§2.7 Economic justifications for intellectual property protection
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In Kitch’s view, the prospect function of the patent system enhances its public welfare effect. However, the prospect development theory as a justification for patent rights has a twist in its tail when applied to research tools in biotechnology. As Nelson and Mazzoleni point out, the assumption that development of technological prospects is most efficient when it is centrally coordinated by the patent holder is inconsistent with the scientific ideal of individualism and independence in research, which is based on the belief that coordination or central planning of research impedes scientific progress by weakening the initiative of researchers and substituting the judgment of the co-ordinator for that of the individuals who are actually immersed in the details of the research.94 Sociologists of science have argued that the most efficient possible organisation of scientific research involves independent initiatives by competing scientists working with knowledge of each other’s achievements.95 Even where imperfect knowledge leads to duplication of effort, such duplication may be valuable: for example, multiple overlapping research efforts may improve the impact and accessibility of new research claims or help establish their validity, while different researchers may make different mistakes, interpret results differently or perceive different implications of the same results, thereby achieving greater overall understanding.96 Assuming both Kitch and the sociologists of science are correct – that is, assuming that patents do function as a claim system for new technological prospects, but that innovation in relation to research tools in biotechnology proceeds most efficiently by way of independent initiatives on the part of many different researchers – it follows that granting broad patents on early stage inventions in biotechnology may actually threaten innovation by forcing subsequent researchers to enter into potentially costly license negotiations with the patent holder. The unattractive alternative would be for later arrivals to give up hope of deriving economic reward from working on the prospect, provided of course that the work did not have to be abandoned altogether for fear of infringing the patent. The higher the transaction costs associated with obtaining a license from the patent holder, the greater the likelihood that a prospect will not be efficiently developed. Thus, the implications of the prospect development theory for patent protection of research tools turn on whether the transaction costs of patent licensing are assumed to be high or low.
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Nelson & Mazzoleni (1997), p.6; Eisenberg (1989), p.1060. Eisenberg (1989), p.1061, citing Michael Polanyi, ”The Republic of Science: Its Political and Economic Theory” (1962) 1 Minerva 54. 96 Eisenberg (1989), pp.1063-1065, citing works by Robert K. Merton and Warren O. Hagstrom. According to Kitch, the patent system cannot perform a prospect function in the context of basic scientific research because it is impossible to fashion a meaningful property right around a mere discovery or explanation of scientific phenomena. However, he does believe that basic research faces the same problems of coordination among researchers as are found in applied research, and suggests that the prospect function performed by the patent system in relation to applied research may be performed in relation to basic research by peer review procedures for research grant applications: Kitch (1977), pp.288-289. 95