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Conceptualizing the Breeding Exception to Patent Rights: A Legal and Economic Appraisal

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The Breeder's Exception to Patent Rights

Part of the book series: International Law and Economics ((ILEC))

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Abstract

This chapter conceptualizes the breeder’s exception to patent rights within the broader category of exceptions to patent rights. It starts with a legal and economic analysis of research exceptions and further elaborates on the concept of a breeder’s exception to patent rights. This concept is based on an examination of the rationale of research exceptions in various common and civil law countries. In addition to legal justifications and classical economic arguments on the incentive to innovate, the chapter investigates possible anticommons effects of patent rights in plant breeding and purports the breeding exception as a legal remedy to the fragmentation of proprietary rights in the breeding phase.

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Notes

  1. 1.

    Research exceptions are object of numerous studies. For an extensive review see Bently et al. (2010) hereinafter, WIPO study; Cook (2006); Dent et al. (2006) hereinafter, OECD report; Gilat (1995); Misati and Adachi (2010); Paradise and Janson (2006), pp. 148–154; University of Alberta, The Research or Experimentation Use Exception: A Comparative Analysis, prepared for Health Canada by the Centre for Intellectual Property Policy & the Health Law Institute, hereinafter, Canada report; Van Eecke et al. (2009).

  2. 2.

    Other exceptions to patent rights, which are not relevant to the purpose of this study, are, for instance, the prior use exception and the preparation of medicinal products in individual cases in a pharmacy.

  3. 3.

    Kur (2008).

  4. 4.

    Ibidem, p. 8. This point is further supported if we look at the decisions of the European Patent Office. In the case G01/07, Medi-Physics/Treatment by Surgery (2011) 3 OJ EPO 134, the Board of Appeal held that exceptions to patentability ‘are to be interpreted to give effect to their purposes’.

  5. 5.

    See the studies mentioned in note 1.

  6. 6.

    EU Case of Monsanto Technology LLC v Cefetra BV, Case C-428/08, 6 July 2010, para. 76.

  7. 7.

    Christie (2011), pp. 121–135.

  8. 8.

    Ibidem, p. 123.

  9. 9.

    Here the terms ‘limitation’ and ‘exclusion’ are considered as synonyms.

  10. 10.

    Ibidem, p. 124.

  11. 11.

    Note that this understanding corresponds to that of Ricketson developed for copyright law. See WIPO Study on Limitations and Exceptions of Copyright and Related Rights in the Digital Environment, prepared by Sam Ricketson, 2003 (WIPO Doc. SCCR/9/7).

  12. 12.

    WIPO study; OECD report (n 1).

  13. 13.

    Scotchmer (2004); Green and Scotchmer (1995), pp. 20–33; Scotchmer (1991), pp. 29–41.

  14. 14.

    See Chap. 4, second part.

  15. 15.

    See, for example, Koo and Wright (2010), p. 489.

  16. 16.

    Scotchmer (2004), p. 132.

  17. 17.

    Nordhaus (1969).

  18. 18.

    Note that these considerations are based on neoclassical economic theory. In a real word scenario, the role of patents should be understood in a broader context that takes account of other factors influencing the innovation system. For a better comprehension see Freeman (1995), pp. 5–24.

  19. 19.

    WIPO study (n 1), p. 56.

  20. 20.

    Gilat (1995), p. 19.

  21. 21.

    Moschini and Yerokhin (2007), pp. 190–203.

  22. 22.

    For more see the Canada Report (n 1), pp. 48–49.

  23. 23.

    For more see Gallini and Scotchmer (2002).

  24. 24.

    Nagaoka and Aoki (2006).

  25. 25.

    Gilat (1995), pp. 77–81.

  26. 26.

    Strandburg (2003).

  27. 27.

    Eisenberg (2007).

  28. 28.

    Eisenberg (1989).

  29. 29.

    Eisenberg (1987), pp. 177 and 225; Gilat (1995), p. 44.

  30. 30.

    Strandburg (2003), p. 41.

  31. 31.

    Ibidem.

  32. 32.

    Strandburg (2003), p. 48 citing Lemley (1997), pp. 1059–1061.

  33. 33.

    Mueller (2001).

  34. 34.

    Strandburg (2003), p. 43.

  35. 35.

    Strandburg recalling chapter V on case studies of the report of the National Research Council.

  36. 36.

    Merriam Webster online dictionary, available at http://www.merriam-webster.com/dictionary/public%20policy, accessed 25 May 2013.

  37. 37.

    WIPO study (n 1), p. 59.

  38. 38.

    For a detailed explanation see Strandburg (2003), pp. 31–32.

  39. 39.

    Gilat (1995), pp. 77–81.

  40. 40.

    Gilat (1995), p. 19.

  41. 41.

    WIPO study (n 1), p. 59.

  42. 42.

    WT/DS/114R, para. 7.69.

  43. 43.

    Agreement on a Unified Patent Court, (2013/C 175/01), available at http://www.unified-patent-court.org/images/documents/upc-agreement.pdf, accessed 22 May 2015.

  44. 44.

    For an overview of the research exceptions in different countries see Correa (2005).

  45. 45.

    For more see Australian Government, IP Australia http://www.ipaustralia.gov.au/about-us/ip-legislation-changes/ip-laws-amendment-act-2012/factsheet-experimental-use/, accessed 17 October 2013.

  46. 46.

    Whittemore v Cutter 29 F. Cas. Qt 1121. For further analysis see Bee (1957), p. 357; Bruzzone (1993), p. 52; Hagelin (2005).

  47. 47.

    Sawin v Guild, 21 F. Cas. 554 (1813)(C.C. D. Mass. 1813).

  48. 48.

    Roche Products v Bolar Pharmaceutical, 733 F.2d 858 (Fed. Cir. 1984).

  49. 49.

    Public Law 98-417.

  50. 50.

    See Dreyfuss (2004), p. 457.

  51. 51.

    The EU has adopted a Bolar type exception in respect of patents. See article 10(6) of Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community Code relating to medicinal products for human use.

  52. 52.

    For a detailed explanation of this issue see Chap. 6 of this study.

  53. 53.

    Embrex Inc. v Service Engineering Corp., 216 F.3d 1343 (2000).

  54. 54.

    Madey v Duke University 307 F. 3D 1351 (Fed. Cir. 2002).

  55. 55.

    Conversely, Strandburg claims that this decision should not be generalized, but understood in the specific context. See Strandburg (2003).

  56. 56.

    Integra Lifesciences v Merck 331 F.3d 860, Fed. Cir. 2003. For a broad interpretation of the US statutory research exception see Rubin (2006). Another common law country, the UK, has adopted a broad interpretation of research exceptions. See Auchinloss v Agricultural and Veterinary Supplies Limited in Van Eecke et al. (2009), p. 153.

  57. 57.

    See better Van Eecke et al. (2009), pp. 149–151.

  58. 58.

    Article 68 of Code of Industrial Property, Decreto Legge N.30 of 10 February 2005.

  59. 59.

    (aux actes accomplis à des fins scientifiques sur et/ou avec l’objet de l’invention brevetée.) <L 2005-04-28/33, art. 11, 006, in force since 23 May 2005. The Belgian exception is also exceptional in that it has replaced ‘for experimental purposes’ with ‘for scientific purposes’ which is arguably wider than experimental purposes alone. See Van Eecke et al. (2009), p. 231.

  60. 60.

    Article 9 (b) of the Loi fédérale sur les brevets d’invention, 2008.

  61. 61.

    Article 40 (b) of the same law.

  62. 62.

    Further clarifications on Swiss law are available at https://www.aippi.org/download/commitees/202/GR202switzerland.pdf, accessed 25 May 2013.

  63. 63.

    Clinical trials I, [1997] RPC 623.

  64. 64.

    Clinical Trials II [1998] RPC 423.

  65. 65.

    For France and the Netherlands see Van Eecke et al. (2009), pp. 159–161 and the Canada report (n 1), p. 32.

  66. 66.

    Clinical trials I, [1997] RPC 623, 631.

  67. 67.

    Ibidem, 632.

  68. 68.

    Clinical trials I, [1997] RPC 433–434.

  69. 69.

    OECD report (n 1), p. 18.

  70. 70.

    Clinical trials I, [1997] RPC 643.

  71. 71.

    Gilat (1995), p. 20. Van Eecke et al. (2009).

  72. 72.

    Mueller (2001).

  73. 73.

    For more on the distinction between research-oriented and market-oriented experiments, see Gilat (1995), p. 4.

  74. 74.

    The commercialization of university research in the US was boosted with the adoption of the ‘Bayh-Dole Act’. (36 U.S.C. §200–212). To a limited extent, this trend has been followed by Europe. The Wageningen University in the Netherlands and the Centre National de la Recherche Scientifique (CNRS) in France seem to be the most active. On this point see Lusser et al. (2011).

  75. 75.

    This seems to be related to the transformation in the organization of science and information. For a brief explanation see Dreyfuss (2004), p. 462.

  76. 76.

    For more see Gilat (1995), pp. 9–10.

  77. 77.

    Frearson v Loe (1876) 9 ChD 48.

  78. 78.

    For the influence of this decision on other common law countries see the Canada report, p. 14 and the OECD report p. 19.

  79. 79.

    Smith Kline & French Laboratories Ltd v Attorney-General (NZ) [1991] 2 NZLR 560.

  80. 80.

    Hantman (1985), p. 617.

  81. 81.

    Israelsen (1988–1989), pp. 457 and 469; Eisenberg (1989), pp. 1017 and 1078.

  82. 82.

    Misati and Adachi (2010), p. 4, note 19.

  83. 83.

    Trojan (2012), p. 11.

  84. 84.

    Harabi (1996), Levin et al. (1987), and Mansfield (1986).

  85. 85.

    Scotchmer (2004), p. 132.

  86. 86.

    See also Moschini and Yerokhin (2007).

  87. 87.

    Ibidem.

  88. 88.

    More on economic studies for R&D and the incentive to innovate, see Chap. 4.

  89. 89.

    Heller and Eisenberg (1998), p. 698.

  90. 90.

    Zwahlen (2011). Previously, evidence of a modest anticommons effect in molecular biology has been provided by Murray and Stern (2007), pp. 648–687.

  91. 91.

    Some studies suggest that this is a real concern in biotechnology. See Graff (2009), p. 34.

  92. 92.

    Parisi et al. (2004), p. 175.

  93. 93.

    See Chap. 3 for the stages of plant breeding.

  94. 94.

    Patented tools are also used to introduce specific genetic sequences into the plant genome.

  95. 95.

    Parisi et al. (2004). The costs of excessive property fragmentation were first recognized by Posner (1998), p. 76.

  96. 96.

    If the deal does not occur, inefficiency problems arise since every person would be worse off. If the deal occurs, the outcome is efficient because everyone takes a share of the surplus. In this last case, distributive and fairness issues may arise, but not efficiency ones. See Fennell (2004), p. 829.

  97. 97.

    Heller (2009), pp. 291–322.

  98. 98.

    See the argumentation of Shapiro on fragmented rights on copper and zinc, key inputs for producing brass. Shapiro (2009), pp. 291–322.

  99. 99.

    Here it should be noted that abandoned projects are not usually publicized. Therefore, it is not always easy to create public awareness of this effect of fragmented rights. For concrete examples on this point see de Jonge and Louwaars (2011), pp. 234–240.

  100. 100.

    It would be more appropriate to state that IPRs ‘partly’ overcome inefficiencies since biopiracy concerns persist even after the implementation of IPRs. Moreover, the efficiency of privatization should take into account State’s property rights over genetic resources and their implementation, and communities’ rights over genetic resources.

  101. 101.

    For a comprehension of the link between the commons and anticommons tragedy see Buchanan and Yoon (2000), pp. 1–13; Fennell (2004), pp. 829–898.

  102. 102.

    Future concerns on fragmentation of rights that cause underuse can be better summarized by the following quotation: ‘(…) withholding productive resources may create dynamic (or future) externalities because the underuse of productive inputs today bears consequences into the future, as standard growth theory suggests.’ See Parisi et al. (2004), p. 176.

  103. 103.

    Merges (1999), p. 5. This paper is available at http://www.law.berkeley.edu/files/pools%281%29.pdf, accessed 22 May 2013. Examples of patent pools are the Public Intellectual Property Resource for Agriculture (PIPRA) in the United States and the European Collective Management of Public Intellectual Property for Agricultural Biotechnologies (EPIPAGRI) in Europe.

  104. 104.

    For further explanations see Van Overwalle et al. (2007). See also Graff and Zilberman (2001), pp. 1–13; Graff et al. (2001), pp. 15–30. A clearing house model is that of the CAMBIA BIOS Initiative, which offers a free public database of US, Australian, and European life science patents see http://www.cambia.org/daisy/cambia/home.html. Building on a clearing house model, some Dutch companies have proposed the adoption of a ‘licensing code of practice’, to obtain clear licensing conditions (based on a free, responsible and non-discriminatory approach) on all patents owned by the participating companies.

  105. 105.

    Shapiro (2009), pp. 291–322.

  106. 106.

    Trommetter (2008), p. 18.

  107. 107.

    Better see Merrill and Smith (2000), p. 1.

  108. 108.

    Merril and Smith affirm that ‘The numerus clausus is probably at its weakest in the area of intellectual property’. For a more detailed analysis on the applicability of the numerous clausus on intangible assets see Mezzanotte (2012), p. 1.

  109. 109.

    See article 9.2 of the Swiss RS 232.14 Legge federale sui brevetti d’invenzione.

  110. 110.

    See article 12 of the EU directive on biotechnological inventions 98/44/EC. See also article 31 of TRIPS.

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    Viola Prifti

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Prifti, V. (2015). Conceptualizing the Breeding Exception to Patent Rights: A Legal and Economic Appraisal. In: The Breeder's Exception to Patent Rights. International Law and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-15771-9_5

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