Economics Publications Economics
4-15-2016 Elements of Intellectual Property Protection in Plant Breeding and Biotechnology: Interactions and Outcomes Stephen Smith DuPont Pioneer
Sergio H. Lence Iowa State University, [email protected]
Dermot J. Hayes Iowa State University, [email protected]
Julian Alston University of California, Davis
Eloy Corona BaFoylerlo Cwr othipSciens andce LP additional works at: http://lib.dr.iastate.edu/econ_las_pubs Part of the Agricultural and Resource Economics Commons, Growth and Development Commons, Plant Breeding and Genetics Commons, and the Regional Economics Commons The ompc lete bibliographic information for this item can be found at http://lib.dr.iastate.edu/ econ_las_pubs/580. For information on how to cite this item, please visit http://lib.dr.iastate.edu/ howtocite.html.
This Article is brought to you for free and open access by the Economics at Iowa State University Digital Repository. It has been accepted for inclusion in Economics Publications by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. Elements of Intellectual Property Protection in Plant Breeding and Biotechnology: Interactions and Outcomes
Abstract Public and private investments in plant breeding have a proven track record of increasing agricultural productivity, significantly contributing to economic well-being or social welfare. Substantial investments in research and development are required before a new plant variety can be developed and released, which the private sector can only recoup through commercial sales coupled with property rights. We previously published outcomes from economic modeling implementing different categories and hypothetical variants of intellectual property protection (IPP) in the field of plant breeding and biotechnology. Our goal here is to portray these outcomes using examples that will be more immediately familiar to the plant-breeding and policy-making communities. In so doing, we do not add to the analyses and arguments already presented. Our objective here is to make more accessible to a broader audience subject matter already presented in a more formal economic format by Lence et al. (2015). We found that plant variety protection (PVP) and utility patents played important and complementary roles in promoting and adopting innovation. Voluntary licensing under patents had a major contribution to social welfare. Periods of protection longer than the current life span of a utility patent did not contribute maximally to the stock of social welfare. We performed a reality check comparing different types of innovation and assessment of time and risk to commercialization. We hope that this information can contribute to more effective implementation of IPP to further promote genetic gain and thus enable commercially funded plant breeders to maximally contribute to the benefit of society on a global basis.
Disciplines Agricultural and Resource Economics | Growth and Development | Plant Breeding and Genetics | Regional Economics
Comments This article is published as Smith, Stephen, Sergio Lence, Dermot Hayes, Julian Alston, and Eloy Corona. "Elements of Intellectual Property Protection in Plant Breeding and Biotechnology: Interactions and Outcomes." Crop Science 56, no. 4 (2016): 1401-1411.doi: 10.2135/cropsci2015.10.0608. Posted with permission.
This article is available at Iowa State University Digital Repository: http://lib.dr.iastate.edu/econ_las_pubs/580 Page 1 of 30 Crop Science
1 Elements of Intellectual Property Protection in Plant Breeding and Biotechnology:
2 Interactions and Outcomes
3 Stephen Smith, Sergio Lence, Dermot Hayes, Julian Alston, and Eloy Corona
4 Stephen Smith DuPont Pioneer, 7300 NW 62nd Ave., Johnston , IA, 50131,
5 ([email protected]); Sergio Lence, Department of Economics, Iowa State 6 University, 368E HeadyFor Hall, Ames, Review IA, 50011. ([email protected]); Only Dermot J. Hayes, 7 Department of Economics, 568CHeady Hall, Ames, IA, 50011. ( [email protected] );
8 Julian Alston, Agriculture and Resources Economics, 2157 Social Sciences and Humanities,
9 University of California, Davis, 95616.( [email protected] ); Eloy Corona, Bayer
10 CropScience LP, 2 TW Alexander Drive, Research Triangle Park, NC, 27709.
11 ([email protected]).
12 Abbreviations: R&D, Research & Development; IPP, Intellectual Property Protection; PVP,
13 Plant Variety Protection; IP, Intellectual Property; PBR, Plant Breeders’ Rights; TRIPS, Trade
14 Related Aspects of Intellectual Property Rights; EU, European Union; WTO, World Trade
15 Organisation; UPOV, L’Union internationale pour la protection des obtentions végétales; OAPI,
16 African Intellectual Property Organization; EDV, Essentially Derived Variety; NPGS, National
17 Plant Germplasm System; SMTA, Material Transfer Agreement; IT PGRFA, International
18 Treaty for Plant Genetic Resources for Food and Agriculture; TPE, target production
19 environment.
20 ABSTRACT
21 Public and private investments in plant breeding have a proven track record of increasing
22 agricultural productivity and thereby significantly contributing to economic well being or social
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23 welfare. Substantial investments in Research and Development (R&D) are required before a new
24 plant variety can be developed and released, which the private sector can only recoup through
25 commercial sales coupled with property rights. We previously published outcomes from
26 economic modelling, implementing different categories and hypothetical variants of Intellectual
27 Property Protection (IPP) in the field of plant breeding and biotechnology. Our goal here is to
28 portray these outcomes in a manner and using examples that will be more immediately familiar
29 to the plant breeding Forand policy making Review communities. We Only found that Plant Variety Protection
30 (PVP) and utility patents played important and complementary roles in promoting and adopting
31 innovation. Voluntary licensing under patents had a major contribution to social welfare. Periods
32 of protection much longer than the current life span of a utility patent did not contribute
33 maximally to the stock of social welfare. We performed a reality check comparing different
34 types of innovation and assessment of time/risk to commercialization. We hope that this
35 information can contribute to more effective implementation of IPP to further promote genetic
36 gain and thus enable commercially funded plant breeders to maximally contribute to the benefit
37 of society on a global basis.
38 Introduction
39 Public and private investments in plant breeding have a proven track record of increasing
40 agricultural productivity and thereby significantly contributing to economic well being (Fehr
41 1984; Frisvold et al., 1999; Duvick, 2005; Rubenstein et al., 2005; British Society of Plant
42 Breeders, 2010). The application of intellectual property protection (IPP) in the field of plant
43 breeding and biotechnology is an issue of abiding interest to many including those in academia,
44 business, private and public sector research, policy makers, and non governmental organizations
45 (NGOs). For example, see Leskien and Flitner (1997), Bioversity International (1999), Cohen
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46 (2000), Rai and Mauria (2004), UPOV (2005), Llewelyn and Adcock (2006), World Bank
47 (2006), Wright (2006), Tripp et al. (2007), Louwaars et al. (2009), SGRP (2010), Dutfield
48 (2011), UN HRC (2011), Blakeney (2012), ISF (2012), JIC (2012), Lieberherr and Meienberg
49 (2014).
50 Means to Obtain IPP in Plant Breeding and Biotechnology
51 There are four majorFor approaches Review that plant breeders canOnly use to obtain IPP. These are: 1) 52 contracts, 2) trade secrets, 3) Plant Variety Protection (PVP) or Plant Breeders’ Rights (PBR),
53 and 4) Utility Patents. The United States also provides PVP type protection for varieties of
54 asexually reproducing non tuberous species through the 1930 US Plant Patent Act (35 U.S.C.§§
55 161 164). Contracts include bag tag “shrink wrap” type protection or use in contractually
56 “closed loop” systems. Trade secrets can help provide protection, particularly for parent lines of
57 hybrids. The biology of hybrids also encourages farmers to annually purchase new seed because
58 the harvested seed is a result of one generation of inbreeding which reduces yield potential.
59 Under the 1995 Trade Related Aspects of Intellectual Property Rights (TRIPS), member
60 countries may exclude plants and animals from patentability. For example, utility patents on
61 plant varieties per se are not available in the European Union (EU) although utility patents
62 around genetically modified traits and native traits are possible in that region. Countries that
63 exclude plants from patentability are obliged by their membership of the World Trade
64 Organisation (WTO) to provide an effective sui generis IPP system; e.g., PVP. WTO members
65 may also exclude “essentially biological processes for the production of plants” from
66 patentability. PVP is a sui generis form of protection prescribed by the L’Union internationale
67 pour la protection des obtentions végétales (UPOV). As of June 2015, there were 72 UPOV
68 members (UPOV, 2015); two of which (the EU and the African Intellectual Property
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69 Organization [OAPI]) are intergovernmental organizations (UPOV,
70 2014)(http://www.upov.int/members/en/). In addition to PVP Acts that are sanctioned as
71 compliant with UPOV, other countries either have, or are in the process of enacting variety
72 protection laws, some of which may or may not be UPOV compliant (e.g., Plant Protection
73 Variety and Farmers Rights Act of India).
74 The two most recent UPOV Conventions are dated 1978 and 1991, although new
75 members can only joinFor under the Review1991 Convention. Th eOnly primary differences between the two
76 Conventions are that UPOV 1991 additionally: 1) extends to all varieties and species, 2) prevents
77 others from producing, reproducing, or conditioning for the purpose of propagation, importing,
78 exporting, stocking, and offering for sale, 3) introduction of the concept of an Essentially
79 Derived Variety (EDV) where IPP ownership resides with the breeder of the initial variety, 4)
80 optional farmers exception only for use on same farm and may be subject to license fee; private
81 use and research allowable; 5) 5 years extension of duration of protection, and 6) double
82 protection by both PVP and patents allowed (Dodds et al., 2007).
83 (.http://www.iphandbook.org/handbook/ch04/p06/. Accessed Aug 13 th 2015.
84 Patent laws may be country or regionally specific. In some countries and regions plant
85 varieties per se (e.g., Europe) are not patentable, whereas in others, including Australia, Canada,
86 and the United States, they are. Nonetheless, even if plant varieties per se are not allowable as
87 patentable subject matter, methods of breeding, production, harvested material, native or
88 genetically modified traits may remain eligible as patentable subject matter. Further variations in
89 country or regional patent law can also include exceptions. For example, patent laws
90 implemented in France and Germany have exceptions to allow further breeding with a variety
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91 that has a patented trait, including commercialization of a progeny variety provided that patented
92 traits have been removed. In contrast, US patent law has no such exceptions.
93 Eligibility for utility patent protection requires evidence of i) utility, ii) novelty, iii) “non
94 obviousness” i.e., include an inventive step beyond that which could be conceived by a person
95 having “ordinary skill in the art”, and iv) enablement, (i.e., described to allow the invention to be
96 recreated for observation and evaluation with regard to the patent per se ). Complete written
97 descriptions are not For possible for Review plant varieties so enablement Only is established through a seed
98 deposit maintained by an appropriate depository such as the American Type Tissue Culture
99 Collection. It is important to understand that a deposit of biological material is “not a grant of
100 license… to infringe the patent” and “the release of biological material from the depository to
101 others does not grant them a license to infringe the patent” (Harney and McBride, 2007).
102 Patentable subject matter is provided into the public domain at the expiration of the protection
103 period as a “pact with society” in return for the grant of limited exclusivity by the patent holder
104 (Comments, 2007). For further details on exclusions from patentability including country status
105 see http://tinyurl.com/d5knqoo. More complete reviews of IPP methods are provided by
106 Williams and Weber (1989), Jondle (1993), Hayes and Riley (2002), Krattiger (2004), Le
107 Buanec (2004), CAMBIA (undated) available at
108 http://www.patentlens.net/daisy/patentlens/1234.html , and Pardey et al. (2013). The International
109 Seed Federation recently completed a revision of its position on IP (ISF, 2012). Helfer (2004)
110 provides comprehensive information describing international legal regimes and policy options
111 for intellectual property rights in plants.
112 Previous Economics Based Analyses of IPP Systems in Plant Breeding
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113 Substantial investments in R&D are required before a new variety can be developed and released
114 (Evenson, 1989; Evenson and Gollin, 1997) which the private sector can only ultimately recoup
115 through commercialization and property rights. Kolady and Lesser (2009) and Naseem et al.
116 (2005) found that privately funded PVP’d wheat varieties grown in Washington State and PVP’d
117 US cotton varieties, respectively contributed to improved productivity. In the U.S., PVP may
118 have stimulated public, but not private sector investments in wheat breeding (Alston and Venner,
119 2002). There was no evidenceFor that Reviewprivately funded PVP’d Only wheat varieties had stimulated
120 increased genetic gain in US wheat production (Alston and Venner, 2002). A relative lack of
121 incentives for private sector wheat breeding in the U.S. is likely associated with the lack of any
122 requirement in the US PVP Act for PVP holders to recoup royalties for use of farm saved seed.
123 For example, the replanting and “brown bagging” of seed harvested from PVP’d self pollinated
124 varieties of wheat, without royalty payment contributed to the exit of much of private industry
125 from hard red wheat breeding in the U.S. (Grace, 2008). During 1990, both Pioneer and Cargill
126 discontinued breeding of hard red winter wheat in the U.S. because production and sales were
127 not profitable: Pioneer donated wheat germplasm to Kansas State University which represented
128 the culmination of 20 years of privately funded research (Knight Ridder, 1990). The USDA
129 Wheat Baseline, 2008 17 updated March 12, 2008 said: “The pace of genetic improvement has
130 been slower for wheat than for some other field crops, resulting in little growth in wheat yields.
131 Genetic improvement for wheat has been slower because of genetic complexity and because of
132 lower potential returns to commercial seed companies, factors that discourage investment in
133 research.” In contrast, Hayes et al. (2009) showed a positive effect of PVP for genetic gains in
134 UK and French wheat production as a result of privately funded breeding when associated with
135 royalty payments by farmers when harvested seed of protected varieties was used to sow the next
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136 season’s crop. Likewise, Alston et al. (2012) suggested that Australia’s end point royalties
137 system had increased private sector investment in breeding. ISF date showed higher sustained
138 wheat yields for countries where private sector wheat breeding is a competitive business (France,
139 Germany, U.K.) compared to countries where wheat breeding remains largely in the public
140 domain (Argentina, Australia, Uruguay, United States). Swanson and Goeschl (2005) showed
141 that hybridity had a similar result as effective IPP on increased productivity as a result of
142 privately funded breeding.For Kolady Reviewet al. (2012) showed that Only yield trends in India for maize and
143 pearl millet had outpaced those for the development of self pollinated varieties of rice and wheat.
144 Lence and Hayes (2005) showed that R&D firms had reduced incentives to develop technologies
145 for use in other countries where they can be easily adopted as a result of non existent or
146 ineffective IPP. They concluded that effective IPP in both countries would allow firms to
147 conduct relevant research in each country. This conclusion has particular relevance to the field of
148 plant breeding and agriculture where there is a very large element of genotype x environmental
149 interaction thereby placing a premium on research and development being conducted in situ .
150 Hayes et al. (2009) showed a positive association between strength of IPP and rate of genetic
151 gain. Moschini and Yerokhin (2008) showed that when research was risky or expensive, then an
152 IPP system with a research and commercialization exception would undermine incentives to
153 undertake that type of research.
154 Use of Modelling
155 A modelling approach is customary where experimental approaches are impractical, very
156 expensive, lengthy, or impossible. Modelling facilitates an understanding of complex
157 interactions, can identify “best management” practices, and study long term effects of
158 undertaking various options. Models can provide predictions and improved understanding
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159 (Thornton and Herrero, 2001; 2008). Modelling is not a substitute for research based enquiry;
160 rather it is an integral component of developing hypotheses for further testing. Modelling has
161 been widely used in helping to research the physiology and genetics of complex traits in maize
162 (Tuberosa, 2012; Shekoofa et al., 2014), and formed the basis for developing hybrids with
163 improved native trait based drought resistance (Cooper et al., 2014). Economists have also used
164 modelling to investigate the attributes of various IPP systems (Lence et al., 2015). Nonetheless, a
165 combination of IPP subject matterFor Reviewand usage of a highly mathematicalOnly language may lead to a
166 degree of opaqueness, especially to those engaged in other fields of endeavor. Consequently,
167 practitioners in the field of plant breeding and biotechnology may prefer a more accessible
168 description of the IPP economics studies, results, and conclusions. The objective of this paper is
169 therefore to describe recent IPP economics research (Lence et al., 2015) in a way that can allow a
170 greater understanding and basis for further enquiry for those interested in IPP with regard to
171 plant breeding and biotechnology.
172 Research Methodology: The Conceptual Framework
173 The two most widely available approaches used by plant breeders to obtain IPP are PVP and
174 utility patents and these were chosen as the main pillars of the model. Of these, PVP is the most
175 used by plant breeders globally to protect varieties per se . On a practical basis, these two forms
176 of IPP were chosen as pillars of the model primarily because of the large differences in
177 protection and dissemination of the protected material afforded under each system (Table 1).
178 Establishment of a model built upon the framework of two very different approaches to IPP
179 provided a breadth of scope where outcomes of contrasting models, e.g., with different durations
180 of protection, or with different periods under which breeder exception might apply, could also be
181 investigated.
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182 Describing the Model
183 Each of several plant breeding companies optimizes its research program based on the strength
184 and length of IPP. Every firm can capture the benefits resulting from its own research in the
185 period after it was undertaken. In subsequent periods, firms continue to conduct research, and the
186 productivity of this research is determined in part by the amount of research conducted in the 187 previous or prior periods.For With utility Review patents, a firm may Onlybe prevented from accessing 188 competitor research in subsequent periods until the patent protection expires, whereas under PVP
189 alone firms have access to the commercial products resulting from other firms’ research. Firms
190 anticipate this trade off between strength of their own IPP and accessibility to others’
191 innovations when making their research investment decisions. We then introduced modifications
192 to these basic models and made additional comparisons to provide a more comprehensive
193 investigation of the components affecting IPP and the resultant development and spread of
194 benefits (social welfare) in the form of improved agricultural production achieved via genetic
195 gain.
196 The Costs of Acquiring Genetic Stocks
197 In this model, the costs of acquiring genetic stocks must be taken into consideration. The costs of
198 acquiring events for development of GMO traited varieties follows a similar logic although these
199 will include not only development costs, but also regulatory costs. The possible sources of
200 genetic stocks, native traits, or GMO traits are i) the firm’s own genetic stocks, ii) genetic stocks
201 developed by other firms if available, and iii) other more exotic and less immediately well
202 adapted germplasm, including the development of new transgenic events sourced from other
203 species or genera. If protection is under PVP alone then the commercialized genetic stocks of
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204 one firm are available to others for breeding during the commercial life of the variety with
205 commercial rights available to the second breeder, unless under UPOV 1991 that second variety
206 is essentially derived. Also, under PVP, it is the policy of the USDA to make publicly available
207 parental lines of hybrids at the end of their PVP period. These inbreds are then available in the
208 global public domain via distribution by the National Plant Germplasm System (NPGS). Such
209 provision of access following expiration of PVP is not the mandate of UPOV, nor is it the
210 practice of most otherFor countries. Review Only
211 Under protection by utility patents, there is a period of exclusivity (20 years from filing in
212 most countries) during which time the owner can restrict research and commercial use by others
213 or can grant specific forms of use via licensing agreements. At the expiration of patent
214 protection, the variety is available in the public domain. However, where off patent subject
215 matter includes genes or varieties that remain subject to regulatory requirements then those
216 requirements will still need to be satisfied. In the United States, there is a voluntary agreement
217 and process in place (the AgAccord) (http://www.agaccord.org/ ) to facilitate the continuance of
218 regulatory requirements post patent although significant costs will be involved to maintain
219 regulatory approvals, especially on an international basis (Jefferson et al., 2015).
220 Other potential sources of genetic stocks include accessions conserved ex situ in
221 genebanks or found in situ either under cultivation or as wild or weedy species. Many genebank
222 accessions can be accessed from the US NPGS or from other genebanks including those of the
223 Consultative Group on International Agricultural Research (CGIAR) such as the International
224 Maize and Wheat Improvement Center (CIMMYT), the International Rice Research Institute
225 (IRRI), and the International Center for research in the Semi Arid Tropics ( ICRISAT) each
226 make materials available through a multilateral system using the standard Material Transfer
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227 Agreement (sMTA) of the International Treaty for Plant Genetic Resources for Food and
228 Agriculture (IT PGRFA). Contractual terms in the present sMTA are currently under review by
229 the Governing Body of the Treaty. Nonetheless, significant improvements remain to be made
230 regarding accessibility of germplasm from genebanks. Bjornstad et al. (2013) reported that of
231 seed requests sent to 121 countries, seeds were received from only 44 (36%). Additional
232 germplasm may be available on a bilateral basis once countries have implemented biodiversity
233 laws under the auspicesFor of the Convention Review on Biological DiversityOnly (CBD).
234 There are usually considerable technical challenges that must be met before exotic
235 germplasm can be practically useful in a plant breeding program. Material may not be well
236 characterized making choice of accessions an immediate challenge. Exotic germplasm is usually
237 not well adapted to grow or even to set seed in a different target production environment (TPE).
238 Consequently, years of adaptation and pre breeding may be required before any potential for
239 improving the already widely used genepool can be ascertained. The costs of accessing and
240 using genetic stocks increase as the amount, time, and risk level of research increases. These
241 costs decrease as the supply of genetic stocks increases, the stocks become better characterized
242 and adapted, and they become nearer in the research and development “pipeline” to commercial
243 release. Sourcing options in order from least to most risky or expensive include, i) a firm’s own
244 germplasm and thus freely available, ii) germplasm available from others e.g., sourcing
245 commercially available varieties that are not protected by utility patents including via the
246 breeder exception of PVP, following the expiration of utility patent protection, or following
247 expiration of PVP in circumstances where parental lines are made publicly available (e.g. as
248 practiced in the U.S. but not generally so elsewhere), iii) via licensing, iv) via a genebank, a
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249 prebreeding consortium, or v) from an in situ location (e.g., on farm or wild and assuming all
250 access and benefit sharing responsibilities have been met..
251 The Measure of Success
252 The metric used for measuring success as a result of plant breeding was optimal genetic
253 innovation which we equated with optimal social welfare. We made this connection on the basis 254 that improvement of agriculturalFor productionReview through genetic Only gain and the improved protection of 255 that genetic potential in the face of biotic and abiotic stresses is basic to public policies that seek
256 to improve social welfare as a result of improved health and nutrition of consumers.
257 Results from Modeling
258 Two Key Parameters
259 Results were sensitive to two key parameters. The first was parameter γ, which measured the
260 degree to which previous genetic research reduced the cost of, or levered, the ability to obtain
261 genetic improvements in a particular period. Projects that required a high degree of prior
262 research had a high value for γ. Intuitively, γ can also be understood as a measure of the degree
263 of research complexity. The second key parameter was (1 − ρ), the rate at which genetic
264 improvements depreciated. Comparisons of various IPP approaches will be presented in the text.
265 Readers who might also like to review results figuratively are directed to Lence et al. (2015).
266 Comparing PVP and Patents
267 PVP and patents were complimentary in their potential contributions to genetic gain and social
268 welfare. Patents provided more potential for higher optimal genetic innovation than PVP due to
269 the ability of patent holders to prevent unlicensed access for further breeding and commercial use
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270 during patent life. In contrast, PVP provided a moderate level of optimal genetic innovation
271 coupled with faster horizontal spread of innovation among companies via the breeder exception.
272 Under PVP, commercialization of new varieties is only limited under UPOV 1991, and then only
273 when a derivative inbred line or variety which has met DUS requirements is also then
274 determined to be essentially derived. Breeding and commercial development under the breeder
275 exception of UPOV of PVP is an example of the horizontal diffusion of research results
276 (Swanson and GoeschlFor 2005). Thus, Review PVP allows short lived Only commercial varieties to achieve
277 genetic gain and contributes to social welfare by ensuring that these varieties reach as many
278 other breeders as possible even before protection on these varieties expires.
279 Changing the Length of Utility Patent Protection
280 Patent terms usually run for 20 years. Lence et al. (2005) had previously shown that, in terms of
281 optimizing social welfare, there was an optimum patent life with regard to the contribution of
282 plant breeding, of just longer than the 20 tear term. Extending the term of patent life much
283 further than the 20 year protection period began to undermine overall contributions to social
284 welfare because of a reduction of timely diffusion into the public domain. When shorter patent
285 terms were investigated, a protection period of 10 years contributed more to social welfare than
286 did a 5 year period of protection unless there was an extremely rapid depreciation rate for the
287 innovation coupled with a low degree of specialization or research complexity (γ).
288 The Effect of Reducing the Time Needed to Create a Variety under PVP
289 Except for scenarios with low research complexity (γ) or high depreciation rates (1 − ρ), a
290 reduction in PVP time reduced welfare and genetic gain. This was because firms would know
291 that their competitors would be able to build upon their research program at an earlier date, and
292 thus reduced their incentive to undertake risk during research. Reducing the time to generate a
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293 new variety accelerated diffusion of that new variety and thus the PVP system with shorter
294 protection period led to greater genetic gain or social welfare in circumstances where varieties
295 had a short shelf life. The base case PVP with a longer protection time led to increased genetic
296 gain and more social welfare when specialization was important and for long lived varieties.
297 All things being equal, the completion of more breeding cycles per unit time should be
298 expected to contribute positively to genetic gain, and thus to social welfare. However, if reduced
299 cycle times become associatedFor predominantly Review or only with Only breeding strategies that make
300 relatively minor genetic changes using only well adapted germplasm then there could be risks of
301 narrowing the widely used and well adapted gene pool and so reducing medium longer term
302 potential to increase productivity.
303 The Effect of a Prolonged Period (Beyond Current PVP and Patent Terms) of Prohibition
304 of Public Access
305 Potentially, when maintained as a trade secret competitors can never access the original science
306 whereas utility patents allow for inventions to be available to the public once the patent term
307 expires. Even when hybrids are protected solely by PVP, the preference is to breed using
308 parental lines per se in order to develop next cycle inbreds with predictable combinations to
309 maximize hybrid vigor. However, most countries implement PVP, with the notable exception of
310 the U.S. in a way that allows owners of parental lines to maintain those lines as trade secrets
311 beyond the life of PVP protection. In contrast, the U.S. implements PVP by releasing parental
312 inbred lines into the public domain at the expiration of their PVP via the USDA National Plant
313 Germplasm System (NPGS). Varieties and inbred lines protected by utility patents are also
314 available to the public following expiration of patent protection.
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315 There was a large set of research complexity (γ) and depreciation combinations where
316 patents with a specific termination date contributed more to social welfare compared to trade
317 secrets with protection lasting well beyond a regular patent term. IPP afforded by utility patents
318 and PVP as implemented in the U.S., which provides inventions into the public domain at the
319 expiration of their IPP term(s), added more to social welfare than if firms were instead to use a
320 policy of prolonged trade secrets. Use of utility patents also facilitated licensing. Licensing was
321 less feasible, if not impractical,For with Review trade secrets as the soleOnly form of protection.
322 Use of Utility Patents with Licensing
323 Licensing increased genetic gain and social welfare for a large set of research complexity (γ) and
324 depreciation combinations. Licensing allowed society to more quickly access new inventions in a
325 similar fashion to PVP, but, unlike PVP a system of patents with licensing provided greater
326 rewards to the firm that created the technology by way of license fees and the firm’s ability to
327 restrict use by others during the patent term. Patents plus licensing maintained an incentive to
328 conduct research of a long term and specialized nature, while also allowing that research to be
329 quickly disseminated. However, if licensing were to be mandatory then the benefits afforded by
330 patent rights in stimulating innovation could be undermined
331 Validation
332 In order to better understand the size of research complexity (γ) for a range of different
333 improvements, two seed research firms were asked to rank various genetic improvements with
334 respect to their interpretation of this parameter. We approached the issue of research complexity
335 in a context understandable to plant breeders by asking them to describe each type of
336 improvement as a proportion of the time and cost involved in incorporating exotic germplasm
337 into maize. This approach respected business confidential information and could be used as an
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338 exemplar or index because it represented a complex breeding program that employees at each
339 company had prior experience. The transition from research complexity to a time and cost index
340 is fairly intuitive. For example, projects that take 15 years to develop will typically have a longer
341 expected commercial life compared with projects that take only 5 years to develop. If this were
342 not the case then the firm would not undertake the multiyear investment. 343 Survey results are shownFor in Table 2.Review Results suggested that Only single gene backcrossing and 344 traditional breeding programs were activities with low research complexity (γ). Second
345 generation transgenes and the introduction of exotic germplasm had much greater research
346 complexity. An IPP system that favored highly complex research was therefore more likely to
347 provide a sufficient level of IPP to support commercial research and development programs such
348 as those involving second generation transgenes or the incorporation of exotic germplasm.
349 Discussion
350 A modelling approach to research is widely used in numerous fields, including plant breeding
351 and agriculture (Hammer et al., 2006). Modelling allows many permutations to be tested and can
352 help identify important parameters and show the results of their interactions. Modelling can
353 provide useful hypotheses which can then be further tested. One well respected plant breeder
354 cautioned that with modelling you get the results according to how the model was programed at
355 the beginning. One good test of the results of modelling is to compare results with intuitive
356 knowledge gained from practical experience. The reality check provided by two companies for
357 different elements of research also aligned with these results.
358 Results from an earlier study into the outcomes of applying IPP in plant breeding (Lence
359 et al., 2005) indicated that 1) there was an optimum life of patent protection and 2) identified
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360 major beneficiaries of research and innovation in the field of plant breeding and biotechnology.
361 Briefly, Lence et al. (2005) found that 1) IPP was necessary to encourage private breeding
362 companies to invest in research that would provide farmers with the best seed technology, 2)
363 There was an optimum duration of protection in relation to the contribution of innovation in
364 plant breeding research and product development to social welfare of just over 20 years, 3)
365 Benefits from higher and better quality yields were captured by farmers through reduced
366 production costs per unitFor harvested, Review 4) A multiplicity of benefitsOnly ultimately flowed to consumers
367 contributed by a) better quality food supporting human health, b) yield gains lowering the price
368 of harvested produce, and c) yield gains which offered the potential to take less productive or
369 more fragile lands out of agricultural production thereby supporting biodiversity and enabling a
370 cleaner environment.
371 Our results were in agreement with the discussion provided in Pardey et al. (2013) and
372 with theoretical results derived in Moschini and Yerokhin (2008). Each of the two primary IPP
373 systems has been shown to have advantages and disadvantages, and neither of them is better than
374 the other under all possible circumstances. Unlike the two earlier papers, the model used here
375 had enough structure to describe the specific parametric conditions under which one IPP system
376 dominated the other; i.e. performed better in terms of encouraging greater genetic gain or
377 contribution to social welfare. We were also able to consider subtle changes such as licensing
378 and changes in the effective length of IPP and to show how these altered the outcomes in terms
379 of genetic gain or contribution to social welfare.
380 The results of some comparisons were clear from the modelling results reported initially
381 by Lence et al. (2015) and presented in a revised format here. For example, patents were more
382 appropriate when longer term and riskier research was needed. However, much of the research
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383 conducted by plant breeders is diverse and subject to several interactions including degree of
384 specialization, half life of a new product, available resources, research, and business strategies.
385 There are also implications of interactions of IPP with the stage of technology development and
386 level of understanding of the genetic basis of important agronomic traits. For example, use of
387 double haploids, off season nurseries, and molecular marker data can facilitate access to both
388 widely used, well adapted germplasm and to more exotic landrace germplasm especially
389 provided the genetic controlFor and chromosomalReview locations ofOnly the traits of interest are known
390 (Tanksley and McCouch, 1997; Glaszmann et al., 2010; Lubberstedt, 2011; Kilian and Graner,
391 2012; Dhanapal and Govindaraj, 2015).
392 There are different fits for IPP according to different research strategies and different
393 sized, or resource based companies. It is not surprising therefore, that with such dynamic
394 complexity there is no “one size” or “one type” IPP that can best fit all circumstances. It is clear,
395 however, that the ability to choose from a range of different specific IPP instruments can allow
396 more opportunities for increased genetic gain and thus contribute more to social welfare than to
397 foster IPP reliance upon trade secrets alone. Furthermore, choice or availability of IPP systems
398 can influence the kind of research that is done. In addition, the ability to invoke exceptions under
399 PVP and utility patents provides countries opportunities for flexibility in implementation.
400 Providing breeders and biotechnologists with a wide range of choice reduces the potential
401 dangers of imposing a relatively low ceiling on innovations developed in country. Providing
402 incentives to develop new varieties in country is particularly important in the fields of plant
403 breeding and agriculture because of highly significant genotype x environment effects
404 determining agronomic performance.
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405 For maximum benefit of society with regard to contributions that can be made by the
406 commercial plant breeding sector an optimum balance is required to be struck between
407 encouraging and disseminating innovation. We hope that by achieving a more complete
408 understanding of the parameters affecting IPP, their interactions, and their overall effects on
409 genetic gain, will help provide means to create IPP environments that can contribute further to
410 increased social welfare achieved through research and innovation based plant breeding and
411 biotechnology. For Review Only
412 Acknowledgements
413 We acknowledge funding for the initial research project (Lence et al., 2015) that was provided
414 by the American Seed Trade Association.
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598 UPOV 1991 and Utility Patents.
599 Table 2. Time to Product Commercialization for Different Types of Genetic Improvements
600
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Table1. Main features distinguishing Plant Variety Protection (PVP) implemented according to UPOV 1991 and Utility Patents.
PVP Utility Patents Eligibility Criteria Distinctness, Uniformity, Stability Novelty, Innovative, Enabled, (DUS) Useful Protection 20 years, can vary according to 20 years crop. No commercial use unless Others cannot copy for licensed by owner commercial use.
Others cannot repeatedly use for direct commercial use. For Review Only Harvested seed cannot be sold for resowing . Exceptions Commercial variety can be used For countries that allow utility to breed and commercialize a patents on inbred lines or new variety unless it is varieties per se there are no Essentially Derived. breeder exceptions. For trait
Harvested seed can be used for patents, some countries allow resowing own holding; royalties breeding but not may be required. commercialization of the patented trait Seed deposits Not available for public use Made available upon issuance of during life of protection. patent. However, the deposit is
Not required by UPOV to be “not a grant of license…to placed into the public domain infringe the patent” (Harney and although it is policy of USDA to McBride, 2007). Available in the make publicly available. public domain at the expiration of protection.
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Table 2. Time to Product Commercialization for Different Types of Genetic Improvements Genetic Improvements Index Time to Product Commervialization 8 (0 -1) • Single gene backcrossed into elite material 0.300 • Single gene backcrossed into elite recurrent 0.300 parent. Example would be converting line to glyphosate resistance • Common breeding program Elite x Elite 0.375 • Germplasm enhancement Exotic x Elite 0.650 • Develop second-generation transgenes + 0.778 regulatory • No public program. Company works through 1.000 un-adapted germplasm to identify trait of interest Exotic x ExoticFor Review Only 8The index measure time to commercialization relative to time to develop the improvement.
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