Is the tragedy of the anti-commons for the greater good?

March 31, 2008 by Linh Le

During Professor Bruce Ziff’s discussion on Private Property, he referred to Garrett Hardin’s theory on the Tragedy of the Commons. The common hypothetical relates to the relationship of farmers overgrazing on common land. Since resources are finite, the over-exploitation of land by some members of the community results in a consequential detriment to all. Thus, through the creation of private property and the right to exclude others, one is able to internalize both the benefits and the burdens of individual activities. [1] How then does one justify Intellectual Property Rights? Unlike real property, ideas theoretically should be infinite. Where one claims proprietary rights to an invention or a unique process, rather than taking from the commons, detailed disclosures of the invention, in theory, enables further dissemination of knowledge and a “putting back” of resources into the commons. One of the justifications of the patent system is that by creating proprietary rights, knowledge that would have remained as a trade-secret is now placed in the public domain/commons. By disclosing this knowledge, the patentee now has a limited monopoly (20 years from the filing date) to commercially exploit the invention against the world. [2] The overall expectation is that this IP protection should be an incentive for further research and innovation. In essence, within the realm of intellectual property, the law encourages the creation of the anti-commons.

Where then does the tragedy reside? In enabling individuals and corporations to maximize their commercial interests through patent protection, it effectively excludes other researchers from using and enhancing this knowledge. Especially within the biotechnology industry, where downstream technologies (biomedical products, diagnostic tests etc.) rely on upstream tools (non-commercial, genetic tools) to produce the final commercial product, upstream patents become a major barrier to innovation. While some might argue that strong intellectual property protection serves as an incentive to create new knowledge and foster industrial and economic development, where the protection is too strong or too broad, the flow of knowledge becomes hindered and potentially harms the public interest. The tragedy of the anti-commons occurs where resources, or in this case, knowledge, is under-utilized. A prime example of how the enforcement of strong IP rights may discourage innovation is the BRCA1 and BRCA2 gene patents held by Myriad Genetics (a biotechnology firm based in Utah). In cases where breast cancer is inherited, it is estimated that half of all mutations occur along the BRCA1 gene. Myriad was granted exclusive rights in Canada (US and Europe – now repelled in Europe [3]) to control the uses of the BRCA1 & 2 genes, as well as diagnostic tests developed for BRCA analysis. Myriad pursued aggressive enforcement of their patents. All tests for the BRCA genes had to be sent to Myriad’s Utah lab for ~$2400-2600 per sample, or labs wanting to conduct in-house testing were forced to negotiate for licences. The three main complaints against Myriad’s patent was that:

1. The price for the testing was unfair; most labs could conduct the same or better testing at 1/3 the price.

2. By sending the samples to Myriad, it prevented other labs from collecting data and enhancing their own research on breast and ovarian cancer.

3. Myriad’s test was only capable of detecting 10-20% of the detectable mutations. One firm had created a test method that was able to detect a new deletion that accounted for an additional 15% of mutations on the gene. Myriad’s test had failed to detect this new deletion. [4]

Although the first argument deals with the public’s interest on affordable access to health-care (which will not be discussed further), the second and third arguments clearly show how proprietary rights can negatively affect innovation.

Innovation is an interesting word. It is defined as “the introduction of something new” [5], but what is this something? Is it the promotion of new research and ideas? Or, is it the commercialization of new products? Relying on the premise of the Bayh-Dole Act, enacted in the US, it is clear that the basis behind patenting in biotechnology is to have research geared towards commercialization. After interviewing a former CEO of a bio-pharmaceutical venture start-up, his last words were, “the cemetery is full of good ideas”. Without strong patent protection, the private industry is not going to invest and drive products to the market. While the patent system may have established a tragedy of the anti-commons, it may also be the only justification for companies to invest. Is it better to have some products in the market (albeit overpriced), than none?

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[1] Bruce Ziff. Presentation: The case for Private Property. January 31^st 2008. Vari Hall, York University.

[2] David Vaver, Intellectual Property Law: Copyrights, Patents, Trade-marks (Toronto: Irwin Law, 1997) at 161.

[3] Canadian Cancer Society: http://www.cancer.ca/ccs/internet/standard/0,3182,3172_31282995_32749610_langId-en,00.html

[4] Declan Butler & Sally Goodman, “French Researchers take a stand against cancer gene patent” (2001) 413 Nature 95.

[5] Merriam-Webster Dictionary: http://www.merriam-webster.com/dictionary/innovation.