Policy Brief: Intellectual property and competition policy in the biotechnology industry

The science of biotechnology has been pushing the frontiers of human knowledge and intellectual property (“IP”) for three decades. As scientists developed techniques for isolating and creating genetic material and began to apply them commercially, a new industry grew and so did its appetite for patent protection. Although the wisdom of granting patents on DNA is still debated, the policy of OECD countries to allow such patents has been fairly well settled for some time. The door was therefore open for biotechnological innovators to create a flood of IP, and they did.

The number of patent applications from the biotechnology industry has grown faster than the number of patent applications from other industries over the past several years. The thousands of biotechnology patents issued annually contribute to new products, services, and tools in agriculture, pharmaceuticals, and industrial products. The completion of the human genome and the use of human embryonic stem cells, for example, have raised the ambitions of biotechnology firms to lofty levels. Inventors who develop biotechnological innovations rely on IP rights to protect and validate their work. They also rely on IP licenses to gain access to needed tools and technologies.

In addition to spurring important inventions, however, the rising tide of biotechnology patents has brought concerns that they are being granted too freely and too broadly. Too many patents that cover too much ground will not only harm competition, but will also stifle innovation by making further research riskier, more difficult or more expensive. At the same time, certain licensing techniques that are used in the biotechnology industry can aggravate those problems. This Policy Brief addresses how government officials can cooperate to foster innovation without stifling competition, as well as some ways in which licensing behaviour that can fall foul of the competition laws.