Directions for next three questions are based on the passage below.
In 1980, the US Supreme Court overturned decades of legal precedents that said that
naturally occurring phenomenon, such as bacteria, could not be patented because they were discoveries rather than inventions. Yet that year, the Court decided that a biologist
named Chakrabarty could patent a hybridized bacterium because ‘his discovery was his handiwork, not that of nature’. A majority of the judges reiterated that ‘a new mineral discovered in the earth or a new plant discovered in the wild is not patentable’. Yet they believed that Chakrabarty had concocted something new using his own ingenuity. Even Chakrabarty was surprised. He had simply cultured different strains of bacteria in the belief that they would exchange genetic material in a laboratory soup. The then embryonic industry used the case to argue that patents should be issued on gene, proteins
and other materials of commercial value.
By 1980s, the US Patent Office had embarked on a far-reaching change of policy to propel the US industry forward, routinely issuing patents on products of nature including genes, fragments of genes and human proteins. In 1987. for example, Genetics Institute Inc. was awarded a patent on erythropoietin, a protein of 165 amino acids that stimulates the production of red blood cells. It did not claim to have invented the protein: it had
extracted small amounts of the naturally occurring substance from thousands of gallons of urine. Erythropoietin is now a multi-billion dollar-a-year treatment.
The industry’s argument is that innovation prospers only when it is rewarded. Without rewards, innovation will not take place. The barriers to entry into biotechnology are relatively low. Biotechnology companies do not have to build costly factories of high
street retail outlets or invest in brand reputations. The basic units of production are bacteria manipulated to deliver therapeutically and commercially valuable substances. Without the protection of a patent, an innovative biotechnology company will find its discoveries quickly copied by later entrant. If the ownership of rights to exploit a genetic discovery were left unclear, there would be less innovation in the economy as a whole and we would all be worse off. The biotechnology industry in USA is larger than anywhere else, in part because innovators there have been allowed to patent their’ inventions’. In 1998, there were almost 1500 patents claiming rights to exploit human gene sequences.
Yet the ownership regime for industries and products spawned by genetics is far from
settled. A practical argument is about what should be owned – the gene or the treatment. The cystic fibrosis gene, for example, is patented, and anyone who makes or uses a
diagnostic kit that uses knowledge of the gene sequence has to pay royalty to the patent holder. Many would argue that this is too broad a patent, which may be excessively strong and slow down innovation. As we move into the knowledge economy, issues such as the breadth and scope of a patent, the standards of novelty, even the duration; will become more problematical. To put in another way, who should own what and for how long will become more of an issue in a knowledge driven economy. That is because incentives to exploit knowledge need to be set against the value of sharing it. Scientific enquiry proceeds as a result of collaboration, the sharing and testing of ideas. We are lucky that James Watson and his collaborator Francis Creek did not work for Genentech
or Glaxo-Wellcome because every genetic researcher would now be paying a royalty to use their discovery. Genetics, as most sciences, is built on a bedrock of shared knowledge. The more basic the knowledge, the more inappropriate strong property rights and exclusive private ownership becomes. Privatization ofknowledg- may make it less likely that know-how will be shared. Perkin Elme will publish its research on the, human genome, but only once in three months and the company will reserve at least 300 genes for its own patent programme. Publicly funded researchers share their results more openly and more frequently.
The erythropoietin episode shows that: