, and ‘leaves as good and as much’ for others is arguably more easily satisfied by good ideas than anything else. After all, good new ideas can only be acquired by mixing one's mental labor with them, and acquisition of one good new idea comes as close as anything can come to leaving enough and as good for others. A utilitarian will be unimpressed with this argument for intellectual property.
4. Which is not to say that the Manhattan Project produced a net increase in human welfare. See the brief discussion of the welfare cost of good ideas in note 13 below.
5. Following R. Solow, ‘Technical Change and the Aggregate Production Function’, Review of Economic Statistics 30 (1957): 214-31.
6. See Paul Romer, ‘Endogenous Technical Change’, Journal of Political Economy 98 (1990): 71-102, and any issue of the Journal of Developmental Economics. This program of research in development economics substantiates the analysis of the centrality of general equilibrium analysis throughout theorizing in many branches of economics that I have advanced repeatedly. See, for example, Alex Rosenberg, Economics - Mathematical Politics or Science of Diminishing Returns (Chicago, IL: University of Chicago Press, 1992), which has been widely decried by economists as exaggerated.
7. K. Popper, The Poverty of Historicism (London: Routledge, 1957), pp. vii-viii.
8. This is not to deny that they can be generically fostered, as by the US National Institutes of Health or National Science Foundation. But even the success of these institutions is a testimony to the importance of the maximal decentralizing of research decisions to the individual laboratory researcher.
9. It is quite possible that in the case of Big Pharma at present all of these variables are set at too generous a level. That is, the number of years usually accorded their patent protections is too great, and the return on their investments is probably well above the level required to act as an inducement. For an influential treatment of the optimal life of a patent, see W. Nordhaus, Invention, Growth and Welfare (Cambridge, MA: MIT Press, 1969). See also P.A. David, ‘Intellectual Property Institutions and the Panda's Thumb’, in The Global Dimension of Intellectual Property Rights in Science and Technology, edited by M. Wallerstein et al. (Washington, DC: National Academy Press, 1993).
10. See S. Shavell and T. van Ypersele, ‘Rewards versus Intellectual Property Rights’, Harvard Economics Department Working Papers (Cambridge, MA: Harvard University, 2000).
11. Some have and will respond to this analysis by decrying the ‘commodification’ of good ideas it reflects and pointing out that over the historical past, it has not been necessary to ‘incentivize’ people to produce good ideas. The best ideas (pure science, for example) are produced in an environment of strongly institutionalized communism, as noted three generations ago by R.K. Merton, ‘The Normative Structure of Science’, in The Sociology of Science, edited by N.W. Storer (Chicago, IL: University of Chicago Press, 1973), pp. 267–78. In reply, it should be noted that, first, over the past 400 years the social institution of science has ‘incentivized’ and rewarded those who provide good ideas with fame, prestige, security, and in many cases, financial reward. Second, many important good ideas were produced in response to the provision of money prizes (for example, a method of determining longitude at sea). Third, the costs of providing good new ideas, as well as the benefits they provide, have become so much greater in recent years, especially in health care, that commodification is a small price to pay for assuring their continued and ever-increasing rate of provision.
12. Compare Richard Epstein, Takings (Cambridge, MA: Harvard University Press, 1985), especially pp. 331–52.
13. This may be expressed as an expected value calculation: even if the probability of some good idea's appearance is low, the product of a low probability and a huge money or welfare payoff must itself be very large.
14. Of course, sometimes such departures have only temporary effects which decline in severity as time passes and memories lapse. I owe this point to Thomas Christiano. Moreover, governments may take steps to reduce the long-term impact of one-off departures from settled expectations about property rights. Indeed, as a referee noted, intellectual property confiscations in one area (for example, pharmaceuticals) might have lesser effects in other areas (for example, software design).
15. Welfare-reducing innovations, from poison gas to nuclear weapons to bio-toxins, may be held up as counterexamples to this claim. ‘Good ideas’ (such as nuclear power) with unintended and unforeseen welfare-reducing consequences may be even more serious counterexamples. It is, however, clear that a system of property rights in innovations is the one most likely to induce the provision of new ideas that will help solve problems such as nuclear waste. Innovations designed to reduce human welfare are another matter, and their rate of provision is probably independent of any property scheme for ideas or chattels. Most patent laws make such innovations unpatentable in any case, through their provisions excluding innovations that threaten public order or morality.
16. In making recommendations for the storage of nuclear waste in the USA, the National Academy of Science adopted a planning horizon of 10,000 years (500 generations).
17. This is notwithstanding the huge problems this generates. See D. Parfit, Reasons and Persons, Part IV (Oxford: Oxford University Press, 1984). We might be prepared to discount future lives, not owing to any ‘lesser’ value each has compared to current lives, but owing to a lower ‘expected’ value, given the improbability of these lives occurring. But ‘expected value’ is not composed of the product of probability and intrinsic value, and may therefore be irrelevant here.
18. Diamond V. Chakrabarty, 447 US, 303. It is worth noting that US law and Supreme Court rulings do preclude the patenting of scientific laws: Funk Bros. Seed Co. v. Kalo Inoculant Co. (1948) 333 US, 127. A principled distinction between unpatentable laws and patentable discoveries needs to be drawn if this approach is to be sustainable.
19. I ignore, here, the redundancy of the genetic code, which allows multiple chemical sequences to express the same gene, on the ground that in the nucleotide sequence for the crucial allosteric and active sites of a gene product, such redundancy is much reduced, if it exists at all. Accordingly, even allowing for the redundancy of the code in general does not open the door to significant discovery around a gene sequence.
20. The parallel with an activist attitude toward monopolies is evident. Where we can distinguish between markets that allow for free or at least low-cost entry, monopolies may be allowed on the grounds that their success results in their own termination, to the benefit of all consumers. Where barriers to entry are high, abrogation of the monopoly is called for on welfarist grounds.
21. Note that among its policies was a reward-payment system something like the one discussed above, which apparently did not elicit a sufficient supply of such innovations.