The International Consortium on Agricultural Biotechnology Research (ICABR)
Intellectual Property Rights
Gokhan Ozertan, H. Alan Love,
Curtis R. Taylor and Diana M. Burton
Biotechnology firms are concerned with protecting their investments in intellectual property. If returns to innovation are not sufficient, technical progress in the private sector will cease. This could substantially reduce the competitive performance of the US agricultural sector because private sector involvement in biotechnology research and development is substantial. Farmers and end-use consumers want to gain innovation benefits in the most cost-effective way. Growers thus have incentive to save seed from
patented crops and use them for future plantings, a practice known as seed piracy. Farmers saving seed lowers the amount purchased, which reduces innovating firm profits and incentives to invest. While seed sales contracts prohibit saving seed, strong monetary incentives exist for farmers to continue the practice, especially for crops and in areas where saving seeds is established tradition.
With the advent of this new agricultural product, it is unclear that the traditional seed sales contractual mechanism, with added clauses prohibiting saving seeds for planting, is an effective mechanism for the protection of intellectual property in these seeds. Innovators can sue those farmers who practice seed piracy. Depending on the ease of appropriation of the intellectual property, these enforcement costs may be quite high.
There are many other potential contractual mechanisms that could be used. An economically efficient mechanism would produce incentive compatibility for the farmer and the innovator and reduce moral hazard problems, thereby minimizing enforcement costs. Such a contractual mechanism would lead to optimal returns for both innovators
and producers and socially efficient investment in research and development. Benefits could be passed on to end-use consumers and help ensure future US competitiveness in agricultural and food markets.
As an alternative to the contractual and legal protections of intellectual property contained in these genetically enhanced products, genetic safeguards may be implemented.
One such alternative, dubbed the terminator gene, prevents seeds from germinating, thus rendering any saved seed worthless for future crops. While biological solutions might seem the perfect foil for seed piracy, they involve further release of genetically altered
material and accompanying environmental risks. Though the probability of a disastrous side-effect may be low, potential damage could be extremely high, making the expected cost of the risk possibly substantial. Indeed, these and other health concerns have led to the ban on genetically modified foods in much of Europe.