Thursday, April 14, 2011

Intellectual Property Protection, Innovation and Climate Change Mitigation

On the topic of intellectual property rights, are you an open source hippie?  Or, are you an "old school" patents defender to provide dynamic incentives for recouping upfront irreversible investments?  The NBER economists are hard at work on doing innovative empirical work on this topic.  Here is the paper that Heidi Williams will present at UCLA today.


This paper provides empirical evidence on how intellectual property (IP) on an ex-
isting technology a ffects subsequent research and development (R&D). Theoretically,
IP could hinder subsequent R&D by imposing transaction costs, or could instead en-
courage subsequent R&D by providing incentives for efficient use of the underlying
technology. To shed empirical light on this question, I analyze the sequencing of the
human genome by the public Human Genome Project and the private firm Celera,
and estimate the impact of Celera's gene-level IP on subsequent scienti c research
and product development outcomes. Celera's IP applied to genes sequenced fi rst by
Celera, and was removed when the public eff ort re-sequenced those genes. I test
whether genes that ever had Celera's IP di ffer in subsequent innovation, as of 2009,
from genes sequenced by the public e ort over the same time period. A complemen-
tary panel analysis traces the eff ects of removal of Celera's IP on within-gene flow
measures of subsequent innovation, and a third analysis relies on variation in the
length of time a gene was held with Celera's IP. Taken together, the results from all
three analyses suggest Celera's IP led to reductions in subsequent scientifi c research
and product development outcomes on the order of 30 percent. Celera's short-term
IP thus appears to have had persistent negative eff ects on subsequent innovation
relative to a counterfactual of Celera genes having always been in the public domain.

So, if these findings generalize to climate mitigation innovation --- what does this mean?  If China figures out ways to cheaply grab our "green" IP --- do we conclude that this accelerates innovation and thus from an "ideas as public goods" vantage point -- this is "good"?