Study About IP On The Human Genome Shows That Patents Hindered Innovation

from the another-one-to-add-to-the-pile dept

David Levine points us to the abstract of a recent study of the human genome, which shows how the parts protected by intellectual property resulted in a significant decrease in both scientific research and product development. This won't come as a surprise to those of you who have been following the research on patents over the years, but it's another bit of evidence to add to the (growing) pile. In this case, the researcher, Heidi L. Williams, had an interesting "natural experiment" to deal with. The race to sequence the human genome had two main players, the public Human Genome Project and the private company Celera -- a massive supporter of patent rights. The paper notes that Celera got IP on genes it first sequenced, but that IP protection was "removed when the public effort re-sequenced those genes." I have to admit I didn't know that was the case, and don't quite understand how or why that happened. Nevertheless, it created a natural set of data worth studying, and Williams conclusions suggest that IP doesn't seem to promote the same kind of progress as opening up the data does.

This paper provides empirical evidence on how intellectual property (IP) on a given technology affects subsequent innovation. To shed light on this question, I analyze the sequencing of the human genome by the public Human Genome Project and the private firm Celera, and estimate the impact of Celera's gene-level IP on subsequent scientific research and product development outcomes. Celera's IP applied to genes sequenced first by Celera, and was removed when the public effort re-sequenced those genes. I test whether genes that ever had Celera's IP differ in subsequent innovation, as of 2009, from genes sequenced by the public effort over the same time period, a comparison group that appears balanced on ex ante gene-level observables. A complementary panel analysis traces the effects of removal of Celera's IP on within-gene flow measures of subsequent innovation. Both analyses suggest Celera's IP led to reductions in subsequent scientific research and product development outcomes on the order of 30 percent. Celera's short-term IP thus appears to have had persistent negative effects on subsequent innovation relative to a counterfactual of Celera genes having always been in the public domain.

Levine laments that the NBER version of the paper he links to is not available for free, but a quick Google search turns up a few publicly available versions of the paper (though, they appear to be earlier drafts) such as this one (pdf)). There's also the following powerpoint presentation (pdf) embedded below, which highlights the key findings and data from Williams' research: The key slide is the fourth one, which reads as follows:

Celera IP on genes has strong negative impact on future research and product development

• 35% fewer publications since 2001
• 16% points reduction in chance of gene having known uncertain genotype-phenotype link
• 2% points reduction in chance of gene having known and certain genotype-phenotype link
• 1.5% points less likely to be used in genetic tests

Also, Celera genes have not "caught up" with ex-ante similar genes sequenced by HGP as of 2009

Now, it's important to note that both the paper and the slide presentation note that you can't necessarily conclude from this paper that IP slowed down the overall human genome sequencing efforts. It notes, for example, that the presence of Celera in the market, getting IP, may have created competitive pressure that sped up the Human Genome Project's effort to sequence. However, it does note that given the competition between Celera and the Human Genome Project, it seems clear that Celera's use of IP was clearly not the best way to create the greatest level of social benefit.

While the paper doesn't delve into it, this is really another way of pointing to the difference between invention and innovation as a process. Innovation tends to be an ongoing process of continual improvements. And that's where IP almost always seems to hinder activities, rather than help it. That's because IP puts a giant brake or tollbooth into the process of all of that important follow on innovation. There may be some argument that IP can help in one-off situations where there is no ongoing innovation, but those situations are excessively rare in the real world, if they exist at all.

Filed Under: human genome, innovation, patents, studies
Companies: celera