One of the key determinants of today’s world is the speed with which innovation takes place and is brought within the sphere of production. The growth of technology is a continuous driver of the economy. While a lot of discussions have taken place on the monopoly created through the “reproduction” of the innovation via patents, much less attention has been focussed in the way innovation takes place and the structures within which innovation is either facilitated or retarded. Does the networked world of today carry new possibilities for alternate structures of creating knowledge and innovation that are currently being retarded? Is it possible to expand the notion of “commons” to help such processes develop?
A number of recent cases in the United States Supreme Court1 and in the US Federal Court dealing with patents have shown that companies investing heavily in advanced technologies are moving away from the patent model. A major exception to this is the big pharmaceutical company sector.
The technology model of generating innovation was conceived to be “private” from the beginning. The patenting system originated in the days of the lone inventor and the need to protect his/her invention. Historically, the lone inventor has given way to large corporate or state funded research laboratories in the early twentieth century. Increasingly, science institutions have been also looking at producing knowledge in profit-oriented ways similar to those used by global corporations in creating new technologies. With the Bayh-Dole legislation2 in the US, this model has come to dominate publicly funded science in the US. In India, as elsewhere, the belief that a direction the US has moved in is a good one to go in is gaining ground.
Interestingly, this is also a time in which alternate models of generating knowledge and innovation have gained ground. The Free Software Movement has shown that networked and open collaborations of “hackers” can produce software of far better quality that what the best of well-heeled corporations working in isolation can manage. The power of open, collaborative structures, working without so-called material incentives is visible in this model. The Free Software Movement has thus resurrected older models that have played key roles in successful innovation in technology development, such as the cases of the steam engine development in Cornish mines3 and the blast furnace developments4 in Great Britain and the US.
Proponents of patents may argue may be they did not work in the past, but currently patents are great for promoting innovation. The argument against the current patent regime for companies involved in innovation is that the increasingly networked character of producing scientific and technological knowledge comes up against the requirements of a patenting system: the bang is not worth the buck involved in patenting.
Let us look at the more recent data. In a forthcoming book, two researchers Bessen and Meurer5 have analysed the numbers in terms of revenues generated from patents as against cost of filing, maintaining and defending patents in courts. In their view, the data shows that except in the case of pharmaceuticals, patents generate far more litigation costs than revenue. The numbers are clear: domestic litigation costs –16 billion dollars in 1999 alone — was about twice the revenue for patents. Even in this, almost two thirds of the revenue was from pharmaceuticals and chemicals. Worse, the more innovative the company, more was the likelihood of it being sued. The software and business method patents fared the worst, with costs far outstripping the benefits of patenting. Even if we examine, not the broader question of whether societies benefit due to greater innovation, but the very narrow one of whether companies that are innovative, benefit from patenting, the answer is that they do not. This answer that Bessen and Merurer come to is no different from what others have discovered in the past: if patents did not already exist, it would be a poor way of rewarding innovation.
Research of Bessen and Meurer, Boldrin and Levine also show that patents do not promote innovation in societies either. Most of the historical data from countries that had different forms of patent protection do not show significantly different rates of innovation. Neither are current data any different.
Historical Look at patents: Cornish Mines and Blast Furnaces in Cleveland Area
The need for patents has always been articulated as a necessary social evil. The US Constitution allows the Congress, “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Thus even in the US, this exclusive or monopoly rights is given not because the inventor somehow owns the idea embodied in the patent but in order to promote science and technology, therefore larger societal goals.
Patent as an incentive, gives a monopoly to the inventor for a certain period in lieu of which he/she makes the invention public. In economic terms, this monopoly allows the patent holder to extract rent from all users of the patents: it is the state allowing the patent holder the right to levy a private tax. Therefore, the question arises whether patents (or monopolies) are the best form of providing such incentives?
Even if we accept that material incentives need to be given to the inventors, patent monopolies however are not the only form of incentives. Others could be a royalty for the inventor from any producer who wanted to work the patent, but not a monopoly over all reproduction of the invention. This is what in patent literature would be referred to as an automatic license of right. Or it could be the state offering prizes from its kitty for socially useful inventions, a policy that a number of states have followed in the past for encouraging inventors.
The question is whether the monopoly patent regime has helped in promoting innovation. For this, let us start with the most celebrated innovation, which in all text books is stated to be one of the key elements of Industrial Revolution: the Steam Engine. James Watt perfected his version of the steam engine for which he secured a patent in 1769. In 1775, using the influence of Mathew Boulton, his rich and influential business partner, he succeeded in getting the Parliament to pass an Act extending his patent till 1800. This gives us an opportunity to examine the developments in steam engines and deciding whether the Watts patent helped in promoting innovation or did it actually stifle development.
The major beneficiary of the advances in steam engines would have been the mining industry in Cornwall. Watt spent his entire time suing the Cornish miners if they tried to make any advances over his design. The firm of Boulton and Watts did not even manufacture steam engines then, they only allowed others to construct the engines based on Watt’s designs for which they claimed huge royalties. If we examine the increased efficiencies of steam engines and plot it against time, we find that after the initial Watts breakthrough, during the period that Watt had monopoly, all further improvements virtually stopped, starting again only after the expiry of his patents (figure below). During the period of Watt’s patents the U.K. added about 750 horsepower of steam engines per year. “In the thirty years following Watt’s patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt’s patent; while between 1810 and 1835 it is estimated to have increased by a factor of five” 6. The major advance in steam engine efficiency took place not because of Watt’s invention but afterwards.
Interestingly, all those who made further advances, such as Trevithick, did not file patents. Instead, they worked on a collaborative model in which all advances were published in a journal collectively maintained by the mine engineers, called the “Lean’s Engine Reporter”. This journal published best practices as well as all advances that were being made. This was the period that saw the fastest growth of engine efficiency.
If we look at the research on increased patent protection helping innovation, very little concrete evidence has ever been found for this thesis. In fact, the evidence not only of Cornish mines but also in U.K. and the US of blast furnaces in the 19th Century, show that collective innovation settings7 lead to a faster diffusion of technology and more innovation as opposed to the closed, patent based monopolies. Thus, the advances in the two key elements of industrial revolution – steam engines and steel — both came out of a non-patented and open sharing environment. The recent advances of Free and Open Source Software is not an anomaly but merely the reflection that an open model of developing knowledge is a faster and surer way to innovation than conferring state monopolies.
Science and Open Models
In science, while results have been open and shared publicly, the competitive model has been the way discoveries are made. The current contours of the scientific enterprise are defined by these competitive notions of exclusive discovery. They have been consistent with reductionist paradigms, in which small problems could be examined in isolation. Such models are unlikely to be adequate today. Cooperation in the scientific community on a far wider scale than has been the case so far is critical if major advances are to take place.
Today, the information technology sector8 has shown that new technologies and methodologies can be developed by cooperative communities. It may be argued that this sector is unique in that the “reproduction costs” of the “artefacts” – the software– are relatively low. However, the question needs to be posed whether it is possible to design such approaches for other areas such as, say, the life sciences? Is it possible to have similar cooperative communities that work together to produce new products? Is it possible to envisage ways by which artefacts can be reproduced and reach the community without high costs of such “reproduction”? Are there spaces to be found in which new, more intimately cooperative modes of scientific enquiry can be initiated?
What is needed is to explore new ways of establishing ‘creative commons’, in which new technologies and methodologies are developed by cooperative communities. It is in this context that we have thought to get together a set of practitioners from different disciplines to focus on production of knowledge and innovation and examining what structures of knowledge production are in consonance with the needs of producing new knowledge and innovation. Some examples of this are given below.
There is little doubt that genetically engineered plants are going to create an enormous impact on agriculture in the future. That it has not done so till date is due to various reasons. One of course is that genetically modified organisms are in their infancy. The second and perhaps an even more important is that unlike the Green Revolution that came out of public domain science, the Gene revolution is coming from private domain science. The prospect of agriculture of any country passing into the hands of a few multinational companies is not a re-assuring one. It is compounded by the fact that most of the successful biotech seed companies are either chemical companies such as Monsanto, Du Pont etc., while others pharmaceutical companies — Novartis, Bayer, etc. And the track record of both regarding public good has been rather poor. Therefore the discomfort that people have regarding their counties’ agriculture passing into multinational hands is not unjustified.
Greg Traxler, in his paper for FAO shows the rapid increase of transgenic crops in some countries and for specific crops. “In 1996, approximately 2.8 million hectares were planted to transgenic crops or genetically modified organisms (GMO) in six countries (James, 1998). Adoption has been rapid in those areas where the crops address important production problems, and by 2003 global area had risen to 67.7 million hectares in 18 countries (James, 2003)… Six countries (the USA, Argentina, Canada, Brazil, China and South Africa), four crops (soybean, cotton, maize and canola) and two traits (herbicide tolerance and insect resistance) account for more than 99 percent of global transgenic area.” 9
In order to explore such possibilities, a possible example would be the development of useful crop varieties in the agribiotech sector. The bulk of ‘innovative technology’ in this arena currently appears focussed in making genetically modified crops (GMOs, so to say), a technology that is patent-protected by the MNC sector. An interesting step away from this corporate model of agribiotech development has been the establishment of an ‘open source biology’10 platform, centred around new microbes useful for making transgenic plants. The most advanced initiative of this kind is the Australia-based CAMBIA/BIOS. While the first acronym refers to the broader scope of promoting biological innovation for agriculture (Centre for the application of Modern Biology to International Agriculture), the second refers to the Biological Innovation for Open Society, the specific arm of CAMBIA dedicated to open-source biology. This particularly focuses on freeing the basic technological tools of biotech for general use, so that innovation at the application level is not restricted, particularly by the biggest multinationals in the biotech sector. It promotes a protected commons license for use in this regard. It also operates a web portal BioForge, similar to the SourceForge of the open-source software movement. While the BIOS initiative is not identical to the free-software idea, it appears to be the most developed initiative of this kind so far.11
However, such a knowledge commons approach may still depend on the conventional manufacturing sector for delivery of the products – for example, the seeds — to the market. Also, it still involves making transgenic crops, which is a technology replete with implementation difficulties of both the political and the environmental kind.
One alternate possibility that is being discussed globally is to take advantage of the growing ability to sequence the entire genetic sequence of individual organisms at steadily declining expense. The incorporation of such a step in traditional plant breeding for advantageous traits will allow the breeding programmes to overcome some of the major obstacles to creating crop varieties with advantageous traits that breed true so that seeds can be re-used. It would allow the identification of combinations of genes that confer a particular trait and thus allow reliable selection of varieties with combinations of many advantageous traits, and it would even allow the creation of carefully engineered crops in which the introduced gene form providing advantage is not from some other species but from the host crop itself. Such a programme would be of little interest to the profit-sector since farmers can re-use seed. It would require little by way of a manufacturing intermediary, since experimentally generated seed can simply be handed out to be bred by farmers themselves. And it is a programme that would demand a large-scale cooperative global effort between breeders and scientists. Breeders would need to collect and maintain source varieties and carry out careful breeding. Scientists must, on the other hand, generate new ways of handling and interpreting the large mass of data that sequencing-assisted breeding would yield, – essentially, cutting-edge science would result from the enterprise as well.
Open Source Drug Discovery:
A similar possibility exists in the area of drug discovery. In 1995 the TRIPS agreement introduced an uniform and higher level of Patent protection across the globe. The promise that this would lead to higher levels of innovation remains a mirage. Globally, the number of New Chemical Entities (NCEs) have progressively gone down over the past decade. Further, of NCEs approved for marketing, a very small fraction – less than 3% — constitute a significant advance over prevailing therapies. An overwhelming majority of new products address needs of the wealthy populations in the global North, while the disease burden is largely in the global South. While the industry researches drugs for lifestyle conditions of the affluent – obesity, erectile dysfunction, baldness, etc. – conditions such as Tuberculosis, Kala Azar, Sleeping Sickness, have to make do with decade old therapies. The last drug developed specifically for Tuberculosis, was introduced some three decades back.
Clearly the IPR based model for innovation is just not working. Strong IP protection is encouraging protectionism and is harming the way science is done. Many more Patents are taken out to stop others from working than to protect one’s own research. It is premised on very high costs of development, that are sought to be recovered through high monopoly pricing of products, thereby closing the door for research that targets conditions of the global poor who do not have pockets deep enough to afford the high prices.
Can open-source drug research and development, using principles pioneered by the highly successful free software movement, help revive the industry? As the cost of genome sequencing drops and the speed at which the sequencing can be done increases exponentially, it is possible to harness this power to solve the problems of health in radically different ways.
An open source model to promote innovation is not a new model and is used extensively in the software sector today. It organises research around researchers across the globe, who draw from a pooled source of information to which the contribute, and to which they pledge to plough back the new developments that accrue. A decade back such a model might have appeared an utopia. Not so today when very powerful tools are available that can create virtual models, that can sequence genetic codes of humans, that can identify potential targets for interventions in the genetic code. It is possible to process genomic information and on a much larger scale, create public databases of genomic information and protein structures, identify promising protein targets, and deliver such compounds for clinical trials. It would be based on a collaborative, transparent process of biomedical development to take on health challenges that big pharmaceutical corporations have neglected in favour of what they perceive as “block-buster drugs”. A number of interesting initiatives are currently under way, from tuberculosis to malaria.
Such a model can identify new candidates at a fraction of the cost that Big Pharma claims to spend. It has been argued that the major cost in drug development relates to clinical trials that need to satisfy drug regulatory agencies. Today Big Pharma outsources clinical trials to a dispersed set of Contract Research Organisations. A collaborative open source model could use the same route, with the difference that the entire endeavour – from selection of promising candidates to marketing approval – is organised and overseen by a publicly funded entity or group that promises to place such research in public domain, without insisting on Patent monopolies. It is an idea whose time has come and has the potential to revolutionise the way research is done.
This is not to say that there are no difficulties with the approach. Rather, it is to suggest a possible example of ways in which the framework of present-day science and technology can be re-cast and used in innovative ways for cooperative generation of useful knowledge. Obviously, each of these areas would have their own specificities as well as demand creating new structures to protect the knowledge commons. Some advances have taken place with the Free Software community’s creation of the Gnu Public License. However, many more questions will need to be addressed not only to protect the knowledge commons being created but also to create this open and cooperative communities.
1 One of the important cases is KSR Vs Telefax. In this case a number of hi-tech companies who are regarded to be innovative, sided against easy granting of patents. The exception was of course the pharma companies who were on the other side. The judgement raised the bar on patents. “We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts. See U. S. Const., Art. I, §8, cl. 8. These premises led to the bar on patents claiming obvious subject matter established in Hotchkiss and codified in §103. Application of the bar must not be confined within a test or formulation too constrained to serve its purpose.” KSR International v Telefax US Supreme Court.
2 A good critique of Bayh Dole Act is Clifton Leaf, The Law of Unintended Consequences, Fortune, September 19, 2005
3 Alessandro Nuvolari, Collective Invention during the British Industrial Revolution: The Case of the Cornish Pumping Engine, Eindhoven Centre for Innovation Studies, The Netherlands, Working Paper 01.04, May 2001.
4 Robert C. Allen, Collective Invention, Journal of Economic Behavior and Organization 4, 1983
5 James Bessen and Michael J. Meurer, Innovation at Risk, Princeton University Press, http://researchoninnovation.org/dopatentswork/),
6 Against Intellectual Monopoly, Michele Boldrin and David K. Levine, http://www.dklevine.com/general/intellectual/againstnew.htm)
7 Robert Allen, op cit
8 John Willinsky, 2005. “The unacknowledged convergence of open source, open access, and open science,” First Monday, volume 10, number 8, at http://www.firstmonday.org/issues/issue10_8/willinsky/
9 The Economic Impacts of Biotechnology-Based Technological Innovations, May 2004, ESA Working Paper No. 04-08, Food and Agriculture Organization, Greg Traxler.
10 W Broothaerts et al, “Gene transfer to plants by diverse species of bacteria,” Nature 433: 583-4. Feb. 10, 2005
11 T Jayaraman, Note on Promotion of Open-Source Biology in India, Private Circulation.