Intellectual property: rights and wrongs

Trade Directorate
Page 35 
The intellectual capital invested in biotechnology raises important questions about protection. Some of them hold risks.
The market for biotechnology is expected to be worth $38 billion by the year 2005. That makes it a lucrative market. But it is much more than that. For whatever the controversies surrounding it – and one only needs to read the newspapers to know there are a few – biotechnology’s influence over our lives is growing, whether it be in the way of the life-saving drugs it brings to the market or in food production with its claim of reduced re-liance on chemical pesticides and higher, more reliable, yields. Public calls, particularly in Europe, for better information about the true effects of GMO food on health and the environment, have served to push the stakes for the concerned industries higher still.Modern biotechnology aims to understand and exploit biological processes for practical ends. It would not exist without the knowledge that goes into it. On average, the biotechnology industry ploughs some 45% of its annual income into R&D. That means nearly half the value of the industry is embedded in its intellectual capital.The trouble is that intellectual capital is a very plunderable good: it can be stolen quite easily, copied and then sold without authorisation. This sometimes happens in the pharmaceuticals industry, where drugs are imitated and marketed at cut prices, particularly in poorer countries.Biotechnology companies have to feel that their heavy investment in knowledge is worth it, that they will hold the rights to their research findings and to profit from them. That is why pa-tenting is seen as being import-ant to researchers; it protects their new ideas and products and acts as an incentive for them to continue researching. Patenting also encourages them to be forthcoming with the results of their research. As long as patents are properly targeted and not too broad (see p. 38), they will continue to play an important role in stimula-ting innovation.Innovation or discoveryInnovation in biotechnology germinated in universities and start-up companies. This was a fragile base, since these concerns did not have the financial muscle needed to market their own goods and ideas. To be able to -license their innovations to large companies, such as Monsanto and Novartis, they turned to intellectual property protection where it was available.But there lies the rub. For while there have recently been many breakthroughs in biotechnology, most of them were unimaginable at the time when the world’s intellectual property protection systems were elaborated, mainly in the 1950s and 1960s. Now the interpretation and application of those rules to biotechnological innovation has become a major public challenge.Key questions have had to be asked since the first applications for intellectual property protection of biotechnological inventions. Are we dealing with innovations in the strict sense, or just discoveries? And how can traditional patenting criteria be applied? Take the example of the growth hormone in humans. Identifying it was not an innovation in itself, since the hormone already existed and could be extracted. However, what could be patented was the synthesised version of the hormone, which was used in children to prevent dwarfism.Little wonder that different intellectual property systems dealt with questions of innovation and discovery in different ways. That these differences would have implications for trade made for some heated discussion at the trade talks leading to the WTO Agreement on Trade-Related Aspects of Intellect-ual Property Rights (TRIPs), which was finally signed in 1994. In fact, those differences have not been resolved and policy-makers will have another go at them later this year.Public disquiet is a policy challengeThe challenge facing legislators has not been made any easier by the public’s unease about health and safety, in particular about genetically modified (GM) food. Moreover, scientific breakthroughs, like the cloning of sheep, have caused alarm and accusations that man is ‘tampering with nature’. Getting the right balance in intellect-ual property protection with respect to biotechnology would probably help to restore some public confidence.One reason for the unease lies in the confusion between property rights in the material sense and intellectual ‘property’ rights, which are in fact tempo-rary rights of exclusive exploit-ation of an idea and not ownership rights to the product that emerges from it. Patenting might give ownership rights to, for example, the genetically controlled process leading to a new life form, but in no way does the patent confer ownership rights on the life form itself. After all, if Dolly the sheep belonged to her masters after her birth, it was because of other laws and -nothing to do with the patent.In 1999 the OECD published a review of intellectual property practices of its member countries in the field of biotechnology. As the study shows, there are some common practices, but there are diverging ones as well, which may have to be dealt with if biotechnology is to be put on to a stronger footing.The WTO TRIPs agreement provides intellectual property protection to product and process inventions as long as they satisfy three basic criteria: they are new, are inventive and have an industrial or other practical use. (It is important to note that -having a patent does not mean authorisation for its commercial exploitation will be -obtained.)WTO member countries retain the right not to extend patents to inventions that raise ethical concerns or which pose risks to human, animal or plant life or to the environment. Inventions of diagnostic, therapeutic and surgical methods for the treatment of humans or animals may be denied pa-tents, as might inventions of plants and animals other than micro-organisms and the biological processes produ-cing them.These exclusions reflect standing practice in Europe and follow to a large extent provisions in the European Pa-tent Convention. They are at odds with the more pro-patent countries of Australia, Japan and the United States. The elaboration of those European patent provisions dates back to 1973 – some even go back to the 1963 Strasbourg Convention. Conveniently, they rather suit Europe’s presently cautious attitude to GM food production. Ethical divisions but common outcomesThe exclusion from patents of inventions on the basis of ethical considerations appeared at the moment of the adoption of the TRIPs agreement as one of the most important controversies dividing OECD countries. In -Europe for instance, ethical interpretations based on general prescripts tend to drive patent decisions. In the United States specific laws exist targeting specific practices; case by case ethical judgements are not the norm. True, ethical considerations may under-pin a specific law, but once the law is in place it alone drives the patenting process.The OECD survey demonstrates that ethics are used to justify exclusion in every country in OECD Europe, as well as in Japan, Korea and New Zealand. Only Australia, Canada and the United States do not recognise such general grounds for exclusion. But in practice so far the end result has been the same.In those legal systems where it applies, exclusion on ethical grounds is understood to cover principally the use or cloning of human beings, or animal experimentation involving suffering to an extent that cannot be justified by the greater good of the invention. With respect to cloning there is no actual difference among OECD countries, since those countries which do not re-cognise ethical considerations as a ground for patent exclusion nevertheless refuse such patents through specific laws. Moreover, other laws and regulations tend to prevent animal suffering, even in countries where patents are poss-ible. Clearly, practice regarding human cloning and animal experimentation is similar across OECD countries, what differs are the means used to regulate it.But that is the situation now. Relying on ethics makes for an uncertain -future for biotechnology. Ethical decisions to exclude patents could be made for short-term political gain, or simply for the sake of appeasing public opinion. There is always the danger of them being evoked as a veiled trade barrier. Meanwhile, European industry is concerned that ethical considerations could have the longer term effect of putting Europe at a competitive disadvantage by holding up research, into food production for instance.But on the other hand, modern biotechnology is still in its infancy, and ethical-based systems may have the virtue of being open ended and adaptable to new circumstances as know-ledge about particular processes, including GM foods, improves.Plant cases expose shortcomingsThe ethical debate will no doubt rage on, even if in practice the outcome across OECD countries remains the same. But there are divisions in practice regarding plants, with clear-cut effects on the development of agrofood output.Patents for certain types of plants have been available under US law since 1930, but in most other countries pa-tent law was originally considered unsuitable for protecting new plant varieties. This is mainly because it was not certain that a given plant could be repro-duced by applying the same breeding methods each time. Cross-breeding, for example between two types of rose to produce a third type, was not a reliable enough process to merit a patent. Special national laws on plant breeder’s rights were elaborated in some countries in the 1960s and an international agreement was concluded, called the International Union for the Protection of New Varieties of Plants (UPOV). However, with biotechnology breeding has become a more reliable process: the same engineering process is in every case expected to produce the exact same plant each time. By normal standards, it warrants a patent.Plant-variety protection systems are -restricted to the marketing of the reproductive material of the protected variety. They leave outside their scope farmers, who can save or sell seed they produced for future planting (the -so-called ‘farmer’s privilege’) and researchers, who can use – but not sell – protected seed to develop new -vari-eties and commercialise them without paying royalties (the so-called ‘breeder’s privilege’ or ‘research exemption’). These exemptions were tightened up under the 1991 revision of UPOV, which is not yet in force.However, one effect may be to limit the access of farmers to agricultural -material at the low prices they were used to, and this has annoyed developing countries in --particular.There lies another important challenge for international policy decision--makers to deal with: how to strike a balance between the demands of -modern biotechnology and the imperatives of traditional farming in a world where the rules of intellectual property rights are getting ever tougher.See Also: Intellectual Property Practices in the Field of Biotechnology, OECD 1999©OECD Observer No 216, March 1999

Economic data


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa.
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .

Most Popular Articles


What issue are you most concerned about in 2016?

Euro crisis
International conflict
Global warming

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016