Non-patent forms of IP induce substantial declines in research and innovation

Taken together with the prior literature, our evidence suggests two conclusions. First, for the case of human genes, the traditional patent trade-off of ex ante incentives versus deadweight loss may be sufficient to analyze optimal patent policy design, because any effects of patents on follow-on innovation appear to be quantitatively small. Second, our evidence, together with the evidence from Williams (2013) on how a non-patent form of intellectual property on the human genome affected follow-on innovation, suggests a somewhat nuanced conclusion: while patent

protection on human genes does not appear to have hindered follow-on innovation, an alternative non-patent form of intellectual property—which was used by a private firm after its gene patent applications were largely unsuccessful in obtaining patent grants—induced substantial declines in follow-on scientific research and product development. This pattern of evidence suggests that changes to patent policy must carefully consider what strategies that firms will use to protect their discoveries in the absence of patents, and that an understanding of the relative costs and benefits of patent protection compared to those outside options is needed in order to evaluate the welfare effects of patent policy changes.