[Sabrina Safrin (guest-blogging), March 7, 2007 at 6:36am] Trackbacks
Reactive Propertization and Fear of Exclusion.

My last two postings identified two reasons why property rights beget additional property rights. First, some may seek property rights because they are copying the actions of others, particularly the actions of influential members of their community. As an example, I pointed to the dramatic rise in patenting notwithstanding the low expected value of individual patents, commonly referred to as the patent paradox. Dennis Crouch suggested that we refer to this as the lemming theory for the patent paradox, and, upon reflection, I concur. (Thank you Dennis.)

Second, second generation property rights may emerge in response to first generation property rights because the first generation property rights fracture a cooperative norm. I pointed to the emergence of property rights over raw genetic material that arose in response to the patenting of genetic sequences and bioengineered goods as an example of this.

Some of yesterday's bloggers seemed to want a bit more information on this point. Basically, before the early 1990s, most nations treated genetic material as part of the "common heritage of mankind." (For example, 100 nations expressly referred to genetic material as part of the "common heritage of mankind" in an international agreement on plant genetic resources). The common heritage principle that prevailed for centuries accounts for the widespread distribution of foods far away from their place of origin. It also accounts for the semi-dwarf varieties of wheat and rice that formed the bedrock of the Green Revolution. U.S. breeders developed these varieties from seeds freely obtained from Japan and, in turn, freely shared their improved varieties throughout the world.

By the early 1990s, this had changed. As developed countries began to patent isolated genetic sequences and bioengineered organisms as well as to require that developing countries, as a condition of free trade relations, extend intellectual property protection to bioengineered goods, developing countries responded by asserting government rights over naturally-occurring genetic material. Why, these countries asked, should individuals and companies from gene-poor developed countries obtain genetic material free of charge from gene-rich developing countries when they then patent these genes and at times sell them back to the country where the genetic material originated? Consequently, in 1992, developing countries insisted on language in the Convention on Biological Diversity that expressly recognized sovereign rights over genetic material and pointedly rejected the common heritage of mankind principle. Since 1992, some 40 nations have or are in the process of adopting laws that greatly restrict access to genetic material within their borders.

Meanwhile, closer to home, patients began to assert property or related legal rights over biological samples that they had contributed in the course of receiving medical treatment.

Today, I offer a third reason for why the creation of property rights can beget additional property rights: fear of exclusion. When some begin to demand and receive new property rights, others naturally experience concern that they will no longer enjoy the ability to use the previously common resource. They respond by securing a property right for themselves in the good that is now the new object of propertization. In the alternative, they demand the creation of new property rights over some related good that they can exchange for access to the first object of propertization.

The fear of exclusion animates much of the frenetic patent activity underlying the patent paradox. Companies and institutions feel compelled to obtain patents over slight and even dubious innovations out of concern that if they do not have such patents, they will have no currency to trade for access to other patented and potentially equally slight innovations. As Internet Patent News Service editor Gregory Aharonian explains: "The big guys couldn't care less about the quality of their patents …. They just want as many as possible because they trade them like baseball cards. When you have a thousand patents and your competition has 1,500, you don't care what they are, you just swap them." Fear of exclusion also helps to explain why so many rushed to file patent applications over gene fragments. They feared that, unless they obtained such patents, those who did would exclude them from entire fields of innovation.

The demand by developing countries for property rights over raw biological material partly arose from their concern that patent holders would exclude them from enjoying the benefits of technology, particularly biotechnology. Developing countries sought governmental property rights over raw biological material partly to leverage such rights for access to patented technologies. The article of the Convention on Biological Diversity that acknowledges sovereign rights over genetic material is immediately followed by an article entitled "access to and transfer of technology." Together, the two articles envision a world where developing countries exchange access to unimproved genetic material within their borders for technological know-how.

Patients also often lay property or other legal claim to donated samples in order to secure access both to the patented gene and to diagnostic tests based on that gene. For example, in Greenberg v. Miami Children's Hospital, 264 F. Supp. 2d 1064 (S.D. Fl. 2003), patient groups, who had provided researchers with tissue samples to help them isolate the gene responsible for Canavan disease, sued the researchers for unjust enrichment in order to enjoin the researchers from enforcing the patent on the gene and preventing others from using the gene and diagnostic tests based on that gene.

Other patient donor groups, like the PXE consortium, have insisted on co-ownership of any issued patent again in order to ensure that the patented gene and derivative diagnostic tests remain available to those who suffer from the disease. They thus obtain an ownership interest to secure open access.