Does Patent Strategy Shape the Long-Run Supply of Public Knowledge? Evidence from Human Genetics

Abstract

We thank special issue coeditor Siobhán O'Mahony and three anonymous AMJ reviewers for their insightful comments and suggestions. We benefited from the constructive feedback of Tom Allen, Phil Anderson, Arnie Barnett, Paul David, David Gabel, Rebecca Henderson, Jane Lu, Jasjit Singh, Paula Stephan, and Scott Stern. Additional feedback was received from participants in the Academy of Management Meeting, INFORMS annual meeting, 25 th DRUID Conference, REER organized by Georgia Institute of Technology, MIT Sloan Research Seminar, and Singapore Strategy Seminar. We also thank Kyle Jensen and Carrie Lee for their excellent assistance throughout the project. We are grateful for the financial support provided by a Merck-MIT fellowship. Errors remain our own. 2 DOES PATENT STRATEGY SHAPE THE LONG-RUN SUPPLY OF PUBLIC KNOWLEDGE? EVIDENCE FROM HUMAN GENETICS ABSTRACTKnowledge-based firms seeking competitive advantage often draw on the public knowledge stream -ideas embedded in public commons institutions -as the foundation for private knowledge -ideas firms protect through private intellectual property (IP) institutions. What are the implications of such strategies for long-run public knowledge production? We examine this question in human genetics, where policymakers debate this issue following dramatic expansion of IP ownership over the human genome. We show that gene patent grant decreases the long-run production of public genetic knowledge, with broader patent scope, private-sector ownership, complexity of the patent landscape, and the gene's commercial relevance exacerbating the effect.

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