Against Intellectual Monopoly

small fraction
of national income both in the United States and in the European Union,
between 3 percent and 10 percent, depending on the country. As we already
documented in the previous chapter, there is no evidence in the data that
this enormous increase in patent protection lead to any measurable increase
in the growth rate of TFP in the U.S. agricultural sector. But the tentacles of
IP-inefficiency reach far outside national borders. In poor and developing
countries, the share of agriculture in national income is an order of magnitude greater than in the United States, and its strategic role for future
development is absolutely crucial. It is for these countries that agricultural
patents are a deadly blow, as they manage to do two harms at once. On the
one hand, by making new seeds and animal species prohibitively expensive,
agricultural patents render farmers from poor countries unable to compete
in the global agricultural market. One may wonder why this affects poor
farmers more than rich ones, and the answer is trivial: credit constraints.
New seeds are, on average, more efficient than traditional ones, but they
also require a much higher up-front investment to be purchased. Because
they cannot finance initial purchases of efficient seeds, poor farmers use
less efficient ones, which means that the break-even price at which they
can sell their products is higher, thereby making them uncompetitive. On
the other hand, by monopolizing seeds and species that are and have been
for centuries in the public domain, agricultural patents rob the same poor
farmers of their capital.
    The history of economic development, and of agricultural development
in particular, is a history of imitation: catching up takes place because
followers imitate the more advanced techniques of the leader. If a small
group of companies from the leading countries prevent and prohibit imitation by monopolizing agricultural innovations around the globe, imitation
and adoption of advanced techniques and seeds are retarded or altogether
blocked. Furthermore, subtly and unjustly, this small group of monopolistic companies is slowly but surely expropriating the agricultural wealth
of many developing countries. How? By taking traditional seeds and plants
that have been grown and selected there for centuries, modifying/improving
them genetically to a more or less relevant extent, and then grabbing a patent as broad as possible. Modified varieties are usually stronger or have
a superior yield than the original variety, thereby displacing the latter quite
rapidly. When this does not work fast enough, the broad patent is used, supported by an army of "intellectual property" lawyers and the "diplomatic"
weight of the U.S. government, to claim property rights on the original
varieties.

    This sounds like one of those multinational conspiracy stories favored by
lunatics and antimarket (but copyright-protected) snobs attending Parisian
art shows while sipping patented California Chardonnay. Some stories of
course are exaggerations, but many are both true and well documented.
One such story is the example of Basmati rice.
    The battle over who controls the world's food supplies has escalated dramatically
with the Indian government launching a legal challenge in the United States against
an American company which has been granted a patent on the world-renowned
basmati rice. It is thought to be the first time a government in a developing country
has challenged an attempt by a US company to patent - and thus control the
production of - staple food and crops in what campaigners dub the "rush for green
gold." Basmati rice, sought-after for its fragrant taste, was developed by Indian
farmers over hundreds of years, but the Texan company RiceTec obtained a patent
for a cross-breed with American long-grain rice. RiceTec was granted the patent on
the basis of aroma, elongation of the grain on cooking and chalkiness. However,
the Indian government last week filed 50,000 pages of scientific evidence to the US
Patents and Trademarks Office, insisting that most high quality basmati varieties
already possess these characteristics. The US Patent and Trademarks office accepted
the petition and will re-examine its legitimacy. The patent - granted only in the
[United States] - gives RiceTec control over basmati rice production in North
America. Farmers have to pay a fee to grow the rice and are not allowed to plant the
seeds