EECONOMIC GROWTH IS STRONGLY influenced by new inventions, and invention is encouraged by patent laws. The ablishment of intellectual property rights is therefore a crucial issue throughout much of the world. In the case of new, technologically advanced industries, innovation, and therefore patents, play a large role in the success or failure of companies. The new field of biotechnology is an excellent example of the increasing importance of patents, as genetic engineering firms are almost totally dependent on strict intellectual property protection in order to make a profit.
Even as cutting-edge industries come to depend more on patents, the old patent system is beginning to break down. Most patent laws are based on precedents set hundreds of years ago and are inadequate in the modern era. In biotechnology especially, there are serious concerns about the viability and fairness of patent protection. On the international level, there are three main problems confronting current intellectual property protection schemes. Conflicts over rights to genetic material, concerns over the effect biotechnology patents will have on the developing world, and disagreement over patent standards are all issues that must be addressed to solve the pressing problems of the patent system. Solutions to these problems have been proposed by economists, but in order to understand them, it is necessary to examine the failures of the current patent system.
Prospecting for Diversity
Biotechnology firms spend large amounts of time and money simply examining natural organisms for useful chemicals and substances. In this respect, genetic engineering is very different from other industries. Other technological innovations involve the construction or creation of a novel device, but in biotechnology, a tremendous advancement can often be achieved simply by purifying an existing natural product or by manipulating a minuscule amount of DNA. In recognition of the special circumstances surrounding genetic engineering, most nations permit purified or slightly modified compounds and organisms to be patented. Since it is much easier to try to purify existing organic substances, the vast majority of biotechnology companies try to find and reproduce useful naturally occurring products. These materials extracted from plants and animals provide the basic compounds used to create many important drugs and chemicals. There are many crucial products that have been developed this way, including insulin and the human growth hormone.
In order to find just one or two of these useful substances, however, a biotechnology firm needs to test thousands of different organisms. This means that companies trying to develop new products need access to a vast pool of genetic diversity. The best place to find this are the tropical rainforests of the developing equatorial regions of the world, which harbor two-thirds of the world's species. There, biotechnology firms carry out "genetic prospecting"--looking for useful chemicals in the rainforests of the less developed nations. When promising substances are found, they are shipped back to the company's home country, almost certainly in the United States, Europe, or Japan, for further development. This practice is at the center of a growing international debate.
Since much of current biotechnology research is dedicated not to the creation of new genetic codes but to the discovery of useful codes and chemicals in naturally existing plants and animals, companies are demanding that this sort of research receive adequate patent protection. For the most part, wealthy nations such as the United States follow the purified form doctrine, which allows a patent to be granted for a chemical that exists in nature only in an unpurified form, if the patent involves a purification which makes the chemical more useful. This principle means that products that occur naturally in the rainforest can become the exclusive property of firms that patent their purified form. …