Welfare Impacts of Intellectual Property Protection in the Seed Industry

Abstract

We examine the welfare impact of different intellectual property protection (IPP) regimes in private sector seed research and development (R&D). We take into account the period after expiration of legal IPP, and require simultaneous equilibrium in markets for R&D, seeds, and final product. Optimal IPP is remarkably insensitive to alternative parameterizations, except for R&D productivity. Results suggest that optimal IPP is greater than IPP in the U.S. seed corn market, but lower than the IPP that could be attained with genetic use restriction technologies. Optimal IPP is much higher than IPP achieved under open-pollinated crops or where legal IPP is limited. Copyright 2005, Oxford University Press.

The potential benefits, risks and costs of genetic use restriction technologies

“…For instance, the average Canadian now spends less than 10% of his or her income on food (Kirkpatrick and Tarasuk 2003), and this can, arguably, be attributed to the over-production of agricultural commodities, which drives down prices. This was confirmed in a model investigating the impacts of intellectual property protection (IPP) in the seed industry by Lence et al (2005), who found that while farmers might generally lose value because of these protections, the value of the benefits to consumers were always greater than the losses to farmers, and society as a whole received a net benefit with IPP.…”

“…This allows for the production of a recombinase which acts to remove the blocking sequence from the terminator gene. opment, genetic diversity enhancement, transgene containment and increased agricultural productivity (Gupta 1998;Lehman 1998;Visser et al 2001;Eaton et al 2002;Goeschl and Swanson 2003;Lence et al 2005). The degree of potential benefits derived from GURTs depends on the social group involved (i.e., private companies, farmers, government or society in general), recognizing of course that these groups are not necessarily mutually exclusive.…”

“…It has been suggested that the absence of robust intellectual property rights results in diminished private research and development (R&D) in plant breeding (Goeschl and Swanson 2003;Pendleton 2004;Lence et al 2005). For example, more private research has traditionally been conducted on crops for which hybrids are practically feasible [e.g., corn (Zea mays L. and sorghum (Sorghum bicolor L.)] compared with those for which they are not [e.g., wheat (Triticum aestivum L.) and rice (Oryza sativa L.)] (Goeschl and Swanson 2003).…”

“…Breeding companies hope to protect their investments in improved varieties thus GURTs may provide a better form of insurance (i.e., a real biological barrier) against the free use of genetic innovations as compared with patents, plant breeders' rights or licenses (Visser et al 2001;Burk 2004;Pendleton 2004). Hence, GURTs would more effectively enforce property rights (Lence et al 2005). Apart from the sterile seed technology of V-GURTs, it is also possible that T-GURTs protecting value-added traits in newly released commercial varieties could be applied to virtually all crops (Visser et al 2001).…”

“…Pendleton (2004) stressed the importance of the private sector's role in providing adequate food for the world's growing population. Arguments can be made that GURTs will foster an environment of increased innovation, which is needed to develop technology capable of increasing crop yields to meet global demands (Goeschl and Swanson 2003;Lence et al 2005). However, forecast model simulations conducted by Goeschl and Swanson (2003) suggested that the most advanced countries stand to benefit the most in terms of productivity gains from GURTs, while less advanced countries will gain the least over the medium to long term (i.e., over 20 yr).…”