Abstract
As a contribution to the open debate regarding the effect of Intellectual Property Rights (IPRs) on innovation, this chapter postulates that the adoption of strong IPRs is not a necessary condition to foster innovation in the plant breeding industry. The chapter studies the evolution of the soybean breeding industry in the US and Argentina and shows that regardless the level of intellectual property protection, if there is an attractive and profitable market, firms may search for different appropriability strategies rather than changing their innovative behavior. The chapter finds that the growth rates of new soybean varieties are similar in both countries and the adoption rate is faster in Argentina where the IPRs system is weaker.
TopDo Iprs Foster Innovation?
The question of whether IPRs can foster innovation and investment in R&D has generated a broad controversy in economics. The literature has justified the use of IPRs because of the existence of market failures preventing appropriability of quasi-rents from innovation. In this view, competitive markets are not able to provide sufficient incentives to firms leading to underinvestment in R&D (Arrow, 1962). Based on these ideas, standard economic theory holds that the introduction of IPRs would solve the market failure providing the proper incentives for firms to allocate their resources to R&D (Barro & Sala-i Martin, 1995). Consequently, IP protection is assumed to be positively related with innovation.
Several scholars have theoretically criticized the monotonic increasing relationship between IPRs and the propensity to innovate, arguing that innovation is determined by a set of factors and that the effect of IPRs is highly sector and technology specific (Dosi et al., 2006; Odagiri et al., 2010). As well, Boldrin and Levine (2010) argue that innovators can be well protected in the absence of IPRs by other means. They claim that IP protection is not a cause of innovation but rather a consequence. Firms aim to hold IPRs because they confer a monopoly power, which may be beneficial for them but can be costly for society.
Key Terms in this Chapter
Utility Patent: Set of exclusive rights granted to an inventor or assignee for a limited period of time in exchange for detailed public disclosure of an invention.
UPOV: International Union for the Protection of New Varieties of Plants, established by the International Convention for the Protection of New Varieties of Plants, adopted in Paris in 1961 and revised in 1972, 1978 and 1991. Its main objective is the protection of new varieties of plants by an intellectual property right.
Intellectual Property Rights: Creations of mind, such as inventions; literary and artistic works; designs; symbols, names and images used in commerce.
Plant Breeding: Activity that changes the traits of plant in order to produce new plant with desired characteristics.
Soybean: Species of legume native to East Asia, an oilseed whose beans have numerous uses.
Plant Breeders’ Right: Rights granted to the breeder of a new plant variety that gives the exclusive control over the propagating material and harvested material of a new variety for a certain number of years.
Plant Variety: Legal term used for a cultivated plant that breeders can protect with an intellectual property right.
Biotechnology: Also called modern biotechnology or genetic engineering, it is an old activity that has been developed over thousands of years and can be defined in general terms as the use of biological processes or organisms for human purposes. It has provided new tools to genetically modified plants.
Innovation: The introduction of a new product or a qualitative change in an existing product; a process innovation new to an industry; the opening of a new market; the development of new sources of supply for raw materials or other inputs; changes in industrial organisation.