The Tragedy of the Anticommons

Do patents actually impede innovation?

Congress is considering sweeping reforms to the U.S. patent system. In September, the House of Representatives passed the Patent Reform Act of 2007, and the Senate is slated to consider similar legislation later this fall.

One motivation for patent reform is a concern that the over-proliferation of patents, instead of encouraging innovation, is stifling it. This argument achieved prominence in an influential 1998 article published in Science by two University of Michigan law professors, Michael A. Heller and Rebecca S. Eisenberg. Heller and Eisenberg worried that the privatization of biomedical research "promises to spur private investment but risks creating a tragedy of the anticommons through a proliferation of fragmented and overlapping intellectual property rights."

By "anticommons," they meant a situation in which the existence of a large number of intellectual property rights applicable to a single good or service unduly retards or even prevents its provision. The blockage to innovation would occur because of high transaction costs, the conflicting goals of various intellectual property owners, and cognitive biases in which owners overvalue their own patents, undervalue others' patents, and reject reasonable offers.

As evidence for a biomedical anticommons, analysts regularly cite the high profile case of "probably the most hated diagnostics company," Myriad Genetics. In the 1990s, Myriad Genetics patented and developed a test for variations in the BRCA1 and BRCA2 genes that greatly increase a woman's risk of breast and ovarian cancer. The company refused to license its patent or test to any other company. Thus clinicians have to send all their samples from patients to Myriad Genetics at a cost of $3000 per test. The refusal to license means, among other issues, that the test has not been validated by other researchers. But is this a common problem?

In a recent presentation, Claire Driscoll, Director of the National Human Genome Research Institute (NHGRI)'s Technology Transfer Office, noted, "In my 10 or 15 years of doing this, I hear the same five examples or six examples repeated over and over. We can all name them by heart: BRCA1 and 2, Myriad Genetics; hemochromatosis; Canavan's disease. It's the same ones. Are there any new ones? Is it getting worse, or is it just these few that are exceptional?" She concluded, "I really think there are only a few, and I think it's the same ones over and over again."

Driscoll is right. The good news is that evidence for a growing biomedical research anticommons that can stifle biomedical research is almost non-existent. A study done for the National Academy of Sciences (NAS) in 2003, Patents in the Knowledge-Based Economy, reported the results of 70 interviews with researchers at biotechnology and pharmaceutical firms and universities about effects of research tool patents on industrial or academic biomedical research. The report found that although patents had proliferated, "drug discovery has not been substantially impeded" by them. In addition, there was "little evidence that university research has been impeded by concerns about patents on research tools." One possible worry was that restrictions on patented genetic diagnostics might be interfering with academic research.

In 2006, the NAS issued another report, Reaping the Benefits of Genomic and Proteomic Research, dealing with the question of whether or not patents were impeding research. Reassuringly, the report once again found that "Overall, the number of projects abandoned or delayed as a result of technology access difficulties is extremely small, as is the number of occasions in which investigators revise their protocols to avoid intellectual property issues or pay high costs to obtain one. Thus, it appears that for the time being, access to patents or information inputs into biomedical research rarely imposes a significant burden for academic biomedical researchers."

What factors did cause researchers to abandon projects? The researchers surveyed by the NAS cited "lack of funding, conflict with other priorities, a judgment that the project was not feasible, not scientifically important, or not that interesting, and the perception that the field was too crowded with competing investigators."

Also, in 2006, Nature Biotechnology published a review (free registration required) of the academic literature on the existence of a research anticommons. The review concluded that "among academic biomedical researchers in the United States, only one percent report having had to delay a project and none having abandoned a project as a result of others' patents, suggesting that neither anticommons nor restrictions on access were seriously limiting academic research." Worryingly, the review noted there was evidence that secrecy was growing among academic researchers. However, patent issues do not seem to be fueling this secrecy. One study suggested that increased academic research secrecy arises chiefly from concerns about securing scientific priority (scientific competition) and the high cost and effort involved in sharing scientific materials and data.

In 2007, the American Association for the Advancement of Science (AAAS) released a report, International Intellectual Property Experiences: A Report of Four Countries, which surveyed thousands of scientists in the U.S., Germany, the U.K. and Japan to assess their experiences in acquiring, using, or creating intellectual property. The AAAS study found "very little evidence of an 'anticommons problem.'" As Stephen Hansen, the director of the AAAS study, noted in a press release, "All four studies suggest that intellectual property rights had little negative impact on the practice of science."

So why has there been so much anticommons hullabaloo over the past few years? "It is interesting that we rarely, if ever, hear from the researchers themselves about these issues. The issues have been brought to public attention instead by academic lawyers, sociologists and economists," noted Hansen. The Nature Biotechnology review further noted, "The Myriad Genetics controversy was used as a primary tool for justifying patent reform-thus highlighting the potential of a single high-profile controversy to mobilize both governmental and non-governmental policy makers."

Finally, it must be observer that the biggest backers of the current push for patent reform in Congress are big information technology companies. Why? Because most information tech products involve the blending of lots of technology covered by numerous software patents, which requires a significant investment of time and money. And yet a huge proportion of the research on the existence of an anticommons focuses on the biomedical arena.

Is there evidence for an infotech anticommons? In 2004, one influential study by Boston University visiting law professor James Bessen and the Federal Reserve Bank of Philadelphia's Robert Hunt suggested that the over-proliferation of software patents was reducing software research and development and slowing down innovation.

However, recent work by two econometricians at the London School of Economics concluded that the "expansion of patentability over software during the 1980s and early 1990s was not associated with any major changes in R&D investment" by software firms. They claim that their findings "contradict the controversial claim by Bessen and Hunt that the expansion of software patenting led firms to reduce R&D over this period." Nevertheless, infotech researchers and companies tend to see patents as creating an anticommons that stifles innovation whereas biotech researchers and companies do not.

One way to think of the current patent legislation is that Congress is favoring infotech companies over biotech companies. Ultimately, what you think about patent reform may depend on whether you want cheaper computers or cheaper drugs.

Ronald Bailey is Reason's science correspondent. His most recent book, Liberation Biology: The Scientific and Moral Case for the Biotech Revolution, is available from Prometheus Books.