Against Intellectual Monopoly

by taking used Fuji cameras and refurbishing them for resale.
The agency said jazz sold more that 25 million cameras since August 2001 in violation of a 1999 order to stop and will consider sanctions. Fuji, based in Tokyo,
has been fighting makers of rebuilt cameras for seven years. Jazz takes used shells
of disposable cameras, puts in new film and batteries and then sells them. Jazz's
founder, Jack Benun, said the company would appeal. "It's unbelievable that the
recycling of two plastic pieces developed into such a long case." Mr. Benun said.
"There's a benefit to the customer. The prices have come down over the years. And
recycling is a good program. Our friends at Fuji do not like it." 22
    Once again, examples abound and we could go on forever, so let us close
with a particularly important one. We mention later in this chapter how
the Wright brothers used their patents to try to block the emergence of a
U.S. aircraft industry. Interestingly, this pattern of behavior continued. In
1972, the U.S. government charged the aircraft industry with an antitrust
violation, basically because it kept using its patent pool and cross-licensing
to prevent entry. That is IP-inefficiency at its best.

Seeds, Animals, and Genes
    A recent "innovation" in patent law has been the enormous expansion in
the types of "ideas" that can be patented. A case in point is the patenting
of plants and animals. We have previously examined how innovations in
the agriculture sector were frequent and abundant, in the complete absence
of any kind of patent protection, until the early 1970s. Plainly speaking,
agriculture evolved, during a period of about 12,000 years, in the complete
absence of patent protection. During these 120 centuries, agricultural productivity increased by a few orders of magnitude, making it possible to feed
an enormously larger world population. Then, about thirty-five years ago,
the U.S. Congress intervened.
    The U.S. Plant Variety Protection Act (PVPA) of 1970 was the first step
toward the complete "oligopolization" of the agriculture sector, first in the
United States, then in the European Union, and more recently around the
world. It allowed for a limited patent protection of sexually reproducing
plants and animals. Alas, the appetite of potential monopolists is never
satiated. Full protection came in the Supreme Court ruling of June 16, 19805
in the Diamond v. Chakrabarty case.23 The case concerned the patentability
of an oil slick-consuming bacterium that had been bioengineered byAnanda
Chakrabarty, a biochemist working for General Electric. It extended the full
protection of patent law to all kinds of engineered or engineerable products
of nature, be they alive or not. The final nail in the coffin was set in 1985,
when the U.S. Patent Office Board of Appeals ruled that sexually propagated
seeds, plants, and cultured tissue could be protected by utility patents. Sadly,
we read that this act seems to have done little for innovation:
    The PVPA appears to have contributed to increases in public expenditures on wheat
variety improvement, but private-sector investment in wheat breeding does not
appear to have increased. Moreover, econometric analyses indicate that the PVPA
has not caused any increase in experimental or commercial wheat yields. However,
the share of U.S. wheat acreage sown to private varieties has increased - from 3
percent in 1970 to 30 percent in the 1990s. These findings indicate that the PVPA
has served primarily as a marketing tool.24
    This is not the odd conclusion of some antiglobalization green group. No,
it is the practically unanimous verdict reached by an army of agricultural
economists who have analyzed the socioeconomic impact of that tombstone
of free competition known as the Plant Variety Protection Act. The word
"protection" is most ironic, as in the hand of a few monopolistic and, unfortunately, mostly U.S.-based multinationals, this bill has become the single most dangerous tool against plant variety protection. We could go on for the
rest of the book talking about this subject, which is of utmost importance
for the future of not just hundreds of millions of farmers in developing
countries, but also of us, the mostly nonfarmers living in developed countries. Still, this would take as too far astray from the IP-inefficiency topic
that is the concern of this chapter; hence, we stop here.

    Back to economic development. The agricultural sector is a