Murray Stern (2005) - Do Formal Intellectual Property Rights Hinder The Free Flow Of Scientific Knowledge

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Reference

  • Murray F., and S. Stern (2005), "Do formal intellectual property rights hinder the free flow of scientific knowledge? An empirical test of the anti-commons hypothesis", NBER working paper #11465. pdf


Abstract

Although many scholars suggest that IPR has a positive effect on cumulative innovation, a growing "anticommons" perspective highlights the negative role of IPR over scientific knowledge. At its core, this debate is centered on how intellectual property rights over a given piece of knowledge affect the propensity of future researchers to build upon that knowledge in their own scientific research activities. This article frames this issue around the concept of dual knowledge, in which a single discovery may contribute to both scientific research and useful commercial applications, and finds evidence for a modest anti-commons effect. A key implication of dual knowledge is that it may be simultaneously instantiated as a scientific research article and as a patent. Such patent-paper pairs are at the heart of our empirical strategy.We exploit the fact that patents are granted with a substantial lag, often many years after the knowledge is initially disclosed through paper publication. The knowledge associated with a patent-paper pair therefore diffuses within two distinct intellectual property environments, one associated with the pre-grant period and another after formal IP rights are granted. Relative to the expected citation pattern for publications with a given quality level, the anti-commons perspective suggests that the citation rate for a scientific publication should fall after formal IP rights associated with that publication are granted. Employing a differences-in-differences estimator for 169 patent-paper pairs (and including a control group of other publications from the same journal for which no patent is granted), we find evidence for a modest anti-commons effect (the citation rate after the patent grant declines by approximately 10 to 20 percent). This decline becomes more pronounced with the number of years elapsed since the date of the patent grant and is particularly salient for articles authored by researchers with public sector affiliations.

Keywords: Anti-commons; Intellectual property; Academic science; Pasteur’s Quadrant


IPR (Intellectual Property Rights)

IPR may contribute to innovation:

  • May facilitate the creation of ideas, encourage further investment in ideas with commercial potential, mitigate disincentives to disclose and exchange ideas
  • Offers incentives to move research from the "Ivory Tower" into commercial practice
  • Social benefits may (Ed: necessarily) accrue with commercial benefits
  • By attracting high quality researchers into their fields (and attracting money!)
  • By communicating knowledge - they contribute to the market for ideas


May hinder innovation:

  • By privatizing the scientific commons and limiting scientific progress
  • By acting as a tax on innovation - resulting in a lower equilibrium level of follow on research
  • By hindering cummulative discovery
    • Scientific knowledge is inherent non-rivalous and current knowledge can serve repeatedly as an input into future knowledge production


             The Anti-Commons Hypothesis

IPR may inhibit the free flow and diffusion of scientific knowledge 
     and the ability of researchers to build cummulatively on
                  each other's discoveries.

Papers are scientific articles designed to share new knowledge

Patents share knowledge and impose a property right over it simultaneously.

Patent-paper pairs:

  • There are dual-purpose ideas that can be published and (generally later) patented, i.e. dual knowledge
  • An increasing number of scientists are using patent-paper pairs, especially in biotech

Basic versus Applied Research

Basic research considers questions of fundamental scientific interest, and applied research considers questions of usefulness and application. Basic research takes place under an open science institution and is disclosed through publication. Applied research takes place under a private property regime and is disclosed through patents, if at all. 

              The Stokes Model

                             Consideration of Use
                             No               Yes
                      ------------------------------------
                      |               |                  |
                No    |               |   Pure Applied   |
Quest for             |               |                  | 
Fundamental           ------------------------------------
Understanding         |               |                  |
               Yes    |   Pure Basic  |   Use Inspired   |
                      |               |                  |
                      ------------------------------------


The open science institution uses rewards for conducting basic research that favor cummulative knowledge production over the long term, such as tenure based on publication record. Whereas the private property regime ignore the impact on follow on research, and instead attempts to exclude others in order to appropriate value through commercialization (or strategy etc, which is ignored here). Particularly problematic is knowledge created in the Use-inspired quadrant of the Stokes Model. This is referred to as Pasteur's Quadrant (Pasteur's insights into microbiology founded germ theory and had practical applications for cholera and rabies). In this quadrant, disclosure becomes endogenous, though choices are not mutually exclusive - researchers may choose patent-paper pairs.

Biotech is important as an example because dual knowledge is so predominant in the field. This might be because:

  1. It is a growing field with expanding promise, and its results are directly applicable commerically
  2. There have been reductions in the costs of academic patenting (c.f. Bayh-Dole and the growth of university institutions that assist in patenting)
  3. The scope of IPR has grown, encompassing (after Diamond vs. Chakrabarty) the domain of genetically modified living organisms. Also note the patenting of the Oncomouse in 1988 (which is a recurrent theme in the paper). This brought the private sphere more into contact with pure research.


Set-up

There is a delay in patent granting; generally patents are granted 2-4 years after application. Therefore there is a pre-grant period (where no IP rights are present) and a post-grant period. To the extend that the issue comes as a 'surprise', the grant may affect the citations and therefore the impact of the scientific research in the public domain. Note that citations are only a noisy measure of the impact. Futhermore, a reduction may not be due to the issue per se, but rather how the IPR is enforced.

The paper claims to exploit three key aspects of the paper-patent pairs phenomenon:

  1. A significant fraction of researchers choose to forego formal IPR.
  2. Even with formal IPR there is a significant delay in issue of the rights
  3. Future citations are a noisy but useful measure of the impact of a publication.

The paper tests are citation patterns different for scientific knowledge that is ultimately patented?

The control group is papers without patents that are 'at risk' of being patented, i.e. in the same journal, at the same time. A patent attorney determined that they were patentable.

Results

Below is a list of the key results:

  • The size of the anti-commons effect is small but statistically significant. Comparing pre-grant to post-grant, the effect is on the order of 25%.
  • On the order of between 1 in 11 and 1 in 6 researchers who would otherwise build on the knowledge don't when it is patented
    • But there may be available substitutes...
  • There is a decline when there is at least one public author - perhaps researchers expect that private authors will retain IP rights.
  • The impact is significant for non-US authors, but this is a puzzle.
  • There is a weak effect on patent characteristics, but no evidence that basic research tools are affected.


See also:

  • The discussion of DuPont's enforcement of its license of the oncomouse on page 655.
  • Check whether there is really no protection in patent pending. Isn't there something about putting people on notice once you've filed (post the changes to the patent system that published applications in 2001), and then getting protection under the American Inventor's Act (or somesuch).
  • Note that the positive effects of patents are weighted in these measures.
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