Against Intellectual Monopoly

Very much like Watt's engine
in the coal districts of England, the cotton gin was enormously valuable in
the South of the United States, where it made Southern cotton a profitable
crop for the first time. Like James Watt, Eli Whitney also had a business partner, Phineas Miller, and the two opted for a monopolistic pricing scheme
not dissimilar from Boulton and Watt's. They would install their machines
throughout Georgia and the South and charge farmers a fee to do the ginning for them. Their charge was two-fifths of the profit, paid to them in
cotton. Not surprisingly, farmers did not like this pricing scheme very much
and started to "pirate" the machine. Whitney and Miller spent a lot of time
and money trying to enforce their patent on the cotton gin, but with little
success. Between 1794 and 1807, they went around the South bringing to
court everyone in sight, yet received little compensation for their strenuous
efforts. In the meanwhile, and thanks also to all that "pirating", the Southern
cotton-growing and cotton-ginning sector grew at a healthy pace.
    Ironically, Eli Whitney did eventually become a rich man - not through
his efforts at monopolization, but through the wonders of competitive markets. In 1798, he invented a way to manufacture muskets by machine, having
developed the idea of interchangeable parts and standardized production.
Having probably learned his lesson, he did not bother to seek patent protection this time, but instead set up a shop in Whitneyville, near New Haven.
Here he manufactured his muskets and sold them to the U.S. Army. So it
was not as a monopolist of the cotton gin, but rather as the competitive
manufacturer of muskets, that Whitney finally became rich.
Agriculture
    Among economists the reaction to the idea that economic progress is the
fruit of competition is varied. Those belonging to the theoretical variety, interested in matters of pure economic theory and logic, tend to quickly
agree and then yawn away the rest of the seminar, as the conclusion seems
straightforward. Specialists working in the areas of innovation, economic
growth, and industrial organization, long steeped in the conventional wisdom that there is no innovation without monopolization, are often certain
that the opposite idea cannot possibly be correct, even if they are uncertain
as to why. There are, however, the specialists in agricultural economics, who
react with neither boredom nor rage. Steeped not in the myths of theory,
but versed in the facts of agricultural innovation, these specialists point out
that, until the early 1970s, animal and plant species innovation flourished
without much in the way of protection from intellectual monopoly. Breeders would develop a new plant variety, the initial seeds of which were sold
to farmers at relatively high prices. Farmers were then free to reproduce
and resell such seeds on the market and compete with the initial breeders,
without the latter bringing them to court because those bushels of, say,
Turkey Red wheat were illegal copies of the Turkey Red wheat variety they
held a patent on.10

    A sizable chunk of innovation in agriculture revolves around plants and
animals. Neither the 1793 original nor the 1952 revised version of the
U.S. patent code mentioned the possibility of patenting different forms of
life, be they animal or vegetable. The issue did not arise during most of
the nineteenth century, but a precedent against patenting was established
in 1889, when the U.S. commissioner of patents rejected an application
for a patent to cover a fiber identified in the needles of a pine tree. The
commissioner wisely pointed out that patenting some newly found form
of life would be tantamount to attributing monopoly power (and de facto
ownership) to all copies of that form of life to be subsequently found, which
struck him, as it strikes us, as "unreasonable and impossible."
    The story of agriculture, however, like that in other industries, is also the
story of the intellectually bankrupt seeking protection for their old ideas.
The discovery of the economic potential of Mendel's law - imagine a world
in which Gregor Mendel had managed to patent applications of his law,
no longer an impossibility these days - started a long series of attempts
to subvert the 1889 doctrine. The National Committee on Plant Patents,
created and financed by U.S. breeders, was the leader of an intense lobbying
campaign arguing that, now,