Plant Patents Bad for Innovation?

I don't actually think so, but that's the conclusion of this story:

Roses Puncture the Case for Plant Patents (The Daily Yonder)

And the study it cites:

Did Plant Patents Create the American Rose? (NBER)

The idea behind plant patents, really all patents, is to encourage innovation. The concept is that if you provide developers of new varieties the means to protect and profit from their creations, you provide an incentive to put in the effort it takes to create a new variety.

This article cites a research project by the National Bureau of Economic Research, however, that claims that this has not actually been the case with plant patents, using rose varieties as an example. I don't actually agree with their conclusion, or the reasons behind it (and yes, I have a serious bias here: without plant patents I wouldn't have a job, a point I will return to). But allow me to discuss their reasons for a bit:

The number of roses registered by U.S. breeders actually went down when the plant patent law was enacted in 1931.

This is not surprising at all. Without a plant patent law, breeders depend on novelty and availability to drive purchases. For example, say you're a breeder, and you've spent $1,000 to develope three new varieties, A, B, and C. A is clearly the best, so you name it, say 'Agatha', and you sell it to your friendly neighborhood nurseryman for $1,000. He pays you that because he's hoping to attract customers as the only nursery featuring 'Agatha'. That may be the last you see out of it, though, because your nurseryman can now propagate it all he wants, and so can any one else who buys it from them. Pretty soon there really isn't any incentive for anyone to pay for anything but the propagation, because the nurseryman, his customers, and any other nurseries who propagated it from his customers, now have it. So you, the breeder, need to keep eating, so you release the next best, B, name it 'Brilliant', and sell it to your friend the nurseryman. This time he might not pay you quite as much, seeing as it's not as good a variety, say $750. And the same thing plays out--people buy 'Brilliant', people swap cuttings, rival nurseries get cuttings, and pretty soon you can buy 'Brilliant' anywhere. They buy it even though 'Agatha' was better because their only source of information on it is the nurseryman, who has no incentive to tell them anything about it and will probably hype the hell out of it, because he's got an exclusive for the moment. Finally, in dire need of cash, you release C, called 'Carbuncle', which kind of a crummy variety. The nurseryman thinks maybe a few people could be conned into buying, so he grudgingly gives you $250. And the cycle repeats. As word gets out, the fact that 'Carbuncle' is lousy becomes common knowledge, and pretty soon no nursery is growing it. 'Brilliant' seems to be okay, but eventually 'Agatha' is proven superior, and within a few years its really the only one of your varieties being grown.

Bottom line:
3 varieties released
1 variety proved useful
$1,000 made by breeder

Now say you're the same breeder, with the same selections, but you live in an alternate reality where there IS a plant patent law. You look over your three selections, decide A is clearly superior, name it 'Agatha', and march down to the patent office, prepare vast acres of paperwork, and get yourself a plant patent on it. Then you go to the nurseryman, offer him not just access to 'Agatha', but exclusive rights to propagate and sell it. This is worth a lot more to him than just a brief headstart, so he pays you, say, $10,000. You have enough money, that you even roll it into expanding your breeding program. You don't bother releasing B and C, because they don't have anything A didn't, and it's not worth the cost of patenting them.

Bottom line:
1 variety released
1 variety proved useful
$9,000 made by breeder

Alternately, if you felt like getting more involved, you could have sold various licenses to a bunch of nurseries, licensed propagation rights to them on a yearly basis, or charged them a per plant royalty (both of these are attractive in that they give you a continuous revenue stream to live off of).

Patenting will virtually always lower the number of varieties released, because there is no longer an incentive to try to sell as many varieties as possible as the next hot thing. Not only does the breeder win on this deal, but so does the public, who has fewer crap varieties to wade through. (The nurserymen might arguably have come out the worst of it, but there are probably efficiencies for them, as they don't need to maintain huge numbers of varieties or keep up with constant changes). The fact that good varieties have value more in keeping with their usefulness means there's an incentive to spend money and time to pursue innovative breeding procedures to produce truly outstanding varieties. Without patents, the best tactic is to throw as many things against the wall as you can and hope that a few stick. With patents, the best tactic is to release a good variety, so that its value has longevity, either to prompt a large upfront payment or years of royalties.

"Luther Burbank did very well without protection"

The above quote is from Fiorello LaGuardia, in the congressional debate over the plant patent act. It is also not especially true. While Burbank achieved widespread renown, which no doubt helped him sell varieties at a higher price than otherwise, he was never wildly rich. Considering that the man released dozens of varieties still grown a hundred years later (and many hundred others, see above), saying that he did "very well" when he seems to have managed at best a middle class life style, partially supported by public grants, seems a bit of a stretch. Also, his operation was always small, topping out at 22 acres, with a very small staff (sometimes just himself). Imagine what a man like that might have created had he been able to make enough money to pour back into his efforts and expand? We might still be benefiting from it.

Most early plant patents were roses

Even if you agree with the conclusion that fewer varieties is equal to less innovation, the study refers only to roses. They are extrapolating from this because of the sheer number of rose patents. However, the purpose of the plant patent law was not primarily to promote innovation in roses. In actuality, it was World War I food shortages and demands from farm states that triggered the pressures that resulted in the plant patent law, although some nurseries who produced ornamentals were certainly among the later proponents (these tended to be the large nurseries with connections to major breeders). The real motivation behind the law was to prompt innovation in food crops.

Most patents belonged to large breeding/nursery operations

Again, we come back to the question of what is actually produced that is of value. Because patents provide an incentive to produce better varieties rather than merely more varieties, the advantage goes to programs that can afford to take financial risks to produce truly superior varieties, by developing programs with real depth, rather than simply name seedlings. Yes, it raises the barriers to entry for small operations, but the reason why those barriers are higher is because the standard for varieties is higher. Isn't that what we want?

The decline in imported varieties after the enactment of the Plant Patent Act can be attributed to other causes

While that may be true, all that the authors establish is that any real effect cannot be measured in terms of the number of imported varieties because there are way too many confounding factors: they cite the Great Depression and World War II. To that I would add the great upswing in public plant breeding which came from the influx of returned soldiers, and federal dollars, to the Land Grant Universities. These produced public plant varieties which decreased the need for both imported varieties and domestic private breeding.

But this brings me to another point: Though most of the world did not have a plant patent law, the lack of plant IP protection in a world where other nations have it means that foreign breeders don't want their varieties to enter your country. This hurts both the breeder and the country without the protections. China is a pretty good current example. Although the government has recognized the disadvantage this presents for Chinese growers and have taken steps to enforce the laws that exist, for years no sane breeder has knowingly let his varieties into China, where they would rapidly and illegally be reproduced without significant recourse on his part.

Most new roses in the 1930's and 40's were bred from European roses

Um, so? Unless you could show that that continued to be true after the breeding programs that plant patents built had been long established, that's a meaningless fact. It gives the impression (as does the whole thing, really) that the authors really don't know much about plant breeding.

Less than one fifth of new varieties are patented

This is another point where I come back to the fact that roses are a really bad example to use here. A rose breeding program does not require the collection of highly accurate data. While there are certainly traits which can be better bred with real data, the critical property of roses can be assessed from a very small number of plants. Plus roses are attractive and nice to have around. This encourages a large number of hobby breeders. You don't see a lot of, say, hobby wheat breeders. A better measure might be the number of useful varieties patented...but useful becomes harder to quantify with an ornamental.

Old data

All the claims made in this paper are made on data 1970 and earlier. Much of it much earlier. Quotes like "Patented roses have no lived up to expectations," date to the early 1940's, when the patently would only have had at best a slight effect on breeding programs. Breeding programs are decades-long endeavors, and the impacts of the plant patent law are felt on a long term basis. Why would they basically discount half of the time since the law was passed? Some of the comments make me wonder if they are actually writing in the past... I find it very hard to believe that there has been no increase in private sector research expenditures on seed-propagated crop breeding since the passage of the PVP act in 1970. The Alston and Venner paper they cite acknowledges that the proportion of wheat acreage (once again, making sweeping conclusions based on a single crop) sown to privately bred varieties increased from 3% to 30% in the 20 years after the act passed, but that yield did not increase appreciably, and so they claim that PVP was used primarily as a marketing tool. I don't quite understand that claim, because a check with FAOSTAT shows an increase of almost 50% since the passage of the act. I know that's a simplistic measure, but the method they use to computer yield, on a state by state basis, seems to me to have certain issues as well...

The FAOSTAT info doesn't show big increases until the mid-80's, but like I said...breeding takes time. One wouldn't expect to see immediate effects of the law. Alston and Venner acknowledge this by saying that development time is 5-12 years, but this is only generation...the real impacts of re-investment in programs would come in compounding over generations.

But anyway, I'm off on another paper now...

I am a private breeder. My value to my employer comes in producing patented varieties. So obviously I have a vested interest here. My job would not exist without a plant patent law. Nor would the jobs of a vast majority of U.S. breeders. All that said, I am a huge proponent of public breeding programs. We need more of them. They need more money. They both build up the foundations on which private programs are built, and they keep up competition on private programs by preventing the development of virtual monopolies. However I think current developments towards the patenting and restricting of public program germplasm has severely damaged that system, and turn it into something frighteningly like the private programs, and losing focus on the scientific advancement and germplasm development that is a critical role for those programs. I don't blame the breeders in charge of those programs—breeding programs are expensive, and that money has to come from somewhere. I blame the institutions and governments that have starved those programs of funds.(But that's another rant...)