STIMULATING INNOVATION IN BRAZIL: A STUDY OF INTELLECTUAL

PROPERTY LAW, BIOTECHNOLOGY AND OPEN SCIENTIFIC

INNOVATION
Guaragna, Mauricio Bauermann

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 STIMULATING INNOVATION IN BRAZIL:

A STUDY OF INTELLECTUAL PROPERTY LAW,

BIOTECHNOLOGY AND OPEN SCIENTIFIC

INNOVATION

Mauricio Bauermann Guaragna

A thesis submitted in fulfilment of the requirements for the degree

of Doctor of Philosophy in Law

Queen Mary University of London

September 2016

1
This thesis is an account of research undertaken in the Queen Mary Intellectual Property

Research Institute and the School of Law at the Queen Mary University of London

between October 2005 and September 2016.

Professor Duncan Mathews and Professor Spyros Maniatis supervised this research, but

unless otherwise indicated, the work presented herein is the author’s own.

2
 Abstract

The Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) administered by

the World Trade Organization affects a wide range of domestic public policies and industry

practices in biotechnology. With the advent of global patent protection for biotechnology,

Brazil faces a significant dilemma. It is necessary for Brazil to comply with international

intellectual property (IP) standards while simultaneous protecting its local industry and

stimulating local innovation. To this end, this thesis investigates whether or not the current

IP rights-dependent business models prevailing within Western industry deprive scientists,

especially in the developing world, of equitable access to biotechnology techniques, and

hinders their participation in research and development by restricting access to research

techniques. Drawing on the case study of Brazil, the thesis identifies key issues relevant to

biotechnology, IP rights and Open Scientific Innovation (OSI) as an approach to the

management of IPRs. Based on an understanding of the international and Brazilian post-

TRIPS scenario, the thesis specifically addresses one central question: Is OSI feasible and

desirable in the Brazilian context? It is intended that the research findings contribute

significantly to the body of knowledge in relation to innovation policies. Overall, it is hoped

that the findings of this thesis will promote innovation in the Brazilian biotechnology sector.

3
 Table of Contents

Abstract ............................................................................................................................. 3

Table of Contents .............................................................................................................. 4

Acknowledgements ........................................................................................................... 9

List of Illustrations .......................................................................................................... 12

Case Law......................................................................................................................... 13

Acronyms and Abbreviations ......................................................................................... 14

1. Introduction ................................................................................................................. 18

1.1 Initial Considerations ................................................................................................ 18

1.2 Objective ................................................................................................................... 20

1.3 Hypothesis ................................................................................................................ 21

1.4 Why Brazil? .............................................................................................................. 22

1.5 Method ...................................................................................................................... 28

1.5.1 Theoretical Data ................................................................................................. 29
1.5.2 Empirical Data ................................................................................................... 33

1.6 Perspectives .............................................................................................................. 40

1.7 Overview of the Thesis ............................................................................................. 40

PART I BIOTECHNOLOGY AND THE RELEVANCE OF INTELLECTUAL

PROPERTY RIGHTS..................................................................................................... 43

2. Biotechnology ............................................................................................................. 44

2.1 Definition of Biotechnology ..................................................................................... 45

2.1.1 Biopharmaceuticals ............................................................................................ 48
2.1.2 Agricultural Biotechnology ............................................................................... 51
2.1.3 Genomics ........................................................................................................... 52
2.1.4 Bioinformatics ................................................................................................... 55
2.1.5 Synthetic Biology .............................................................................................. 56
2.1.6 Research Techniques ......................................................................................... 60

2.2 Biotech Definitions within the Theoretical Framework ........................................... 62

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2.3 Conclusions ............................................................................................................... 64

3. Biotechnology and Intellectual Property Rights ......................................................... 67

3.1 Introduction ............................................................................................................... 67

3.2 Patents and Other IPRs ............................................................................................. 68

3.3 Justifications of IPRs from a Theoretical Perspective .............................................. 70

3.4 Problems with Some of These Justifications ............................................................ 74

3.4.1 North-South Patent Issues .................................................................................. 79

3.5 The Reality of Ownership and Management of IPRs in Biotechnology .................. 88

3.5.1 Patenting Research Techniques ......................................................................... 89
3.5.2 Gene Patenting ................................................................................................... 95
3.5.3 The Patent Thickets and Anticommons Debate ................................................. 98
3.5.4 Research Exemption ........................................................................................ 107
3.5.4.1 The Canadian Patent Act and the WTO Dispute ...................................... 109
3.5.4.2 Research Exemption in the EU ................................................................. 112
3.5.4.3 The US Narrow Perspective ..................................................................... 113
3.5.5 Compulsory Licensing ..................................................................................... 115
3.5.5.1 European Court of Justice Decision in IMS Health v. NBC .................... 116
3.5.5.2 Regulation (EC) No. 816/20066 ............................................................... 116
3.5.5.3 United States ............................................................................................. 117

3.6 The Evolution of IPRs in Biotechnology and the Regulatory Space ...................... 118

3.7 Conclusion .............................................................................................................. 121

4. Why The Current Patent System is Suboptimal ....................................................... 125

4.1 Introduction ............................................................................................................. 125

4.2 Influences in Shaping and Reshaping IPRs: From Regulatory Capture to Regulatory
Space ............................................................................................................................. 126
4.2.1 Interest Groups ................................................................................................. 126
4.2.1 TRIPS............................................................................................................... 131

4.4 Patenting in Biotechnology..................................................................................... 138

4.4.1 The United States’ perspective ........................................................................ 139
4.4.1.1 Bayh-Dole Act .......................................................................................... 141
4.4.1.2 Biotechnology-specific Patent Law .......................................................... 144
4.4.2 A European Perspective ................................................................................... 148

4.5 Conclusions ............................................................................................................. 153

PART I UNDERSTANDING OPEN SCIENTIFIC INNOVATION .......................... 157

5. Understanding Open Scientific Innovation............................................................... 158

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5.1 Introduction ............................................................................................................. 158

5.2 At a Glance: Open Innovation ................................................................................ 159

5.2.1 Defining Innovation ......................................................................................... 159
5.2.2 Open Innovation, Cumulative Innovation and User Innovation ...................... 160

5.3 History Matters: A Spotlight on OSI’s Origins ...................................................... 165

5.3.1 OSI and Its Origins in Agriculture ................................................................... 165
5.3.2 OSI and the Nature of Science ......................................................................... 168
5.3.3 Open Society .................................................................................................... 172

5.4 Contrasting OSI and Open Innovation within Intellectual Property....................... 175
5.4.1 Defining OSI .................................................................................................... 176
5.4.1.1 Free-revealing to Build Public Domain .................................................... 177
5.4.1.2 Open Collaborative Licensing .................................................................. 181
5.4.1.3 Shortcomings of Open Collaborative Licensing ....................................... 183
5.4.3 Peer Production ................................................................................................ 187
5.4.4 Commons ......................................................................................................... 190
5.4.4.1 Creative Commons ................................................................................... 191
5.3.4.2 Scientific Commons .................................................................................. 193
5.4.5 Patent Pools...................................................................................................... 197
5.4.6 Open Source Software ..................................................................................... 200
5.4.7 Open Source Biotechnology ............................................................................ 203

5.5. Hancher and Moran’s Methodology in the Context of OSI................................... 205

5.6 Making Profit with OSI .......................................................................................... 209

5.7 Key Objectives of OSI ............................................................................................ 215

5.7.1 Open or Publicly Accessible ............................................................................ 215
5.7.2 Freedom to Fork............................................................................................... 215
5.7.3 Credible Commitment...................................................................................... 216
5.7.4 Competition ..................................................................................................... 216

5.8 Conclusions ............................................................................................................. 221

PART III OPEN SCIENTIFIC INNOVATION AND BRAZIL .................................. 226

6. Brazilian Law and Open Scientific Innovation......................................................... 227

6.1 Introduction ............................................................................................................. 227

6.2 Brazilian Patent Law ............................................................................................... 228

6.2.1 A Historical Overview ..................................................................................... 228
6.2.3 The Current Patent Framework........................................................................ 232

6.2.4 Reflections on the Brazilian Patent System ......................................................... 236

6.2.4.1 Research Exemption and Compulsory Licensing ..................................... 237

6.3 The Constitution ..................................................................................................... 243

6.2.1 Democratic Principle ....................................................................................... 247

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 6.2.2 Open Administration Principle or Publicity Principle ..................................... 251
6.2.3 Social Function of IP ....................................................................................... 253
6.2.4 Sovereign Principle .......................................................................................... 260

6.3 Brazilian Competition Law and OSI ...................................................................... 264

6.4 Law-making in Brazil and Hancher and Moran’s Approach .................................. 268
6.4.1 The Brazilian New Biosafety Law................................................................... 273
6.4.2 Brazil and the Dilemma of Complying with Global IPRs ............................... 274
6.4.3 Brazilian Innovation Law ................................................................................ 281

6.5 Conclusions ............................................................................................................. 286

7. Brazil’s Development and Innovation In Biotechnology ......................................... 288

7.1 Introduction ............................................................................................................. 288

7.2 Disappointing Performance in Biotechnology........................................................ 288

7.3 Science and Development in Brazil ........................................................................ 292

7.3.1 Brazilian Development from 1980 to 1989: The Lost Decade ........................ 294
7.3.2 The 1990s and Liberalization .......................................................................... 302
7.3.3 Itamar Franco and Fernando Henrique Cardoso (1992– 2002) ....................... 305
7.3.4 2002 until 2010 ................................................................................................ 309
7.3.4.1 Human Resources ..................................................................................... 311
7.3.4.2 Biotechnology Development Policy ......................................................... 313

7.3.5 Dilma Rousseff’s Government ............................................................................ 314

7.4 Conclusion: Reflections Supporting OSI................................................................ 316

8. Open Scientific Innovation in Brazil: Challenges and Opportunities....................... 322

8.1 Introduction ............................................................................................................. 322

8.2 Is There a Space for OSI in Brazil? ........................................................................ 322

8.3 Mapping Key Actors for OSI in Brazil ................................................................... 326

8.3.1 Public Research Organizations ........................................................................ 327
8.3.2 The Private Sector ............................................................................................ 333

8.4 Partnerships for Innovation: OSI Precedents .......................................................... 336

8.5 Conclusions ............................................................................................................. 342

9. Possible Actions to Be Taken: Implementing Open Scientific Innovation in Brazil .....

………………………………………………………………………………………...345

9.1 Introduction ............................................................................................................. 345

9.2 A Network for OSI ................................................................................................. 345

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9.3 Licensing ................................................................................................................. 348

9.4 Transparency and Risk Management ...................................................................... 350

9.5 Financing ................................................................................................................ 353

9.5.1 PPPs ................................................................................................................. 355
9.5.2 Compensation Systems .................................................................................... 357

PART IV CONCLUSIONS AND IMPLICATIONS ................................................... 362

10. Conclusions and Implications ................................................................................. 363

10.1 Conclusions ........................................................................................................... 363

10.1.1 Biotechnology, Patents and Research Techniques ........................................ 363
10.1.2 The “Regulatory Space” Metaphor ................................................................ 366
10.1.3 OSI ................................................................................................................. 368
10.1.4 Brazil .............................................................................................................. 372

10.2 Further Implications .......................................................................................... 378

10.2.1 Contributions ................................................................................................. 378
10.2.2 Lessons of the Analytical Approaches Employed in This Thesis ................. 379
10.2.3 Future Research Questions ............................................................................ 381

Appendix I: International Models of Collaboration in Science and Technology ......... 382

Appendix II: Brazilian Landscape of Biotech Companies and Their Collaborations .. 420

Appendix III: Map of the Main Brazilian and International Actors Who Populate the
Existing Regulatory Regimes in Biotechnology and IPRs ........................................... 446

Appendix IV: Interviewees ........................................................................................... 450

Bibliography ................................................................................................................. 456

8
 Acknowledgements

This thesis would not have been completed without the contributions of the people named

below:

Professors Duncan Mathews and Spyros Maniatis, my supervisors, have guided,

supported, and understood me through my research.

Janet Hope has inspired me through her work and stimulating conversations we had in

Canberra.

I have benefited from various conversations I had with Joseph Porter Jackson III, who

also reviewed parts of my initial draft.

Professor Carlos Pio and Professor Marcus Faro de Castro made insightful comments on

Chapter 7.

Professor Luis Fernando Schuartz, who passed away as I was completing the thesis, gave

helpful suggestions for Chapter 6. My deepest appreciation to Luis.

Researchers from the Value Addition through Genomics and GE3LS (VALGEN) project

such as Professors Jeremy de Beer and Richard Gold, with whom I developed a policy

brief for Genome Canada, inspired the rewriting of Part II of this thesis.

Dr Kent Lau, a scientist, and a great friend, kindly reviewed my final draft.

9
Brazilian Ambassador Frederico Cesar de Araújo gave me the motivation to finish my

task.

The interviewees who were willing to share ideas with me.

In London, I have benefited from being able to use the facilities of the Queen Mary

Intellectual Property Research Institute.

I thank the individuals from the Centre of Application of Molecular Biology into

Agriculture (Cambia) who hosted me in Canberra. My stay in Australia would not have

been possible without Richard Jefferson who offered me financial support to travel to

Australia. Richard also gave me inspiring ideas.

I thank my former colleagues from Centre for Technology and Society at the Fundação

Getúlio Vargas Law School, Pontifical Catholic University, Rio de Janeiro. During

almost a year (2007/2008) I had the opportunity to live in Rio de Janeiro and be part of a

thriving research environment. This time was essential to elaborate Part III.

Whilst in Brasilia, my cousin Tito Livio Machado, kindly hosted me in his apartment.

Thanks, Tito. I also thank the librarians from the National University of Brasilia (UNB).

I must gratefully thank my uncle Celso Arnildo, my aunt Naura, and my cousins Marcelo

and Marcia. They hosted me twice in their house in beautiful Garopaba, Santa Catarina.

Without the peace of their family and the sea, I am sure I would not have finished my

thesis.

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I must acknowledge the Ford Foundation for awarding me a research studentship in 2009.

This made possible my return to London to do my research. The Ford Foundation also

sponsored my trip in 2007 to attend the World Health Organization Intergovernmental

Working Group on Public Health, Innovation, and Intellectual Property.

I have to thank my father Luiz Antonio, my brother Fernando, and mother Silvia Maria

for, among many things, helping in paying my tuition fees and supporting me financially

during my time in London (when no one else would help).

My wife Simone always encouraged me to finish this thesis. Therefore, I must

acknowledge her support, and thank her.

This thesis is dedicated to my father Luiz Antonio Machado Guaragna and grandfather

Arnildo Oswaldo Bauermann, truly my best friends, who passed away while I was

conducting this research.

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 List of Illustrations

1: Key Streams of Research in Innovation 161

2: Models of Innovation and Commercialization Path 163

3: Law Changes that Affect Innovation Proposed in the Brazilian Congress 279

4: Countries’ Share of Biotechnology Patents, 2010–13 289

5: Number of Patent Applications Filed under the PCT 291

6: Statistics of GDP (1970=100) 295

7: Brazilian Public Expenditure on Science and Technology (S&T) 2000-2010 310

8: Science and Innovation Profile of Brazil 312

9: Expenses of IP Management 332

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 Case Law

University of California v. Eli Lilly 91

Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals 105

Madey v. Duke University 113

Merck KGaA v. Integra Lifesciences 114

Diamond v. Chakrabarty 139

INPI v. Pfizer 277

INPI v. Novartis 277

Eldred v. Ashcroft 190

European Court of Justice decision in IMS Health v. NBC 116

Association for Molecular Pathology et al. v. USPTO 97

WTO Dispute DS 114 109

Klinische Versuche I [1997] RPC 623 German Supreme Court 112

Klinische Versuche II [1998] RPC 423 German Supreme Court 112

Roche Products Inc. v. Bolar 113

WT/DS224/1(‘The Merck case’) 237

Decision G-2/06 of the European Patent Office 149

Decision C-34/10 (Brüstle v Greenpeace) 149

Special Appeal 140436/SP (Supreme Court ) 255

BVerfGE 37, 132 (Federal Constitutional Court of Germany) 256

Extraordinary Appeal number 153771-0 (Supreme Court) 256

Brazilian Attorney General brief to the Brazilian Supreme Court (STF) 258

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 Acronyms and Abbreviations

A2K Access to Knowledge

ALRC Australian Law Reform Commission

ANVISA Brazil’s National Health Surveillance Agency

Bayh-Dole University and Small Business Patent Procedures Act

BBF Bioricks Foundation

BiOS Biological Innovation Initiative for Open Society

BIPL Brazilian Industrial Property Law

BNDES Brazilian National Bank of Development

CADE Brazil's Council for Economic Defence

CAFC Court of Appeals for the Federal Circuit

CAMBIA Centre of Application of Molecular Biology into

Agriculture

CBD Convention on Biological Diversity

CEPAL United Nations Latin American Economic Commission

CFTR cystic fibrosis transmembrane conductance regulator

CGIAR Consultative Group on International Agriculture Research

CIPR Commission on Intellectual Property Rights

CPC Community Patent Convention

CPTech Consumer Project on Technology

CTS Centre for Technology and Society

DBF dedicated biotechnology firms

DNA deoxyribonucleic acid

DNDi Drugs for Neglected Diseases Initiative

EMBRAPA Brazilian Agricultural Research Corporation

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EPC European Patent Convention

FAPESP São Paulo Research Foundation

FDA US Food and Drug Administration

FINEP The Brazilian Innovation Agency

FIOCRUZ Fundação Oswaldo Cruz

FTAs free trade agreements

GMOs genetically modified organisms

GRIT Genetic Resources Indexing Technologies

iGEM The international Genetically Engineered Machine

Competition

I+A Innovation plus Access

INPI Brazilian Industrial Property Office

IP intellectual property

IPRs intellectual property rights

ITPGRFA Treaty on Plant Genetic Resources for Food and

Agriculture

KEI Knowledge Ecology International

MCT Brazilian Ministry of Science and Technology

MIT Massachusetts Institute of Technology

MMV Medicine for Malaria Venture

MSF Médecins Sans Frontières/Doctors Without Borders

NCB Nuffield Council on Bioethics

NCBI National Centre for Biotechnology Information

NGP Brazilian National Genome Project

NIH National Institutes of Health

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NTBs non-tariff barriers

OECD Organisation for Economic Co-operation and Development

ONSA Organization for Nucleotide Sequencing and Analysis

OSI Open Scientific Innovation

PAHO Pan American Health Organisation

PCDA Provisional Committee on Proposals Related to a WIPO

Development Agenda

PCR polymerase chain reaction

PCT Patent Cooperation Treaty

PET plant enabling technologies

PINTEC Brazilian Industrial Research on Technological Innovation

PNI Brazilian Program for National Immunisation

PLOS Public Library of Science

PPPs public-private partnerships

PSDB Brazilian Social Democratic Party

PUC-RJ Pontifical Catholic University Rio de Janeiro

PUC-RS Pontifical Catholic University Rio Grande do Sul

R&D research and development

SACGHS Secretary’s Advisory Committee on Genetics, Health, and

Society

S&T Science and Technology

SCP Standing Committee on the Law of Patents

SCT Special Secretary for Science and Technology

SNDCT Brazilian the National Scientific and Technological

Development System

SPLT Substantive Patent Law Treaty

16
TDI Tropical Diseases Initiative

TNCs transnational corporations

TRIPS Agreement on Trade-Related Aspects of Intellectual

Property Rights

UCB University of California, Berkeley

UN United Nations

UNB National University of Brasilia

UNCTAD United Nations Conference on Trade and Development

UNICAMP University of Campinas

USC United States Code

USP University of São Paulo

USPTO US Patent and Trademark Office

WHO World Health Organization

WHO-CIPIH WHO Commission on Intellectual Property Rights,

Innovation and Public Health

WHO-IGWG WHO Intergovernmental Working Group on Public Health,

Innovation and Intellectual Property

WIPO World Intellectual Property Organization

WTO World Trade Organization

17
 1. Introduction

1.1 Initial Considerations

The development of the biotechnology industry in the 1980s was a turning point for a prominent

expansion of intellectual property (IP) protection in biotechnology. This thesis argues that this

expansion created shortcomings in the patent system because access to research techniques has

been obstructed in certain circumstances. In fact, often the current business models prevailing

within the industry neither furnish equitable access to the latest tools in biotechnology research

nor facilitate broad participation in research and development (R&D). Thus, a strategy for R&D

innovation that relies only on patent incentives will rarely address the problems of diseases that

affect the poor (Boyle 2008:8-9).

Hope’s (2006) empirical study on open source biotechnology argues that IP rights (IPRs) in

biotechnology are an obstacle to ongoing innovation. This is controversial because there is an

increase in demand for technologies that improve healthcare, food security and environmental

sustainability. Hope suggests that, from the point of view of the participants in biotechnology

R&D, there are frustrations, delayed research outcomes and wasted resources (ibid.:28).

To gain a more complete understanding of the realities of the problems in biotechnology, it is

useful to visualize biotechnology as an immature field where the ability to conduct socially

valuable R&D depends on access to a full set of research techniques. This reality is particularly

troubling if one compares the prevalent business models for managing biotechnology with

Stanford University’s licensing program for the Cohen-Boyer patents (the foundational

techniques of biotechnology). Stanford University licensed these patents to multiple, non-

18
exclusive parties in return for minimal license fees. This strategy of licensing proved very

successful because users of the invention were inclined to obtain licenses, which led to the broad

distribution of the technology.

This research evaluates the existing studies in the field in order to verify if Open Scientific

Innovation (OSI) is feasible and desirable for Brazil. The thesis investigates whether OSI models

(and not only open source biotechnology) have the potential to change the way IP shapes science

for the better and if they can exist within the current system in Brazil.

This thesis is the first empirical study on the desirability and feasibility of implementing OSI from

a developing country perspective. Hope (2004, 2008) has demonstrated, from a developed country

perspective, that open source biotechnology (one model of OSI) is feasible and desirable as a

supplemental management strategy that leaves IP intact. The argument is that developing

countries such as Brazil have innovation and legislation systems which are different from

developed ones, and to apply OSI to such nations requires further research.

Thus, following Hope’s US- and Australia-oriented studies on open source biotechnology, a study

on OSI and Brazil may guide other developing countries in adopting an open strategy in science

that is tailored for them. OSI is an IP strategy for innovation that involves a combination of

institutions, values, and practices; it will therefore have to be adapted to particular institutional

contexts in any given country. This thesis will investigate how these principles can be grafted onto

Brazil’s existing institutions and governance structures.

Admittedly, there are some areas where open collaborative licensing may not be feasible.

Nevertheless, it is legitimate for this thesis to explore whether the concepts of OSI are an effective

19
way of managing biotechnology in Brazil using the prevalent IP business models of the developed

world.

1.2 Objective

This thesis aims to demonstrate that the country in question, Brazil, has the option to use its

competitive advantage in surviving the post-Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS) period and the potential to improve its levels of biotechnological

innovation. Whereas research on IPR and TRIPS has tended to focus on legal issues, this thesis

also focuses on pragmatic issues, such as innovation strategies and systems.

Brazil’s innovation system can contribute immensely to the growth of its economy, and innovative

systems that utilize the flexibilities of TRIPS and alternative models such as OSI have the potential

to enhance local capabilities, technology transfer and information flow. To this end, this thesis

sets out recommendations on how this can be achieved. This thesis also investigates whether the

outcome of the struggle for control of the domestic and international regulatory spaces explains

to some extent why biotech patenting is suboptimal in certain respects.

It is important to emphasize that this thesis accepts the existence of patents and will not attempt

to provide a detailed analysis of the failures or successes of the patent system. However, whether

we wish to critique the system or to advocate a new way to manage IP, it is essential to understand

why these rights exist in the first place (their justifications). One must also understand that the

patenting of biotechnological inventions in their present forms creates social impacts that are

cause for concern given the potential benefits for humanity. This makes it timely to give serious

consideration to alternatives to traditional IPRs and prevalent IP management strategies. These

20
evolving approaches include open source biotechnology, scientific commons, patent pools, and

supporting the public domain through free sharing of knowledge and technology.

1.3 Hypothesis

Economic and legal studies have challenged the role of patents in the innovation process and

indeed it is often argued that the patent system is suboptimal in certain aspects. Further, the patent

system fails to provide sufficient incentives for pro-poor innovation and investment, such as in

the area of neglected diseases. It may be asserted that this has happened because the dominant

culture to acquire IP in order to commercialize it provoked a patent system that presents

characteristics that are not optimal. Nevertheless, it may be argued that high levels of IPR

protection may well benefit countries such as Brazil, providing that certain flexibilities are met.

The debate, however, goes far beyond the IPR regime and the relevant literature. To demonstrate

this, this thesis advances the hypothesis that Brazil would benefit from OSI as a viable alternative

model for providing open access to capabilities for innovation in biotechnology. This hypothesis

is tested by having one central research question: Is OSI feasible and desirable in the Brazilian

context? This research question will generate evidence to test the hypothesis by studying the

relationship between patents, innovation and developing countries and the impact of the IPR

regime on local innovation. In addition, the research question will generate evidence by

considering alternative models such as OSI to manage R&D. To validate this premise, the

thesis investigates the case of Brazil and company case studies. These lessons look at the

experiences of companies adopting OSI.

21
The thesis further argues that alternative IP strategies based upon models of cooperation and

sharing in order to maximize social and economic benefits of publicly funded research are

important for innovation in Brazil, and may help to add value to biotechnology. The case study

will evaluate how Brazil could embrace OSI in order to develop its biotechnology and construct

a scientific commons.

1.4 Why Brazil?

This thesis studies Brazil because the research findings could be used for future planning in the

area of science and innovation in the country at the federal, regional or local level, as well as

in the academic and scientific research communities. The study may be also relevant to the

Brazilian government and government officials given that the Brazilian Ministry of Science,

Technology and Innovation has the power to handle issues of national scientific and

technological research and to encourage innovation policies.

This study is further justified because Brazil is an important developing country. Academia has

paid attention to the positions and roles of so-called emerging, developing or even third world

powers such as Brazil, China, India and South Africa, and more specifically their potential

impact on the structure of the international IPR system.

Brazil is an influential country among these emerging powers and occupies a unique position

as a leader of a bloc of developing countries. For instance, Brazil has been a principal player

in the mobilization of the G20 and has emerged as one of the main voices in negotiations such

as the Doha Development Round. Brazil is also making efforts to establish other sites of South-

22
South cooperation (exchange of resources, technology, and knowledge between developing

countries).

In fact, Brazil has been actively participating in the different IPR negotiation forums since their

creation. However, Brazilian diplomats have seen their country pushed to the margins of decision-

making. This has led to a natural desire to balance the power asymmetries at the international level

and, consequently, to the formulation of strategies and initiatives that are targeted towards the

creation of a more balanced multilateral system. The Brazilian government plays an important

role in international negotiations, and Brazil has shown leadership in exploring IP alternatives.

The World Intellectual Property Organization (WIPO) Development Agenda and the negotiations

at the World Health Organization (WHO) are evidence of important actions that the Brazilian

government undertakes towards promoting an innovative and balanced IP regime that supports

access to knowledge and access to medicines.

WIPO adopted its Development Agenda in September 2007, three years after it was first proposed

by Brazil and Argentina (WIPO 2007). The Agenda promised to achieve a breakthrough as it gave

the WIPO the mandate to move beyond the traditional view that any and all IP protection is

beneficial (ibid.). Importantly, WIPO Members States approved a recommendation to establish a

Committee on Development and Intellectual Property Rights (ibid.).

In collaboration with the Brazilian government, some institutions and non-governmental

organizations (NGOs) (e.g. Centre for Technology and Society at Fundação Getúlio Vargas

(FGV), Médecins Sans Frontières (MSF), Drugs for Neglected Diseases Initiative (DNDi) are also

engaged in international discussions and have developed influence in regard to patents, innovation

and access to essential medicines issues. For instance, since the 2001 World Trade Organization

23
(WTO) Declaration on the TRIPS Agreement and Public Health, the WHO has become more

active in the issue of IP and public health, and Brazil has worked to promote access to medicines

via the WHO. The World Health Assembly Resolution 59.24 established the Intergovernmental

Working Group (IGWG) on Public Health, Innovation, and Intellectual Property (WHA59.24

2006). The IGWG’s initial task was to produce a “global strategy and plan of action” with the

goal of securing essential health and R&D in the developing world (ibid.).

At the IGWG meetings in Geneva, Brazil and Brazilian institutions promoted plans to stimulate

medical innovation without high drug prices. One important proposal was the development of a

Global R&D Treaty offering prizes to reward medical innovation and a pharmaceutical patent

pools (KEI A2M). In May 2008 the WHO presented the Global Plan of Action at the World Health

Assembly (WHO-CIPIH 2008) that is likely to have considerable implications on the extent to

which the issues of public health, innovation and IPRs are being dealt with, both in the multilateral

arena and domestically. The extent to which the Brazilian government and domestic industry has

translated this international activism into reform at the domestic level is still very low given the

external pressures.

One could say that today the situation of the past is reversed. To a large extent, in the past Brazil

was identified as a focal point for US efforts to strengthen IP protection (United States

Government Accountability Office 2004) and increase market access for its research-intensive

products (ibid.). Although during the 1980s the Brazilian IP law followed the international laws

at the time, the country was the subject of unilateral US retaliation because of its policy on IP. The

United States commonly used the practice of punishing producers of goods (orange juice and

shoes, among others) unconnected to the IP-related complaint by interests connected with patents,

trademarks and copyright.

24
However, as this section has shown, recently the Brazilian government has successfully used IP

as an instrument of international activism and diplomacy. For example, the WTO authorized

Brazil to implement sanctions and cross-retaliation on the United States because the US

government oversubsidized its cotton farmers. WTO arbitrators authorized Brazil to adopt

countermeasures on goods, services and IP. The Brazilian government released a list of IPRs such

as patents, copyrights and trademarks whose grant to US entities could be suspended (Measure

482/10) and started a process of public consultation on the suspension of concessions or

obligations of IPRs from the United States (Barbosa 2010:1).

It has been recognized that Brazil has identified the need to explore alternative IP management

strategies to balance commercial considerations with public health and human rights objectives

(Moniz 2006:1). In fact, Brazil has already shown leadership in exploring IP innovative

alternatives (Lemos 2005:3; 2005b:5; Lemos and Mizukami 2008:32; Moniz 2006:7). For

example, the Brazilian government has undertaken important actions towards promoting an

innovative and balanced IP regime (ibid.), although there are not many actions in the

biotechnology arena, as this thesis will explain.

Initially, at the national level, we have seen the adoption of free software, both by the government

and by the private sector. For instance, several state ministries have adopted free software (ibid.).

In addition, the Brazilian Army and the main Brazilian data processing entity at the government

level, SERPRO (the Federal Data Processing Service), are adopting free software. A second

important initiative is the support of Creative Commons. The Brazilian government through its

Ministry of Culture supports Creative Commons and access to knowledge.

25
Hence, to some extent Brazilians have not tended to follow the prevailing international IPR

system, but rather have sought to reform multilateral rules and structures to the advantage of

Brazilian interests. This position suggests that Brazil is a good case study for the feasibility and

desirability of new models to manage IP.

Brazil has the potential to use its considerable agenda-setting power in the South to promote OSI.

In many ways, Brazil is the most important nation in Latin America. In South America Brazil has

the largest territory, the largest population, and boasts the largest economy. The importance of

Brazil directly reflects its leadership in the global scenario – a position that has been extended to

a general leadership of all developing nations in international negotiations (e.g. the Doha

negotiations).

Furthermore, while Brazil’s wealth, prosperity and health are based on the capacity to exploit

its natural resources, Brazilians are no longer simply coffee bean planters, soya bean planters

or cattle raisers. Today the Brazilian middle class comprises 91.8 million people

(CPS/IBRE/FGV 2008:1) and 160 million people live in urban areas (IBGE 2010). Brazilian

prosperity has long relied on the scientifically informed use of resources. Brazil has a growing

interest in biotechnology and a strong proprietary model might be premature. Brazilian

biotechnology R&D has been of benefit to Brazil and the world. For instance, Brazilian

Agricultural Research Corporation, EMBRAPA, is one of the largest national agricultural

research organizations in the world (EMBRAPA 2010).

Recent Brazilian investments in biotechnology attempt to move Brazil to the global forefront

of science, from fisheries, farming and forestry to environmental remediation and medical

research (Part III discusses the Brazilian scenario). The nation’s long-term prosperity depends

26
on the capacity to innovate – to adapt, adopt, use and socially embed new processes, products

and organizational structures. Innovation requires an ability to understand and work at the

frontier of emerging science and technology, and the ability to invent. Beyond that, Brazil

needs to be able to capitalize on innovation by translating shifts in global stocks and flows of

knowledge into processes, organizations and products of economic and social benefit to Brazil.

For the purposes of this thesis, it is necessary to clarify that Brazil is considered to be a

developing country. The literature uses the term “developing” and “developed” in relation to

nations, and although the United Nations (UN) does not provide universal definitions, this

thesis follows conventional wisdom. In that sense, a developing country is a country that has

not been able to achieve a substantial degree of industrialization, whereas a developed country

indicates a country that has completed the development process. The term “developing

countries” means emerging economies that already have a certain level of technological and

scientific advantages and to some extent local biotechnology industries. The term “developed

countries” includes countries that possess a strong biotechnology industry such as the United

States, Japan, Canada, Switzerland, Germany, France, Sweden, etc.

From the 1970s onwards a number of papers describe Brazil as an emerging or future power.

For example, Schneider (1976) called Brazil a “future world power” and Selcher (1981)

describes it as an “emerging middle power”. These projections of Brazil’s role as a future

power derived mainly from the country’s successful years of industrialization in the 1950s and

1960s. With the return to regionalism in the Americas and other parts of the world in the late

1980s and early 1990s, Brazil came to be described by Becker and Egler (1992) as a “new

regional power in the world economy” and since the increasing economic successes of the

27
BRICS (Brazil, Russia, India, China and South Africa), Brazil has again been referred to as an

emerging (middle) power.

Although Brazil is viewed as a “future” world power in the academic literature, detailed and

theoretically informed research into Brazilian innovation policy and strategies in

biotechnology is lacking and this thesis therefore aims to fill this gap.

It is also true to say that to some extent an analysis of Brazil’s innovation policy and strategies

in biotechnology could provide insights into similar challenges faced by nations such as China,

Malaysia, Argentina and India that are relatively technologically advanced developing countries.

It must be pointed out, however, that conclusions on other developing nations are not easy to draw

because of the differing national conditions that mean that such countries are not truly comparable.

Indeed, it is assumed that a similar analysis conducted for the case of Brazil would generate quite

different results with regard to the structural contexts in which other developing countries such as

China, Malaysia, Argentina and India are situated. It can nevertheless be argued that certain

commonalities exist between Brazil and other developing countries and the findings in this thesis

might provide a useful basis to advance the study of other developing-country contexts.

1.5 Method

This thesis combines both theoretical and empirical data.

28
 1.5.1 Theoretical Data

Theoretical data involves the relevant legal and economic literature, legislation, case law and

reports. This thesis uses an interdisciplinary approach that draws on IP law, constitutional law,

international policy and law, biology, economics, philosophy and history.

The theoretical framework comprises the methods of mapping and critical analysis of IPRs and

biotechnology. The thesis will study the legal problems that have emerged due to the increased

development of technology and commercialization of biotechnology. Faced with many questions,

the mapping and criticism approach sets out to identify the main tangible problems raised by

changes in the social, technological and juridical context and to show institutional alternatives to

these. The intention is to highlight the changes which IP has undergone, or could undergo, due to

society’s transformations, and to discuss the contributions to innovation, access to core

technologies, and the inter-relationship of legislation, social norms and markets. Hence, it will be

possible to view the main global business regulations and law applicable to biotechnology and

their implications for Brazil.

When analysing the feasibility and desirability of developing an OSI approach, it is crucial to

understand the corporate governance of biotechnology and the public-private management of

discovery, development and commercialization of biotechnological tools. The impact of corporate

governance is especially important in the business of development of drug candidates for human

healthcare. In the long term, society benefits in a world with reduced levels of disease – where

many otherwise debilitated citizens would be productive workers, creators, and innovators. Thus,

to research, map, analyse and document the space concerning the governance of biotechnology is

of significant importance.

29
The theoretical framework of this thesis employs Hancher and Moran’s (1998:148-172) analysis

for mapping and understanding the dynamics and patterns of interaction between the actors who

populate existing regulatory regimes. The primary purpose is to apply this analytical approach to

mapping out – and thereby, gain a deeper understanding of – the current governance of

biotechnological innovations worldwide and in Brazil. Kaye and Gibson (2008) have applied this

type of analysis to biobanks; as has Dutfield (2006:62-90) to patents, albeit not in the

biotechnology context.

Appendix III provides a map of the actors who populate existing regulatory regimes for

biotechnology and IPRs. Appendices I and II offers a map of other occupants of the domain.

The research starting point was to identify the organizations that enjoy formal legal authority or,

at least, some official recognition as agents of governance in biotechnology and IPRs within Brazil

and at international level. The second step was to identify additional actors that exercise

“informal” (i.e. extra-legal, unofficial or non-binding) authority or influence in the space. The

focus was also on organizations within new approaches to IP management strategies, what this

thesis calls OSI. The mapping started with the documentary governance framework. This consists

of statutes, regulations, statutory provisions, other legislative instruments and statutory codes of

practice applicable to biotechnology. It also includes doctrines, and a growing body of judicial

rulings on related subjects, interpretation and application of relevant laws, and best practice norms

and guidelines.

This thesis investigates whether or not regulation in biotech has fulfilled the expectations of the

designers of the international IPR system. For this, it draws on the work of Hancher and Moran to

understand the forces that shape the structure and functioning of regulation in IPRs. It examines

the political context for the introduction of regulation, the factors shaping the regulator’s internal

30
institutional form, regulatory practice with attention to the interaction between regulator, state and

utility, and the potential for new forms of regulatory governance.

The idea is to use Hancher and Moran’s concept of regulatory space as an analytical tool for

interrogating, mapping, understanding and diagnosing problems with the existing IPR regulatory

regime. Space analysis involves mapping the occupants of the domain, their competitive struggles

to assert power and influence, the key resources deployed in those struggles, and how those

resources are distributed (Kaye and Gibson 2007:4).

TRIPS changed the international landscape of IPRs as it allowed protection to any invention,

whether it was a product or process, in all areas of technology, without any distinction.

Furthermore, the access to technologies debate in biotechnology has emerged because the

scientific and technological advancements have changed the business strategies of biotechnology

companies.

This thesis focuses on the regulation of biotechnology and IPRs because they are a good example

of a controlled sector which utilizes private ownership and arms-length regulation. To provide a

theoretical underpinning for the case study of Brazil, Part I of this thesis discusses biotechnology

and the relevance of IPRs. This will serve to answer this thesis’s central research question.

The literature review which begins in Chapter 3 is particularly important in providing a discussion

of biotechnology, IPRs and the regulatory context in which IPRs were established and have

functioned. Following Hancher and Moran, this initial chapter considers the nuances of the

shaping of regulatory structures in biotechnology.

31
Chapter 4 looks at the shaping and reshaping of IPRs. Hancher and Moran stress that everyday

routines and customs structure regulatory practice. This thesis takes this into account to explore

the sources of these practices. This is relevant as a means to understand the dominant culture of

acquiring IP in order to commercialize it, and the reasons why suboptimal issues exist in the patent

system. In this respect, the theoretical framework is significant in that it enhances our

understanding of how the design of regulation in biotechnology occurred at an international level.

In line with Hancher and Moran, this thesis also examines how some interest groups captured

regulation, and dwells on the significance of historical timing in shaping regulatory structures in

biotechnology. The thesis looks at the role of interest groups in shaping regulation, practices and

cultures.

The theoretical framework of Part I will, therefore, assist in explaining the global context in which

the design of regulation in Brazil took place. The framework serves as an analytical tool to answer

the research question, and as an organizing structure for the case study of Brazil in Part III.

Part III explores the dynamics of interaction between the regulator, regulated and state (Brazil) by

looking at interactions around specific issues in order to capture what Moran (2002) evocatively

described as the “spirit of regulation”. This is useful because of its relevance in the Brazilian

national context – political, legal and cultural. Mapping the specifics of the Brazilian context will

allow the thesis to identify what the unique characteristics of Brazil are and how they could

potentially support OSI in the country.

Hancher and Moran suppress the public-private distinction by pointing out that many private,

regulated actors have important attributes of a public status. This approach may well be relevant

32
in the Brazilian context, where the regulated actors are public entities or private companies which

used to be public (were privatized). Moreover, Part III looks at Brazil’s context and the role of

actors in the regulatory process using the overarching concept of “regulatory governance”. With

their emphasis on publicness and organizations that exhibit this characteristic, Hancher and Moran

are silent on regulation as a space for democratic deliberation, although they do draw our attention

to understanding patterns of inclusion and exclusion. The discussion of openness aims to provide

critical reflection on OSI as an important mechanism of transparency and inclusion for the

legitimacy of a regulatory state.

1.5.2 Empirical Data

The empirical work undertaken for this thesis makes an important contribution to the work as a

whole. In particular, it contributes to answering the central research question of the thesis.

Throughout the research, the theoretical approach, incorporating the work of Hancher and Moran,

offers a conceptual lens through which the the empirical data is evaluated. The methodology used

is qualitative, comprising interviews with individuals involved with science and biotechnology,

and regulation. Consequently, the content of the thesis reflects the opinions and viewpoints of

experts and practitioners actively involved in biotechnology. This provides the thesis with

insiders’ perspectives on the challenges and opportunities associated with OSI.

In Canberra, interviews were held with scientists at Cambia and DArT, two Australian companies

promoting the use of open source principles in biotechnology; officials from Australia’s

Biotechnology Organisation; researchers and scholars from the Australian National University;

and officials from Australian Research Council (ARC).

33
In Sydney, interviews were conducted with scientists at the University of Sydney.

Email correspondence and phone interviews were also conducted in Australia with scientists from

the Rural Industries Research and Development Corporation (RIRDC), Grains Research and

Development Corporation (GRDC), International Food Policy Research Institute (IFPRI),

International Plant Genetics Resources Institute (IPGRI), the International Rice Research Institute

(IRRI), Centro Internacional de Agricultura Tropical (CIAT), International Maize and Wheat

Improvement Center (CIMMYT) and International Food Policy Research Institute (IFPRI).

In Boston, interviews were conducted with scientists from the Massachusetts Institute of

Technology (MIT), Harvard Medical School, Harvard Law School, Biobricks, Science

Commons, and Synaptic Leap.

In Rio de Janeiro, interviews were held with representatives and scientists from Fundação

Oswaldo Cruz (FIOCRUZ), EMBRAPA, Brazil’s National Health Surveillance Agency

(ANVISA), Médecins Sans Frontières, Oxfam, ABIA-AIDS, Pontifical Catholic University Rio

de Janeiro (PUC-RJ), officials from the National Institute of Industrial Property, academic experts

from FGV, representatives of Nortec Quimica, representatives of the Brazilian generic industry

and representatives of the industry of biotechnology.

In Sao Paulo, interviews were carried out with scholars, researchers and scientists from the

University of São Paulo (USP), São Paulo Research Foundation (FAPESP), University of

Campinas (UNICAMP), Aché Laboratórios, Coinfar, Rcepta Biopharm and Urofarma.

34
In Brasilia, interviews were conducted with scholars at the University of Brasilia (UNB), officials

from the Ministry of Science and Technology, and officials from the Ministry of Health.

In Porto Alegre, interviews were conducted with scholars and scientists from the Pontifical

Catholic University Rio Grande do Sul (PUC-RS) and Universidade Federal do Rio Grande do

Sul (UFRGS), representatives from TECNOPUC, and scientists from FK Biotecnologia.

In Geneva, interviews were conducted with officials from the WHO, Knowledge Ecology

International, Novartis, Merck, the Pharmaceutical Manufacturers and Research Association

(PhRMA), Biotechnology Industry Organization (BIO), Oxfam, BUKOPHARMA and the

Universities Allied for Essential Medicines.

In Canada, interviews were held with officials from Genome Canada, scientists and scholars and

researchers from the University of British Columbia, Genome Canada, University of Calgary,

University of Regina, University of Ottawa, McGill University (Montreal), Laval University

(Quebec City), British Columbia Cancer Agency (BCCA), Centre for Drug Research and

Development (CDRD), Ocean Networks Canada (ONC) and Ocean Networks Canada Centre,

and the Innovation Partnership (TIP).

Further interviews with other organizations were conducted through email correspondence.

Appendices I and II provide a control mechanism for the companies researched and interviewed

throughout this thesis.

This thesis has also gained from the author’s professional work. In March–August 2006 the author

was a visiting fellow at the Centre for Application of Molecular Biology into Agriculture

35
(CAMBIA) in Canberra, Australia. From January 2007 until January 2008 he was employed as a

researcher at the Centre for Technology and Society at the FGV Law School in Brazil. From

October 2010 until July 2012 he worked as a post-doc fellow in the Sauder School of Business at

the University of British Columbia in Canada. From July 2012 until December 2014 he worked

at Statoil’s Heavy Oil Technology Centre in Calgary, Canada.

In this thesis the author is also a bit-part player in the “story”, having written or co-written

documents for Genome Canada, CAMBIA, the VALGEN (Value Addition through Genomics

and GE3LS) research project, the Brazilian Ministry of Foreign Affairs (Mission of Brazil to

Australia), and observed two UN meetings. The author was able to see how ideas and concepts in

the area of biotechnology and IP developed by individuals can become political, and how they

seem to gain general acceptance; but there is a difference between this and what really makes a

difference to science governance at national and international levels.

The interviews comprise one aspect of the empirical part of this research. The debate between

qualitative research and quantitative research has been discussed broadly, and Bryman (1988) has

analysed the qualities of both. For this thesis, ethnography is an appropriate approach given that

the intention of the thesis is to conduct a social investigation and identify wider perceptions that

could not be gleaned from a questionnaire or other type of survey. In this research: a) the

researcher has the intention to explore the actors and their interpretations of the analysed issues;

b) the researcher’s stance in relation to subject is the one of an insider; c) the researcher maintains

a close relationship with the subjects; d) the relationship between theory and concepts and the

researcher is emergent; e) the nature of data is rich; f) the image of social reality is processual and

socially constructed; and g) the scope of findings is ideographic (ibid).

36
The interviews were semi-structured as this research adopted an open strategy which is known for

its flexibility and is an overwhelming source of potential data. Throughout the research new leads

and interview opportunities were followed up and additional data were gathered in response to

changes in ideas. This is the strength of this approach which gives the researcher “the capacity to

encounter the unexpected and possibly to change direction” (ibid:100).

During the research process, the content of the interview questions changed, depending on the

interviewee. For example, the representatives from the Brazilian Patent Office were asked about

the patent regime and how it had evolved over time, the examination process, the backlog and the

pipeline mechanism. The representatives from the Ministry of Science, Technology and

Innovation, Ministry of Health, ANVISA, FIOCRUZ, EMPRABA, MSF were asked about

Brazil’s innovation system, including questions concerning biotechnology, the role of patents

within the system, IP management strategies and the desirability and feasibility of implementing

alternative solutions. Questions to scientists and to representatives from the biotech industry,

NGOs and research centres were directed towards the structures and capacities of the local (and

international) biotech market. Those interviews included questions on patent strategies, local

political and economic factors, innovation patterns within the industry, management strategies

and the desirability and feasibility of implementing alternative solutions. The other interviews

were with academics and lawyers. These interviews focused on the patent regime, biotechnology,

open source, OSI and case law.

The collection of empirical data (interviews) for this research is justified first as a means to map

the field under study through. The author selected a number of scholars in the field through

scholarly citations in the areas of IPRs and biotechnology and from a list of biotechnology

companies, universities, research centres and government institutions involved in science and

37
technology. He obtained a list of companies through inquiries with interviewees. For example, the

author learned about Cambia through an email interview with Janet Hope and then contacted

Richard Jefferson, the CEO of Cambia, who invited him to undertake research in the organization.

As a result, the researcher travelled to Australia and spent three months there working and acting

as a member of Cambia.

The empirical approach of the thesis is further justified because it supported the theoretical

findings and revealed additional insights such as some practical perceptual information. For

example, interviewed participants elaborated on how scientists share information or on how

companies use IPRs to disturb competitors. The empirical data also informed the conclusions of

the thesis. The control mechanism for the research on the empirical part was done through direct

interviews and an email survey approach. The researcher kept transcripts of the interviews and, in

many instances requested feedback on transcripts and clarified uncertainties with a second

interview undertaken by phone or email.

Appendix IV lists the people interviewd for this thesis. The interviews were conducted on a non-

attributable basis due to the sensitivity of the issues discussed. The interviews were not taped and,

in order to protect the anonymity of the interviewees, no direct quotations are used and any specific

evidence that could identify the interviewees has been omitted.

Interviewees and their organizations were promised confidentiality because this was important to

facilitate open and free discussion. This contributed to determining the format of this thesis; in

place of a number of discrete case studies, this thesis focuses on the overall picture in order to

identify patterns that occur in biotechnology and OSI.

38
The majority of the empirical data were collected through interviews of cases studies relating to

Brazil and international business experiences. The case studies on Brazil and business draw on

fieldwork conducted in Brazil, Australia, Canada, the United Kingdom, Switzerland and the

United States. The interview data offered background information on the specific issues covering

the economic, social, cultural, technological, legal and political characteristics of OSI and Brazil.

The data further aided in the interpretation of the findings obtained from the literature.

The author initially mapped approaches that foster collaboration. These were entities that were

applying innovative business models in the space between research centres such as universities,

and industry. These approaches were taken from an initial scan that involved the cataloguing of

over 50 firms that were applying innovative business models based on collaboration. The selection

process was organic (seeing what leads to what) combined with some criteria of priority on finding

organizations that increased the diversity of the sample, were unusual or unique. From this initial

list of approaches, the researcher focused on a set of four characteristics that seemed the most

important to capture a snapshot of each organization. The four characteristics were: 1) Corporate

type, i.e. nonprofit or for profit; 2) Funding source, i.e. public, private, or self; 3) Function or

service offered, i.e. managerial, financial, legal, or research; and 4) Selection/Discrimination, i.e.

level at which they actively selected projects for collaboration (national and foreign level). The

author later interviewed agents within these organizations.

To provide an overview of the space, the researcher completed 32 profiles of organizations, which

were divided into two regions: international (Australia, Canada and the United States) and Brazil.

Appendix I sets out a list of the non-Brazilian organizations studied which contributes to an

analysis of models of collaboration based on OSI. Appendix II provides a control mechanism for

Brazil by means of a map of the Brazilian companies in biotech and their collaboration efforts.

39
The interviews listed in these two appendixes contribute to the analysis of the hypothesis to be

tested in the case study. Throughout the thesis, other organizations which are not in the

appendixes, such as EMBRAPA and FIOCRUZ (which were part of the empirical work), are also

referred to.

1.6 Perspectives

Two main perspectives are adopted in this thesis. The first is that of a technology developer –

normally a scientist. It is important to discuss how OSI impacts on licensing practices. The second

is that of a policy maker – especially the perspective of a developing-country policy maker. The

implications of changing licensing practices are intrinsically connected to public policy questions.

This work looks into the contradictions and complementarities within and between these two

perspectives.

1.7 Overview of the Thesis

This thesis has four parts.

The first part consists of Chapters 2–4 and analyses biotechnology, the rhetoric of patents, and the

relevance of IPRs.

Chapter 2 provides a background to biotechnology with some definitions and delimitations of

biotechnology. It presents a global perspective and definitions of biotechnology and the

biotechnology industries. The main idea is to lay the foundations for this research before

developing a theoretical framework and methodological approach for studying OSI.

40
Chapter 3 presents the context of this thesis and maps some concerns of the current IPR regime,

such as patent-dependent business models prevailing within the industry. Analytical background

is provided through a discussion of patents and other IPRs, the justifications of IP from a

theoretical perspective, some problems with these justifications and North-South patent issues.

The intention is to provide analysis to support a critique of the current IPR regime. Also, this

chapter investigates the reality of ownership and management of IP through a study of technology

transfer and competitiveness, patents over research techniques, gene patenting, patent thickets and

anticommons, research exemption and compulsory licensing.

Chapter 4 investigates the reasons why the current IPR regime is suboptimal, providing a critique

– a theoretically engaged and empirically validated critique of the current patent-dependent

business models prevailing within the industry. It looks at the shaping and reshaping of IPRs.

Part II explores the theory and practice of OSI and consists of Chapter 5. This chapter investigates

whether alternative strategies of IP management can function and provides a discussion of OSI

and its parameters. It also defines OSI and analyses different concepts and features that appear to

be at the core of OSI and deserve consideration.

Part III consists of Chapters 6–9 and comprises the case study of Brazil. This part directly

addresses the Brazilian scenario and investigates whether OSI is feasible and desirable for Brazil.

Chapter 6 is a study of Brazilian law and OSI. It clarifies the Brazilian legal situation and its

interaction with OSI, and on this basis assesses the feasibility of OSI in Brazil from a legal point

41
of view. It traces the legal elements that justify the implementation of public policies that aim to

promote the use of OSI.

Chapter 7 first outlines Brazilian science and Brazil`s modern biotechnology performance before

moving into the broader economic literature that analyses Brazil’s development. It also surveys

the challenges and opportunities for Brazil.

Chapter 8 provides discussion and evidence to support the claim that there are Brazilian

institutions which have the capacity to adopt and benefit from OSI. It attempts to map the

Brazilian scenario in order to evaluate whether or not OSI has a future in Brazil.

Chapter 9 relates OSI to the Brazilian context with a discussion on suitable initiatives and licensing

options, the gaps in OSI that need to be bridged, and the additional conditions for sustaining OSI

in that country.

The fourth and final part consists of Chapter 10, which presents the main findings, their

implications, and the general conclusions of the study.

42
 PART I

BIOTECHNOLOGY AND THE RELEVANCE OF

INTELLECTUAL PROPERTY RIGHTS

43
 2. Biotechnology

Current predictions are that in the twenty-first century biotechnology has the potential to grow to

be what aviation, information technology, and electronics, were to the twentieth century (Suarez

and Walrod 2004:402). To get a realistic idea of the importance of biotechnology, an analogy with

the last century is instructive. If the last century was the century of physics, this century is the

century of biology (Dyson 2007:1). Today, because of the size of its budgets, the size of its

workforce and its outputs, biology is bigger than physics (ibid.). In addition, because of its

economic consequences, its ethical implications and its effects on human welfare, biology is also

more important than physics today (ibid.).

Biotechnology has undergone a rapid process of improvement and commercialization ever since

Herbert Boyer and Stanley Cohen created the first genetically engineered organism in 1973 (see

Hughes 2011). It is said that they “stitched together nearly twenty years of discoveries into a fitting

climax: the invention of the recombinant DNA engineering” (Goozner 2004:21).

With the improvement of processes, which occurred following the advent of recombinant

deoxyribonucleic acid (DNA) engineering, scientists became able to use biological and chemical

processes to manufacture large quantities of a selected protein by splicing the gene that expresses

the protein into the genome of fast-growing bacteria, yeasts or mammalian ovary cells (Goozner

2004:21). This breakthrough led directly to the creation of a biotechnology industry (ibid.:21).

The objective of this chapter is to describe biotechnology through definitions that will serve as an

interpretative guideline for the thesis. The aim of this chapter is also to analyse whether or not the

definitions of biotechnology are consistent with the theoretical framework of this thesis, namely

Hancher and Moran’s regulatory approach.

44
The main argument of this chapter is that research techniques are a central definitive trait of

biotechnology and foster rapid development of subsequent derivative technologies. The

methodology applied is theoretical. In relation to the central research question of the thesis, it

offers the basis for understanding that in biotechnology research techniques are a central definitive

trait of biotechnology. Of course not all aspects of biotechnology are generative of further

research; some are end products of themselves, others are of a dual nature and the utility of some

is purely restricted to further research. Nevertheless, this argument aims to challenge the role of

patents in the innovation process, at least to the extent that it concerns research techniques. It may

be not optimal to have research techniques patented, and patenting may also not provide sufficient

incentives for pro-poor innovation and investment, such as in the area of neglected diseases.

2.1 Definition of Biotechnology

This section first broadly defines biotechnology in general before presenting the definition of

biotechnology used in this thesis. According to the Convention on Biological Diversity (CBD),

biotechnology means “any technological application that uses biological systems, living

organisms, or derivatives thereof, to make or modify products or processes for specific use”

(CBD:article 2).

The term “biotechnology” “conveys a singularity or unity to what is actually a tremendously

diverse set of activities and range of choices” (Buttel 1985:5). Gaisford et al. (2001:1) summarized

biotechnology as:

… the use of information on genetically controlled traits, combined with the technical
ability to alter the expression of those traits, to provide enhanced biological organisms,
which allow mankind to lessen the constraints imposed by the natural environment.

45
Biotechnology may be divided into first-, second- and third-generation biotechnologies (Dutfield,

Muraguri and Leverve 2006:8). Accordingly, traditional technologies like beer brewing and bread

making comprise first-generation biotechnologies. In the second generation of biotechnologies

are techniques ranging from microbiological applications developed by Pasteur to mass

production through fermentation of antibiotics. Tissue culture and plant breeding are also in this

generation (ibid.).

This thesis deals with the third-generation biotechnologies (“new biotechnologies”). In this

context, biotechnology is concerned with the molecular level: DNA, especially the protein-

encoding sections (genes), ribonucleic acid (RNA), proteins and cell metabolism. Proteins are of

special importance in forming the bulk of every organism’s structural elements and, as enzymes,

receptors, regulators and chemical messengers, playing essential roles in the functioning of all

living cells and organisms (ibid.). Most of this work involves characterizing proteins and their

associated genes, identifying their function, reproducing them in other organisms (typically

microbial), and discovering small molecules that bind to them and in so doing generating

therapeutic effects (ibid.).

In third-generation biotechnology, there are genetic engineering techniques that transfer DNA

from one life form to another and a transgenic organism expresses new and useful traits (ibid.:8).

Examples of third-generation biotechnologies are diversity arrays technologies, hybridoma

technology for culturing monoclonal antibodies, polymerase chain reaction (PCR), recombinant

DNA, genomics, proteomics, transcriptomics, metabolomics, and synthetic biology fields such as

metabolic engineering (ibid.).

46
This thesis further restricts the term “biotechnology” to the range of techniques and products based

on molecular biology. Still, this narrower sense of the term refers to a broad range of research

techniques that affects productivity in a wide range of industry sectors, including healthcare

(drugs, vaccines, devices and diagnostics); agricultural biotechnology (genetically modified

organisms and food safety); industrial and environmental applications (biofuels and biomaterials);

biodefence (vaccines and biosensors) and research tools (DNA fingerprinting, bioinformatics,

microarray technology and nanotechnology) (Spillane 1999:28).

The Organisation for Economic Co-operation and Development (OECD 2010) provides a list-

based definition of research techniques:

 DNA/RNA: Genomics, pharmacogenomics, gene probes, genetic

engineering, DNA/RNA sequencing/synthesis/amplification, gene
expression profiling, and use of antisense technology

 Proteins and other molecules: Sequencing/synthesis/engineering of proteins

and peptides (including large molecule hormones); improved delivery
methods for large molecule drugs; proteomics, protein isolation, and
purification, signalling, identification of cell receptors

 Cell and tissue culture and engineering: Cell/tissue culture, tissue

engineering (including tissue scaffolds and biomedical engineering),
cellular fusion, vaccine/immune stimulants, embryo manipulation.
 Process biotechnology techniques: Fermentation using bioreactors,
bioprocessing, bioleaching, bio-pulping, biobleaching, desulphurisation,
bioremediation, biofiltration and phytoremediation

 Gene and RNA vectors: Gene therapy, viral vectors.

 Bioinformatics: Construction of databases on genomes, protein sequences;

modelling complex biological processes, including systems biology

 Nanobiotechnology applies the tools and processes of

nano/microfabrication to build devices for studying biosystems and
applications in drug delivery, diagnostics etc.

47
The CBD and the OECD offer some initial definitions of biotechnology but these explanations

led the author to question whether biotechnology is, by nature, unique and thus to suggest that

actors in the space have not completely captured the term and its legal definitions.

This thesis divides biotechnology into groups to clarify the different ways in which the restriction

of the term is used. This definition is important for the reader in order to understand that research

techniques are important for the discipline of biotechnology.

2.1.1 Biopharmaceuticals

Terms such as “biologic”, “biological pharmaceutical”, “products of pharmaceutical

biotechnology” or “biotechnology medicines” refer to medical drugs produced using

biotechnology. These involve proteins (including antibodies), nucleic acids (DNA, RNA or

antisense oligonucleotides) and living microorganisms like viruses and bacteria whose virulence

is reduced by the process of attenuation. They can be used for therapeutic or in vivo diagnostic

purposes, and are produced by means other than direct extraction from a native (non-engineered)

biological source (Walsh 2003:chapter 1). Two important research techniques for

biopharmaceuticals are recombinant DNA and PCR. These techniques are very important to the

innovation process in biopharmaceuticals.

According to the US Food and Drug Administration (FDA), biopharmaceuticals “are complex

mixtures that are not easily identified or characterized” (FDA 2015). A federal statute, the Public

Health Service Act, defines biological product as a virus, therapeutics serum, toxin, antitoxin,

vaccine, blood, blood component or derivative, allergenic product, or analogous product, or

arsphenamine or derivative of arsphenamine (or any other trivalent organic arsenic compound)

that is “applicable to the prevention, treatment, or cure of a disease or condition of human beings”

48
(Public Health Service Act, §351(i), 42 USC §262(i)). The Code of Federal Regulations defines

some key terms in biopharmaceuticals (CFR: §600.3(h)):

1. A virus is interpreted to be a product containing the minute living cause of an infectious

disease and includes but is not limited to filterable viruses, bacteria, rickettsia, fungi, and
protozoa.

2. A therapeutic serum is a product obtained from blood by removing the clot or clot
components and the blood cells.

3. A toxin is a product containing a soluble substance poisonous to laboratory animals or

to man in doses of 1 milliliter or less (or equivalent in weight) of the product, and having
the property, following the injection of non-fatal doses into an animal, of causing to be
produced therein another soluble substance which specifically neutralizes the poisonous
substance and which is demonstrable in the serum of the animal thus immunized.

4. An antitoxin is a product containing the soluble substance in serum or other body fluid
of an immunized animal which specifically neutralizes the toxin against which the animal
is immune.

These legal definitions found in US legislation relate to tangible products. It is important here to

analyse these definitions in the context of the theoretical framework of the thesis. For this, an

understanding of the underlying legal basis for regulation, how these laws have evolved, and how

regulatory responsibility for biologics has shifted will be useful.

Today, the Public Health Service Act authorizes the FDA to ensure the safety, purity and potency

of genetically engineered proteins derived from human genes, called “biologics”. The Act also

gives the FDA authority to approve biologics for marketing (Public Health Service Act §351, 42

USC §262) and has its origins in the 1902 with the Biologics Control Act (Mathieu 2004). The

Biologics Control Act was the first legislation to regulate a specific class of drugs as a direct

response to calamities in St. Louis, Missouri, and Camden, New Jersey, in which many people

died after taking vaccines for diphtheria and smallpox (Kracov 2006:195). Between 1902 and

1972, the United States repeatedly changed the mechanism of responsibility for regulations on

49
biologics, ultimately establishing the FDA (Mathieu 2004). This explains the difficulty in

categorizing biopharmaceuticals.

In Europe, Directive 2003/63/EC defines biopharmaceuticals as products that consist of two

essential elements. First, “the active substance is a biological substance. A biological substance is

a substance that is produced by or extracted from a biological source” (microorganisms, organs

and tissues of either plant or animal origin, cells or fluids, including blood or plasma of human or

animal origin, and biotechnological cell constructs utilizing cell substrates). Second, “the product

requires for its characterization and the determination of its quality a combination of

physicochemical-biological testing, together with the production process and its control”. The

following are considered as biological medicinal products: immunological medicinal products and

medicinal products derived from human blood and human plasma.

The definitions of biopharmaceuticals in Europe are based on the legislation produced by the

competent authorities of the European Union (EU) Member States and other European institutions

such as the European Commission and the European Medicines Agency (EMA). In addition, the

Commission issues technical and administrative guidelines in order to explain how EU law can

workably put into practice. The EMA has created a body of scientific guidelines regarding

biopharmaceuticals.

There are two main important considerations regarding the definitions of biopharmaceuticals:

first, the legal definitions of biopharmaceuticals are very technology-based (therefore unique);

and second, they originated in developed biotech countries.

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 2.1.2 Agricultural Biotechnology

Agricultural biotechnology is a collection of scientific techniques used to improve plants,

animals and microorganisms. It attempts to solve problems in all areas of production and

processing. For instance, plant breeding is intended to raise and stabilize yields and to improve

resistance to pests, diseases and abiotic stresses such as drought and cold, and to enhance the

nutritional content of foods. Through genetic engineering, scientists move genes from one

organism to another. Molecular markers allow the examination of an organism’s DNA so that

scientists can select plants or animals that possess a desirable gene. Molecular diagnostics in

agriculture can accurately diagnose crop/livestock diseases. Biotechnology-derived vaccines are

used in livestock. Tissue culture allows for the reproduction of disease-free planting material for

crops. Two foundational techniques in agricultural biotechnology are the Agrobacterium

tumefaciens and the “gene gun”.

Agrobacterium tumefaciens is a natural plant pest that has been used as a delivery system for

shuttling foreign genes into plant genomes (Shiboleth and Tzfira 2012:99). Jeff Schell and Marc

Van Montagu at the University of Ghent in Belgium discovered the gene transfer mechanism

between Agrobacterium and plants. Several patents related to Agrobacterium-mediated

transformation have been filed in the last decade (see Roa Rodrigues et al. 2003:4; Yancey

2011:chapter 2; Yancey and Stewart 2007:12).

The gene gun is a delivery method which fires gold particles carrying the foreign DNA into plant

cells (Matsumoto and Gonsalves 2012:121). DuPont owned the gene gun or biolistic technology

(a series of patents were filed, e.g. US Patent 4945050 filed on November 13, 1984), and

licensed it exclusively to Bio-Rad Laboratories (Matsumoto and Gonsalves 2012:121). The gene

gun’s patents have now expired, however. This is an example of one technology that was

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developed in a university environment (Cornell University in this case) and ended up being owned

by multinational corporations.

The Cartagena Protocol on Biosafety defines agricultural biotechnology legally through the

definition of “Living modified organism”. Article 3 of the Protocol states:

(…) (g) “Living modified organism” means any living organism that possesses a novel
combination of genetic material obtained through the use of modern biotechnology;

(h) “Living organism” means any biological entity capable of transferring or replicating
genetic material, including sterile organisms, viruses, and viroids;

(i) “Modern biotechnology” means the application of a. In vitro nucleic acid techniques,
including recombinant deoxyribonucleic acid (DNA) and direct injection of nucleic acid
into cells or organelles, or b. Fusion of cells beyond the taxonomic family, that
overcome natural physiological reproductive . or recombination barriers and that are not
techniques used in traditional breeding and selection.

In agricultural biotechnology, there are complex dynamics and patterns of interaction between

environmental groups, transnational corporations (TNCs) and governments. These actors have

different regulatory agendas. For instance, environmental groups are concerned that agricultural

biotechnology presents potential risks to human health and the environment and raises serious

ethical questions. Transnational companies and governments often have different agendas as they

desire to build a competitive agricultural biotechnology industry. Lobbying was an integral part

of the negotiations of the Cartagena Protocol.

2.1.3 Genomics

According to the WHO (2002, 2004), genomics is defined as the study of genes and their

functions, and related techniques. Genomics allows researchers to understand the complex

52
mechanisms through which genes and their products interact to affect biological function and

influence disease process (ibid.).

The core aim of genomics is “to sequence the entire DNA complement of the cell and to physically

map the genome arrangements (assign exact positions in the genome to the various genes/non-

coding regions)” (Walsh 2002:47). Due to improvements in sequencing technologies, DNA

sequencing is now considerably faster, cheaper and more accurate. The current view is that

genomics-related science will develop innovations using biological technologies derived from

genomics research, helping with solutions to some of global society’s “Grand Challenges”

(such as population health, food production, clean energy production, an environmentally

sustainable economy and the effects of climate change) (Genome British Columbia 2003:1).

Genomics is one of the most exciting disciplines of biotechnology where most of the

technologies are themselves research techniques. Genomics research techniques have provided

applications in many fields and allow clinicians and biomedical researchers to increase the

amount of genomic data collected on large study populations. These techniques are very

important, especially when combined with new informatics approaches that integrate different

data with genomic data.

The FDA’s (2008) Guidance for Industry provides a legal definition of genomics:

Genomic Biomarker (2.1)

1. Definition (2.1.1) A genomic biomarker is defined as follows:

A measurable DNA and/or RNA characteristic that is an indicator of normal
biologic processes, pathogenic processes, and/or response to therapeutic or other
interventions.

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 2. Additional Information (2.1.2)

a. A genomic biomarker could, for example, be a measurement of:

The expression of a gene
The function of a gene
The regulation of a gene

b. A genomic biomarker can consist of one or more deoxyribonucleic acid (DNA)

and/or ribonucleic acid (RNA) characteristics.

c. DNA characteristics include, but are not limited to:

Single nucleotide polymorphisms (SNPs)
Variability of short sequence repeats
Haplotypes
DNA modifications, e.g., methylation
Deletions or insertions of (a) single nucleotide(s)
Copy number variations
Cytogenetic rearrangements, e.g., translocations, duplications, deletions, or
inversions d. RNA characteristics include, but are not limited to:
RNA sequences
RNA expression levels
RNA processing, e.g., splicing and editing microRNA levels

e. The definition of a genomic biomarker is not limited to human samples, but includes
samples from viruses and infectious agents as well as animal samples, i.e., for the
application of genomic biomarkers to nonclinical and/or toxicological studies.

f. The definition of a genomic biomarker does not include the measurement and
characterization of proteins or low molecular weight metabolites

Several organizations such as Genome Canada, the US National Human Genome Research

Institute (NHGRI), Genoma España, Instituto Nacional de Medicina Genómica (Mexico), the

Riken Genomic Sciences Center (Japan) and the Sanger Institute (United Kingdom) are actors

who influence the space of genome research. The definitions of genomics, similar to other

definitions in biotechnology, are technology-based and follow expert opinion or authority.

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 2.1.4 Bioinformatics

Bioinformatics, or the application of computer science and information technology to the field of

biology and medicine, involves the use of computational methods for comparative analysis of

genome data. Luscombe et al. (2001:346) explain that

bioinformatics is conceptualizing biology in terms of macromolecules (in the sense of

physical chemistry) and then applying “informatics” techniques (derived from disciplines
such as applied maths, computer science, and statistics) to understand and organize the
information associated with these molecules, on a large-scale.

Bioinformatics has three objectives (ibid.). Firstly, it aims to organize data in a way that allows

researchers to access existing information and to submit new information. Secondly, it develops

resources to aid in the analysis of data. Thirdly, it uses “tools to analyse the data and interpret the

results in a biologically meaningful manner” (ibid.).

Bioinformatics was originally developed for the analysis of biological sequences, but today

bioinformatics encompasses a broad array of subject areas that include structural biology,

genomics and gene expression studies (ibid.:356).

Bioinformatics research techniques are becoming more important every day as they provide the

basis for discoveries in all the areas of biotechnology. Novel research techniques are a defining

trait of biotechnology. and the combination of other disciplines with bioinformatics is crucial for

innovation. Equitable access to bioinformatics techniques is extremely important.

The research of Luscombe et al. suggested that bioinformatics does not have an appropriate legal

definition and classification system for its inventions. Given that there are overlapping biotech

and computer technologies – to an extent that biotech inventions merge with the computer arts

55
– the guidelines for computer-related inventions (e.g. US Patent and Trademark Office

[USPTO] guidelines and European Patent Office [EPO] guidelines) may shed some light on

what technology falls into the field of bioinformatics.

2.1.5 Synthetic Biology

Synthetic biology, or molecular biological engineering, essentially is an area of biological

research and technology that combines science and engineering. It includes different

approaches, methodologies and disciplines with many definitions, which have a common goal

of designing and construction new biological functions and systems that are not found in

nature. Chopra and Kamma (2006:1) explain that the emerging interdisciplinary field of

synthetic biology brings an engineering approach to biology. In order to make useful products,

individual biological parts are synthesized and combined in different biological arrangements

(Chen et al. 2010:6)

Synthetic biology, and its promises to improve medical treatments, create greener energy and even

artificial life, has gained increased notoriety since scientists at the J. Craig Venter Institute in the

United States declared that they had made a “self-replicating synthetic bacterial cell”. This

breakthrough occurred in 2010 and was the first living cell to have an entirely human-made

genome, meaning that all the cell’s characteristics were controlled by a DNA sequence that the

scientists designed. This was made possible because of the combining of molecular

biotechnology, gene synthesis technology and bioinformatics.

Carlson’s (2005:chapter 1) study on synthetic biology traces its antecedents to the mid-1970s

when cutting-edge techniques were developed to modify single-celled organisms to produce

therapeutic drugs. Cutting-edge technologies of 40 years ago are routine in university lab courses

56
today, and have already been included in some high school curricula. The level of genetic

modification is intensifying and getting more complex each day. Technology has evolved in a

way that academic and industrial researchers are now working with multicellular organisms and

improving technologies to manipulate cellular processes at an unprecedented level of

sophistication. For instance, goats and cattle have been modified to produce milk containing

complex proteins for novel materials and pharmaceuticals, while viruses can be used to reprogram

mammalian cancer cells to invite attack by the immune system, thereby curing the disease (ibid.).

As Carlson (2005:chapter 1) explains, “technology is a process, and a body of knowledge, as much

as a collection of artifacts”. Biology is no different and scientists are tackling the challenges

inherent in the next stage of biology as a human technology. Progress in biology is due to advances

in the science of biological systems and the technology used to manipulate them (ibid.).

Synthetic biology is one of the fastest developing new classes of biological technology. Scientists

now have the ability to manipulate biology to produce economically useful products such as

plastics, therapeutic drugs, biofuels, industrial chemicals and metabolites (normally produced in

higher life forms such as plants in engineered micro-organisms) (Carlson 2005:1). The

development of new powerful laboratory tools is enabling a new mode of interaction with

biological systems (ibid.:2). Chemically synthesized DNA fragments (oligonucleotides) have the

potential to be used in DNA computation for the fabrication of gene expression arrays (“gene

chips”) (ibid.). The capacity of DNA synthesis is expanding and the ability to manipulate

biological systems and biological information in increasing too (ibid.).

To give one example of synthetic biology’s potential, “Dr. Coli” is a bacterial drug delivery

system that won the gold medal at the 2008 International Genetically Engineered Machine

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competition (an undergraduate synthetic biology competition) (KULeuven 2008). Dr. Coli

produces a drug when the human body needs it (KULeuven 2008). It does it in an intelligent way

because the drug production meets the individual patient’s needs and when the patient is cured,

Dr. Coli eliminates itself from the body. To achieve this, a molecular timer registers the time since

the last disease signal sensed. Then, after a certain time, Dr. Coli self-destructs. If the disease

intensifies again – above a certain noise level – the timer is reset and a new drug is produced.

Since the disease is in the memory, the timer will not start counting during the production of Dr.

Coli. Supposedly this drug delivery system has advantages over classical drugs and, if successful,

could have many medical applications. One example could be the delivery of a vasoactive

intestinal peptide as a potential treatment for Crohn’s disease (KULeuven 2008).

Also, Professor Jay Keasling (2008) and his team of scientists at the University of California,

Berkeley (UCB), are combining the development and application of synthetic biology tools to

change a bacterium or yeast, with the aim of producing artemisinic acid, a precursor to artemisinin,

a powerful anti-malarial drug.

Adam Arkin from UCB (Arkin BioSysBio 2009) explains that synthetic biology makes it possible

to make things more transparent, efficient, reliable, predictable and safe. Synthetic biology is the

emerging future of biotechnology, one in which the lessons and principles from open source will

be even more relevant because biology will more closely resemble computer programming (ibid.).

So the question arises of whether open source is relevant to biotechnology.

Synthetic biology is a new discipline of biotechnology that opens up many possibilities for

innovation. Needless to say, synthetic biology is totally dependent on research techniques as they

enable the ongoing innovation in the field. Synthetic biology falls within the scope of

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biotechnology as defined by the CBD. The Secretariat of the CBD first turned its attention to

synthetic biology at the tenth meeting of the Conference of the Parties in 2010 (CBD Technical

Series No. 82 2015:3). Since synthetic biology has been a substantive issue debated intensively.

Given that synthetic biology is a loosely defined term for a range of techniques stemming from

the combination of different disciplines, this opens up many possibilities for definitions and

regulation. Moreover, as the field develops quickly, there are many unknowns regarding what

products and applications will be technically feasible, commercially viable, and safe for both

human health and biodiversity.

There are questions concerning the adequacy of existing regulations to deal with current and

anticipated components, organisms and products of genomic, bioinformatics and synthetic

biology, as well as the social and ethical implications of these biotechnologies.

While there is no agreed scientific definition of synthetic biology, it is difficult to develop a legal

definition given that legal definitions in the area of natural sciences are usually based on scientific

definitions. In the case of synthetic biology there are social, environmental, ethical and legal

conflicts, therefore there will likely be a dispute between interest groups to capture the definition.

Regarding IP in the meantime, two main models are developing around synthetic biology. One is

a system with heavy reliance on patenting the components, organisms, and products of synthetic

biology, exemplified by the approach of the J. Craig Venter Institute (Gibson et al. 2008;

Gibson et al. 2010; Glass et al. 2007). The other main model is the BioBricks system, modelled

on open source software (see Appendix I, Biobricks).

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 2.1.6 Research Techniques

The definitions of biotechnology provided above have many similarities, but the most important

aspect of them with regard to this thesis is that innovation in those areas is dependent on research

techniques. Hence, in this thesis research techniques are a central defining trait of biotechnology.

Some studies and authors often refer to the term “research tools”, but this thesis prefers to use the

term “research techniques” because it implies applied knowledge, whereas “research tools”

implies physical things (and is not as a broad term the former).

This thesis acknowledges the US National Institutes of Health (NIH) definition of research tools

and includes in its definition of research techniques the full range of resources that scientists use

in the laboratory (NIH 1998; Nuffield Council on Bioethics [NCB] 2002:47). In biotechnology,

research techniques may include cell lines, reagents, animal models, growth factors, combinatorial

chemistry libraries, drugs and drug targets, clones and cloning tools, methods, laboratory

equipment and machines, databases and computer software (NIH 1998).

According to the OECD (2002:19):

Research tools may be considered compositions or methods used in conducting

experiments. This term could embrace a broad range of resources that scientists use in
the laboratory including, but not limited to, cell lines, monoclonal antibodies, reagents,
animal models, growth factors, combinational chemistry, genomic and proteomic
libraries, drug and drug targets, clones and cloning tools, methods, laboratory
equipment and machines, databases and software.

In genetics research, there are different ways to categorize the range of research techniques that

scientists use. According to the Australian Law Reform Commission (ALRC 2004:12.29),

there are three basic categories are:

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 1) Research techniques. Some gene patents cover laboratory techniques that molecular
biologists use in research, such as the Cohen–Boyer techniques (for gene-splicing)
and the polymerase chain reaction (PCR) methodology (for DNA amplification)
2) Research consumables. Some gene patents cover particular enzymes or reagents that
are used in the laboratory, such as Taq polymerase (used in PCR) and restriction
enzymes (used in cloning and other applications)
3) Research targets. Some gene patents cover genetic materials that are targeted in
research, for example, genes for receptor proteins used in designing new drugs or
vaccines, such as the HIV-receptor CCR5. This category also includes expressed
sequence tags (ESTs) and single nucleotide polymorphisms (SNPs), which can be
targets of research or used to target other genetic materials.

To delve a bit further into the concept of research techniques and show its importance, this thesis

explores the concept of foundational research techniques. Some authors argue that the most

important research techniques are the “fundamental research platforms that open up new and

uncharted areas of investigation” (e.g. Rai 2002:1368-1369). These are platforms that are best

utilized by multiple researchers because “a single patent holder is unlikely to see the myriad

directions in which a broadly enabling research platform could be developed” (ibid.:1369).

However, it is difficult to distinguish research techniques and platforms and the description of a

specific research technique may vary with time (ibid.).

Foundational research techniques are of great importance because they facilitate further research

or allow technologies to be built on them (OECD 2002:12). Two examples of foundational

research techniques are the now expired patents on recombinant DNA and on PCR. Cohen and

Boyer’s rDNA technique has been described as an “essential” research platform as this technique

is used in many different ways by many researchers. Examples of more contemporary research

platforms are genetic stem cell lines and the technology of RNA interference (RNAi) (Rai

2002:1368-1369). In agricultural biotechnology, the Agrobacterium tumefaciens and the gene gun

are two examples of foundational techniques.

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Furthermore, in line with the definition of foundational research techniques, Adelman (2005:989)

identifies two classes of research tools: common method and problem-specific:

Common-method research tools involve uniquely powerful methods of broad

applicability (for example, the polymerase chain reaction (PCR), which is used to
replicate DNA), whereas problem-specific research tools involve data or information
that are of narrow applicability and available in many forms (for example, drug targets
and gene probes).

In Adelman’s assessment, common-method research tools may suffer from limitations on access

due to patenting, whereas for problem-specific research tools the likelihood of major problems of

access is very low because alternative solutions to specific problems will occur and specific blocks

on research will foster inventiveness and innovation (ibid.).

Biotechnology is an area where the importance of research techniques is clearly evident. Many

research techniques in agriculture and biopharmaceuticals are or were subject to patents.

2.2 Biotech Definitions within the Theoretical Framework

A theoretical framework is necessary for a thorough analysis of whether or not the actors in the

biotech space have captured the term biotechnology and its legal definitions. Given that

biotechnology is highly technical and interconnected, there is the suggestion of a balance between

different actors’ points of view. Nevertheless, although there is no evidence that these initial

definitions of biotechnology are consistent with the regulatory space approach, the business of

biotechnology most likely has influenced those definitions. Thus, it is necessary to look into the

business of biotechnology and its actors.

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Apart from the United States, the business of biotechnology occurs almost exclusively in

Europe and Japan. The United States still remains the most advanced biotechnological country

in the world. No single explanation can account for this phenomenon; however, one can find

three main reasons (Dutfield 2003:144-145). First, private businesses in that country have

benefited greatly from universities, hospitals and government-sponsored basic research.

Second, the US government spends a considerable amount of money on research, including

biomedical research. Third, venture capital and private finance are much easier to obtain in the

United States than in many other countries.

During the 1980s, biotechnology in Europe developed primarily within large companies.

Unlike in the United States, the small company sector in Europe remained mostly stagnant

except in the United Kingdom (Europa Biotechnology 2002:27). While large companies in the

pharmaceutical and chemical sectors continued to exploit the technology to provide innovative

products, recently there has been a rapid expansion of the small company sector in Europe.

The definition of biopharmaceuticals is to some extent confused as there are different definitions

in use. International usage generally follows the US and European paradigm of defining

biopharmaceuticals as biotechnology-based pharmaceuticals, with genetically engineered

products as a subset, albeit using different terminology. Biotechnology and pharmaceutical trade

associations such as BIO and PhRMA also provide definitions of biopharmaceuticals which vary,

are inconsistent, and contain lists of approved products which are misleading.

In our highly complex society, agencies and businesses develop and maintain the necessary

expertise to fill in the technical details that legislatures simply lack the time to address. The

opinions of industry experts serve as the backbone for developing definitions in biotechnology.

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One could argue that while the definitions of biopharmaceuticals are not consistent with the

regulatory space approach, there is a suggestion that the United States, Europe, and possibly

Japan and their industries have influenced the shaping of those definitions or at least influenced

their use.

On the other hand, when mobilizing the concept of regulatory space, there is also a suggestion

that NGOs act in the public interest, balancing the system and also influencing in the definitions

of biotechnology. For example, the lobbying of environmental groups has grown in the last

decades, balancing the negotiations in the environmental arena. One could argue that NGOs

have engaged in biotechnology discussions and used their expertise to assert their views in the

definitions of biotechnology to advance public goals. Part III of this thesis, which deals with

the Brazilian regulation of biotech, will provide further analyses in the Brazilian context.

2.3 Conclusions

In order to make distinctions between the different definitions in biotechnology it is important

to provide an introduction to biotechnology and describe the complexity of the different

biotechnologies in use. Most people view biotechnology in a simplistic way, and this causes

problems in communication and public perception. Accurate terminology (and related

taxonomy and classification) is of great importance to this work because it provides the

framework for the thesis.

In addition to providing an introduction to biotechnology, this chapter has established that

research techniques are a central defining trait of biotechnology. It has been argued that

although some studies and authors often refer to the terms “research tools” and “enabling

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technologies”, for the purposes of this thesis the term “research techniques” is superior (e.g.

“technique” implies applied knowledge whereas “tool” implies a physical thing). It is also a

broader term.

As this thesis focuses on the interaction between IPRs, biotechnology and OSI, particular

emphasis has been placed on the classification of biotechnology (biopharmaceuticals,

agricultural biotechnology, genomics, bioinformatics and synthetic biology). This chapter has

also clarified the different ways in which the term “biotechnology” is used in the thesis.

Researchers in all these areas to some extent interact with each other and may use the same

research techniques (e.g. PCR may be used in agricultural biotechnology as well as in

biopharmaceuticals). Genomics, bioinformatics and synthetic biology are very important areas

of research for biopharmaceuticals and agricultural biotechnology.

Generally speaking, the definitions of biotechnology are technology-based. Although there is

little evidence that the definitions of biotechnology are consistent with the regulatory space

approach, there is a suggestion that the struggle between interest groups may have impacted

the development of the terms. Another concern is that this struggle could potentially impact

the development of the field; innovation in bioinformatics, genomics and synthetic biology

may be encouraged, stifled, or directed towards certain kinds of applications or users. On the

other hand, with the increasing engagement of civil society in policy making, the inclusion of

principles of environmental and labour protection, development concerns and public health

influence ideas, concepts and regulation.

The above definitions show that all the disciplines within the scope of this thesis rely on

research techniques to innovate. Clearly, not all aspects of biotechnology are generative of

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further research as some are end products in themselves. However, research techniques are the

most important aspect enabling researchers to invent those very end products.

Biological technologies have both commercial and public significance, and one may

hypothesize that current IP-dependent business models prevailing within the biotechnology

industry are not optimal because they will not generate speedy innovation and innovation in

neglected areas. The following two chapters provide s background material, with the next

chapter shedding light on biotechnology and IPRs, and the models prevailing within the

biotechnology industry.

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 3. Biotechnology and Intellectual Property Rights

3.1 Introduction

The prevailing business model in biotechnology, IPRs, in some circumstances deprives scientists

of equitable access to biotechnology techniques. This chapter aims to take the discussion

concerning biotechnology and IP further and begins by explaining a number of current issues

within patent theory.

First, the chapter maps key IPR concepts and delineates the research question by focusing on the

reality of ownership and management of IPRs in biotechnology. The chapter also provides a

literature review of the justifications for having a patent system, the problems with the

justifications, and the reality of ownership and management of IPRs.

Building on the foundations of patent theory, this chapter explores ownership and management of

IP in biotechnology. Within the context of this thesis, particular emphasis is placed on the aspects

of the biotech business model as well as the culture of acquiring IP in order to commercialize it,

which leads to the argument that this practice is suboptimal in the biotechnology context.

The intention of this chapter is also to develop a critique of the current IP-dependent business

models prevailing within the biotechnology industry. In order to develop this critique, this thesis

applies Hancher and Moran’s “regulatory space” analysis to gain a deeper understanding of the

current governance of biotechnological innovations.

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 3.2 Patents and Other IPRs

The analytical framework constructed here is limited and concise as the goal is to provide the

reader with an overview of IPRs. Hence, it is important to first understand the concept of

patents.

Patents provide exclusive rights to make, use, sell and import inventions that are new (novel),

not obvious (inventive) and useful (capable of industrial application), normally for 20 years

from the date of an application for protection. Inventions can be products or processes, or

improvements to products or processes, in any field of technology. Trade secrets draw on

private law to prevent those to whom information has been disclosed from either using it or

revealing it to others, for as long as the information remains secret. Although long considered

a poor cousin to patents, which provide more extensive rights, plant breeder’s rights protect

plant varieties in a complementary manner. Copyrights provide exclusive rights to copy,

transmit, distribute or adapt original expression, generally for at least 50 years from the end of

the author’s life and often longer. Automatically protected expression can include among other

things written outputs, computer code, and in some cases compilations of data or other

materials. Trademarks provide exclusive rights to use distinctive marks that identify goods or

services. Others cannot use such marks to create confusion in the market for as long as the

mark remains distinctive.

Patents, as with trademarks, are clear forms of government-granted privileges (monopolies)

(Drahos 2005:1-2). The formal legal literature defines patents as “a right granted for any device,

substance, method or process, which is new, inventive and useful” (ibid.:8).

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In short, a patent gives the owner the entitlement to exclude others from exploiting the invention

for the life of the patent (Article 28 TRIPS). Thus, patent rights are negative in nature because

they give the patentee a right to exclude others from making, using, selling and distributing their

technology. Patents do not necessarily provide the owner with a right to exploit it since this may

be subject to government authorization.

Before granting a patent, a number of requirements must be fulfilled. They are:

• The invention must be novel, i.e., it may not be part of the state of the art

• The invention must also be inventive, i.e., it may not be obvious to the man skilled in the
art to come to that invention based on what is known in the prior art

• The invention must have an industrial application, i.e., it must be capable of being applied
in any type of industry

• The invention must be sufficiently disclosed so that the man skilled in the art can carry out
the invention without undue burden or inventive skill. (Article 27 TRIPS)

Patents tend to dominate IP debates around biotechnology policy, but patents are not the only,

nor necessarily the most important, IPR to consider. Patents are relevant in varying ways by

dint of the fact they protect such “inventions” as research tools, diagnostic tests, isolated and

synthesized genes, and chemical and compounds of natural and artificial origins. Copyright

may affect the accessibility of equally important bioinformatics software, scientific

publications, original compilations of data, and possibly even synthetic DNA sequences.

Trademarks are used for branding genomics research enterprises or particular technologies. A

holistic view of all forms of IPRs, and also classic tangible property rights over biological

materials (de Beer 2005:17), is especially important in areas such as synthetic biology, which

lies at the confluence of information technology and biotechnology.

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Most public and private sector organizations involved with biotech are generally aware of the

importance of these IP issues. The challenge for government policy makers is to help build further

awareness and, more importantly, translate awareness into coherent IP management policies that

effectively and efficiently facilitate continuous circulation of knowledge. This is not entirely a

matter for policy makers, but also of private ordering, where the actors themselves resolve issues

such as excessive IP claims and the value of openness in pre-competitive areas of science.

3.3 Justifications of IPRs from a Theoretical Perspective

IPRs, including copyrights, trademarks, trade secrets and patents, play an important role in

innovation systems. In theory, patents should benefit society through 1) the widest possible

availability of new and useful goods, services and technical information that derive from inventive

activity, and 2) the highest possible level of economic activity based on the production, circulation

and further development of such goods, services and information (Dutfield 2006:67-65; 2008).

Utilitarianism, natural rights theories, and theories of justice are the different sorts of theories used

to justify IPRs (ibid.; Boyle 1996:87). According to Llewelyn (2005:11), a patent system is

justified because, in theory, it should serve to provide a framework of protection that enables

scientists to carry out R&D for the benefit of the public.

IPRs have a market-based, or commodification justification because patents and licenses provide

incentives to “increase the number of commercially available products and thereby serve the

public interest” (Lieberwitz 2004:782; Sell 2006:7). In theory, IP has a fundamental importance

for innovation and economic growth. Sell (2006:11) explains that the rationale for IPRs is that

they provide incentives for creation and the dissemination of innovation, encouraging further

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investment in ideas with commercial potential, and mitigating disincentives to disclose and

exchange knowledge which might otherwise remain secret (see also Arora, Fosfuri and

Gambardela 2001:7).

Schumpeter’s writings are useful to gain a better understanding of the complex interplay between

patents and innovation. Schumpeter (1939), credited with the first economic definition of

innovation, defined innovation as the introduction of a new good or a new quality of an existing

good, a new method of production, the opening of a new market and the introduction of a new

supply of inputs to a production system or a new organizational structure in an industry. He

stressed that “innovation is possible without anything we should identify as invention, and

invention does not necessarily induce innovation” (ibid.:84).

According to Schumpeter’s (1911) theory of economic development, the progress of science has

been a key driver in the process of economic development. Schumpeter (1982:42) argued that

innovation comes from the entrepreneur and his/her desire to obtain profits and eliminate

competitors. In his studies, Schumpeter defended the view that economic development is based

on scientific progress and innovation assures competitive advantages. For him, patents provide a

monopoly, and this monopoly makes entrepreneurs invest money in innovation (ibid.).

Further, standard economic theory stresses the ex-ante incentive effects of patents. Patents provide

a guarantee that causes willingness to invest in R&D, whereas this could not happen without

adequate protection against appropriation (Gallini and Scotchmer 2001). Introducing a new

perspective, few economists have argued that patents also play an ex-post role. Kitch (1977)

argues that patents encourage the dissemination of scientific knowledge after the discovery has

already been made (see also Denicolo and Franzoni 2004). Two arguments of the ex-post point of

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view are that without the compensation that IPRs provide, public goods would be underprovided

and that patents increase the output from resources used for technological innovation (Kitch

1977:266-267).

In his paper “The Nature and Function of the Patent System”, Kitch proposed two views of the

patent system: the conventional “reward theory” and the “prospect theory” (ibid.: 267-271). The

basis of the reward theory is that it is necessary to compensate a creator with a sufficient monopoly

to recover the costs of inventing and the possibility of making a profit (ibid.:266). A patent acts

as a reward, enabling the inventor to capture returns for his investment in the invention, returns

that would otherwise be subject to the expropriation by others upon disclosure (ibid.). The reward

theory is both justice- and economic-based: society is considered to be morally obligated under

its natural law to grant the reward. The patent serves to balance the amount of private investment

in an invention and the social value of the product. Thus, a monopoly granted should be

proportional to the benefit of the invention to society. This is achieved by limiting the duration of

a patent. While the reward theory is not a flawed analysis of the modern patent system, Kitch

argues that it is incomplete (ibid.).

Kitch contends that the patent system performs a function not previously noted: it increases the

output from resources used for technological progress (ibid.:265). Thus, the patent system is no

longer understandable as a system described by the reward theory whereby the output of

technology is reduced through the grant of a monopoly and exclusive control of resources. The

prospect theory conceives of the patent system as a means of progressing technological innovation

through the efficient disclosure of resources which thereby allows for the allocation of these

resources among an array of prospects (ibid.:266). Kitch defines prospects as a particular

opportunity to develop a known technological opportunity by any number of firms with any level

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of resources. A patent system that publicly records innovations efficiently allocates resources

among prospects equipped to best manage them and efficiently protects and encourages the

investments of prospects (ibid.).

The prospect theory is supported by rules which require and permit an inventor to apply for patent

protection early in the development process. The application does not have to disclose a

commercially viable process, only an invention that works. Moreover, rules which make a patent

invalid if the application is filed more than one year after public disclosure or commercial use

ensure early application and prompt disclosure (ibid.). The combined effect of these rules is that

it is risky for and inventor not to seek patent protection, thereby promoting efficient disclosure of

technological resources and enhancing the efficiency of which investment in innovation can be

managed (ibid.: 276).

A disclosure requirement reduces the amount of duplicative investment in innovation (ibid.:276).

Once a patent has been issued, inventors can learn about the technology and redirect their work

so as not to reproduce work already done (ibid.:278). Further, disclosure reduces transaction costs

in relaying information between prospects and enhances the efficiency with which inventions can

be developed (ibid.). After a patent has been disclosed, a patent owner also has an incentive to

make investments to maximize the value of the patent without fear that the fruits of the

investigation will produce information appropriable by competitors (ibid.:276). A patent system,

which facilitates these processes, reduces social waste in investment, cuts the ultimate cost of an

innovation to the public, and enhances the accessibility of an invention thereby furthering the

utilitarian goals of the patent system (ibid.:279).

A wider analysis of the interaction between biotechnology research techniques patents and the

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prospect theory must consider the patent system’s role in allowing for coordinated, rational

development of a patent prospect. This coordination and rational development of a patent

prospect may be a useful concept if replacing private entities with a federal agency to

coordinate R&D and avoid problems of aggressive patenting of research techniques (see Rai and

Eisenberg 2003:310-313). In fact, a strategy that contemplates the prospect theory and an

agency to coordinate R&D is consistent with OSI because it improves collaboration among

researchers. Federal agencies could effectively be a one-stop shop for patent licensing.

3.4 Problems with Some of These Justifications

If we did not have a patent system, it would be irresponsible, on the basis of our present
knowledge of its economic consequences, to recommend instituting one. But since we
have had a patent system for a long time, it would be irresponsible, on the basis of our
present knowledge, to recommend abolishing it.
(Machlup 1958:80)

The attempt to stimulate a comprehensive debate about the justifications for a patent system

requires an evaluation of the counterarguments. Although the empirical evidence is often not

conclusive, it provides at least some support for an incentive effect of patents (Arora et al.

2003; Cohen et al. 2002; Levin et al. 1987). While the incentive rationale is reasonably realistic

for private sector R&D, its applicability to public-funded research, pro-poor innovation such as

in the area of neglected diseases, and academic research is more questionable.

One of the problems with the prospect theory is patents of broad scope. In fact, Merges and Nelson

(1990:843) reject the prospect theory because it permits patents of broad scope that most often

hinder or block subsequent innovation. They argue that competition should be favoured over

prospect theory’s reliance on broad pioneer patents in most technological areas (1990:843-

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844). The authors’ explanation for this is that the prospect theory makes a wrong understanding

of the problems (ibid.:873):

But with the technological ‘prospects’ … no one knows for sure what possible
inventions are in the technological pool. Because of this uncertainty, development of
technology is critically different from other common pool problems. The real problem
is not controlling overfishing, but preventing under fishing after exclusive rights have
been granted. The only way to find out what works and what does not is to let a variety
of minds try.

Hence, Merges and Nelson (ibid.:884) believe that to spur innovation competition is much

more effective than monopolies. Unlike a traditional resource prospect, which is mutually

exclusive, competition allows multiple inventors to work simultaneously and to use ideas. In

this regard, they single out biotech because “the patent system should be particularly careful in

awarding patents of broad scope” in this area (ibid.:884). For the authors:

a real danger exists that allowing the patent scope to be overbroad may enable the
individual or firm who first came up with a particular practical application to control a
broad array of improvements and applications.

Arguments that question the justification for patents at large emphasize that market-based

solutions alone are likely to fail to serve the poor and the marginalized (Lamptey, 2003: 650; Sell

2006:7), but there are plenty of pro-patent advocates who would concede the point that patents

are not a perfect mechanism for directing solutions that are the most social-welfare enhancing.

Drahos and Braithwaite (2002:16) argue that the current patent system does not provide a

reasonable mechanism to fight neglected diseases and poverty. In addition, they suggest that the

historical record shows that, from the beginning, “a ruthless trade morality drove the development

and use of patents” (ibid.:35; see also Sections 4.2 and 4.3).

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Drahos and Maher (2004:10) go so far as to suggest that “patents and innovation have more or

less parted company”. According to Macdonald (2003), as cited by Drahos and Maher (2004:1),

there is good evidence of the scale and scope of patenting because there is an “intellectual property

arms race”. In the current business model, managers, rather than scientists, make decisions on

how to commercialize technologies, and biotechnological and pharmaceutical companies pay

lawyers to escalate to new levels of protection; the winners are the richest ones (ibid.).

In addition, Macdonald (2001), as cited by Drahos and Maher (2004:1), explains that there is a

basic paradox: innovation depends on people communicating with each other. This last finding

(the basic paradox) refers to the fact that research is lacking in collaboration because the patent

system is not promoting the diffusion of knowledge. Most discussion about the costs and

benefits of the patent system tends to emphasize the benefits, however most studies often

ignore the monetary costs of the patent system altogether, or present them as trivial

(MacDonald 2001:13). Analysing the literature, one may find that the monetary costs most

commonly acknowledged are the fees paid to patent offices and to patent attorneys (ibid.).

Moreover, the patent system requires courts and a granting office, so society must bear these

costs too (Drahos and Maher 2004).

The increasing commercialization of agriculture and medicine means that developing-country

farmers and the diseases of the poor will be ignored by firms for sound economic reasons in the

sense that directing investment towards them makes no business sense (Dutfield 2003:495). There

are many diseases, such as malaria, leishmaniasis, tuberculosis and dengue fever, which

disproportionately afflict poorer countries and are neglected by researchers because any resultant

drug would not be profitable (Maurer et al. 2004:1). In some cases, vaccines and drugs exist but

they are patented. Consequently, where patents prevent competition that would otherwise exist,

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access to affordable generic medicines is blocked (Jamison et al. 2008:chapter 4), and prices are

maintained at artificially high levels (Dutfield 2008:1).

One of the today’s key issues is how to respond to the R&D gap, whereby only 10 per cent of

global funding goes to diseases affecting the poorest 90 per cent who are sick (Global Forum for

Health Research 2002). In other words, only 10 per cent of R&D resources are spent on illnesses

that represent 90 per cent of the global disease burden. The WHO’s Commission on Intellectual

Property Rights, Innovation and Public Health (WHO-CIPIH) has issued a comprehensive report

on the global innovation system and the special needs of developing countries. In its findings, the

Commission noted that

Public research institutions and universities in developed countries should seriously

consider initiatives designed to ensure that access to R&D outputs relevant to the health
concerns of developing countries and to products derived therefrom are facilitated through
appropriate licensing policies and practices. (WHO-CIPIH 2006: 74)

It also called on the WHO (ibid.:78) to begin a process to create mechanisms that provide for

“sustainability and effectiveness of public-private partnerships by attracting new donors, both

from governments and the private sector” and “to promote wider participation of research

institutions from developing countries”.

Patents are largely irrelevant for research into neglected diseases (WHO-CIPIH 2006:74). These

diseases are neglected precisely because there is no paying market for treatments. More

importantly, under the existing model of financing innovation, there is no reason for private

companies to invest in developing treatments for diseases that primarily affect the poor since there

is no possibility of recouping costs in the short term (MSF 2001).

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Llewelyn (2005:66) argues “for a more determined external scrutiny of the system”. She explains

that it is necessary to have a better scrutiny of the system so that inventors who have contributed

to the public good are rewarded instead of those with an economic interest in acquiring rights

(ibid.:66). In truth, one may question whether the patent system is serving the function of

rewarding inventors who have contributed to the public good. Since this statement is based only

on theoretical and general points made by authors, it is important to present empirical evidence

here justifying a critical stance. Rai (2008:1041) suggests that the growing tide of criticism of the

patent system began to emerge in the late 1990s:

In 2003 and 2004, respectively, the Federal Trade Commission and the National Academy
of Sciences issued prominent reports calling for (inter alia) the invigoration of the non-
obviousness standard for determining patent validity. In addition, starting in the late 1990s,
various scholars began to emphasize the failure of the patent system to establish clear
patent validity and scope when the patent is first issued.

In 2009, Rai et al. (2009:14) found that a company called Sangamo consolidated a large patent

estate that covers both the engineering and the use of zinc-finger proteins (ZFPs). This

consolidation has given the company a powerful monopoly over an important platform

technology. The study suggests that Sangamo has often (but not always) licensed its platform

technology in a manner that is both profit maximizing and likely to enhance social benefit

(ibid.:143).

Rai et al. (2009:144) argue that the patent systems is failing because problems associated with

patent disclosure, stating that,

First, because of problems with patent disclosure, patents may effectively be posing a
barrier to academic research in this field. Second, resolving deficiencies in patent
disclosure could mitigate the problem of academic access to physical materials and know-
how, perhaps even obviating the need to develop open-science alternatives. Thus our study

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 raises the possibility that even when academics are not defendants in patent suits, and
enjoy a de facto (if not de jure) exemption from patent infringement liability, the patent
system may nonetheless be failing to fulfil the constitutional mandate that patents
“promote the progress of … the useful Arts.

Furthermore, it is likely that patents will have modest effects on the efforts of scientists to

engage in research. If anything, the argument has been made that patenting can divert scientists’

attention: research institutes may hive off research from basic to applied fields, and may lure

scientists to hunt private profit prospects through start-ups or industry collaborations (Shane

2004; Thursby and Mukherjee 2005).

3.4.1 North-South Patent Issues

In the context of this thesis, a discussion of North-South patent issues will provide important

background for the subsequent case study analysis. Such a discussion provides further

counterarguments for the justification of a patent system, focusing on the situation of developing

countries. Historically, at international and country levels businessmen and patent lawyers argued

to justify the patent system, and only after 1970 authors such as Firestone (1972), Vaitsos (1972)

and Kaltz (1974) and the UN (1975) began to examine the largely negative role of patents in

developing countries (the Global South). Below is provided a brief canvass of North-South patents

issues in order to further develop a critique of the current IP-dependent business models prevailing

within the biotechnology industry.

From the perspective of Brazil and other developing countries, the history of development in IP

is one of controversy and change. Countries that now advocate the international harmonization of

patent law did not follow that course to industrial development. It is not false to say that IP

protection changes in response to the internal and external economic and technological

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circumstances (Dutfield 2004:4). The history of patents demonstrates that the so-called developed

countries exploited weaker patent regulation when they were developing countries (ibid.).

Dutfield (2004) examined the factors that determined the development of patent law and the

decision to establish an international patent convention. Those factors were at the time (ibid.:1)

the European and North American industrial revolution; 2) the expansion of international trade

and investment; 3) national trade and development policy; and 4) the economic recession of the

late nineteenth century. Dutfield concludes that

Despite the undeniable uncertainties, history would appear to indicate two things. First,
the developed countries are being hypocritical in demanding that the rest of the world
adopt their own patent and other IP standards before many of them feel they are ready.
Second, and much more important, in doing so they are preventing the developing
countries from adopting appropriate patent standards for their levels of development, a
freedom today’s rich countries made sure not to deny themselves when they were
developing economies (ibid.:4).

In fact, the IP system – particularly its internationalization under TRIPS – did not intend to benefit

Brazil and other developing countries directly or even incidentally (see Oddi 2001, 1996 and

1987). Historically economists expressed the concern that the patent system did not provide

benefits for developing countries and Machlup and Penrose (1950) argued that maintaining the

patent system was beneficial for developed economies such as the United States, but not for

developing economies (see also Penrose 1951).

Oddi (1987) demonstrates the disadvantaged position of developing countries through cost-

benefit and economic analysis. He explains that there are two fundamental assumptions one makes

when evaluating the benefits of a patent system. First, “society needs more inventions than would

be made if society did not offer incentives”; and second, the best incentive for those inventions is

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the exclusivity that patents provide (ibid.:839). The question is what are the social benefits

attributed under such assumptions, if they are accepted:

If any benefit is to be attributed to a patent system, attention must be directed only to those
inventions that would not have been made but for that patent system. We must examine
those patent-induced inventions that would not have been seen in light of day without the
existence of a patent system for their protection. (ibid.:838)

To a certain extent, the debate about this cost-benefit and economic analysis is relevant to the very

particular problem this thesis addresses because the aggressive patenting of research techniques

seems not to be the best business model for developing countries’ interests. It essentially fails in

providing more inventions as the patenting of research techniques often impedes ongoing

innovation.

Oddi (1987:839) points out that many inventions would emerge without persuasion cost, however

in his cost-benefit analyses he raises some doubts about whether a patent system produces a net

system for society (ibid.:841) and offers three fundamental assumptions that developing countries

apply. The first assumption is that more inventions are needed in the country than would otherwise

be provided without its patent system. The second is that the grant of a patent is the most efficient

way of achieving this goal. Oddi explains that developing countries a priori need development,

and makes the third assumption for those countries, which is “that the grant of patents on invention

leads to development” (ibid.).

Following these assumptions, Oddi’s (1987) conclusion is that notwithstanding recommendation

from economists against developing countries’ participation in the patent international system,

those countries have disregarded those recommendations. The reasons for this range from

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“formalized efforts toward development by inducing foreign investment and the transfer of

technology to, perhaps, yearnings for prestige and self-respect” (ibid.:876).

As a matter of fact, in the last century the developed countries pressured economically developing

nations to accept the internationalization of patent law (Oddi 1987:875). Nevertheless, the

economic conditions of this same period did not offer a fertile environment for increased

cooperation towards, and support for, developing countries’ development (ibid.:876). The great

imbalances of international trade increased pressure for protective measures and the United States

balance-of-trade deficit exacerbated developing countries’ inability to purchase American-

manufactured and agricultural products (ibid.).

Barbosa (2000:1) explains that the United States’ unilateral diplomatic and economic actions

dictated most changes in the national legislations of “third world” countries. The national security

or foreign policy rules of the industrialized countries imposed other restrictions on the spread and

use of technology (ibid.). Strict controls dictated the exportation of technology, including patent

documents, and “third world” scientists, students and institutions had restricted access to segments

of scientific information – including scientific conferences and research experience (ibid.). For

Barbosa, globalization led almost inexorably to legal uniformity and national legislations were

changed to the benefit of the holder of the patents (ibid.).

It is clear from the above discussion that the economies of the countries from the South experience

strong pressure to adopt IPRs. Globalization and its impact on development processes arguably

triggered developments in global trade regimes that sought for the liberalization of the

international trading system and enforcement of universal patent rights.

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In undertaking an examination of the benefits or harms of patents for developing countries, the

United Nations Conference on Trade and Development

(UNCTAD 1980) analysed the empirical data collected from member countries and found that

instead of being used in production, the vast majority of patents granted to foreigners by the

national laws of developing countries had been used to protect imported monopolies.

UNCTAD (1980) suggested that the filing of patents in developing countries legalized this

particular situation that imposed a reverse system of preferences granted to foreign patent holders.

For instance, the study provided a survey of 22,736 registered patents in Mexico as of February

1980 and showed that only 1,951 or 8.6 per cent were used industrially. In production activities,

there were a small number of foreign patents which did constitute a transfer of technology, but at

a very high price. A study of the agreements of the developing countries concerning the use of

patents through foreign investment or license agreements showed that such agreements often

imposed high royalty payments and fees such as technical services which increased the direct

costs for the technology use. In addition, those agreements in certain cases contained restrictions

(either explicitly embodied in the contractual agreements or implicitly followed by subsidiaries

and affiliates of TNCs) that evidence an abuse of patent monopolies, leading to great indirect costs

or “hidden” costs, by far exceeding the levels of direct costs for all developing countries.

This old report retains validity if one takes into consideration the more recent studies of Maskus

(2000), Lall and Albaladejo (2001) and Kim (2003). For Maskus (2000), in developing countries

the high costs associated with regimes of strong IP have the potential to impede them from

attempting industrialization at the very early stage. Lall and Albaladejo’s (2001) report showed

that developing countries must first reach a certain level of industrialization in order to reap long-

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term benefits from strong IPRs. Kim’s (2003:vii) study on the Korean experience also offers some

valuable lessons for developing countries:

a. Strong IPR protection will hinder rather than facilitate technology transfer and
indigenous learning in the early stage of industrialization when learning takes
place through reverse engineering and duplicative imitation of mature foreign
products.

b. Only after countries have accumulated sufficient indigenous capabilities with

extensive science and technology infrastructure to undertake creative imitation
IPR protection becomes an important element in technology transfer and
industrial activities.

c. If adequate protection and enforcement of IPRs are genuinely intended to

enhance development, policy makers should seriously consider differentiation
in terms of the level of economic development and industrial sectors.

d. Developing countries should cooperate to change current trends towards a

standardized all-encompassing multilateral IPR system. They should strive to
make IPR policies more favourable to them in the short term. But they should
also strengthen their own absorptive capacity for a long-term solution.

Vaitsos (1972:74) points out that when one talks about patents in developing countries, one is

really talking about foreign patent-holding companies. For Vaitsos (ibid.:71):

The patent system is developing countries has a predominantly negative effect and is
devoid of significant benefits for these countries; virtually all owned by large foreign
corporations, patent are used as a vehicle for achieving monopoly privileges which
militate against conditions conducive to foreign investment, and hinder the flow of
technology advance through imitation and adaptation. For developing countries to license
patents is, therefore, tantamount to granting import permits under restrictive conditions.

The foreign ownership of patents in developing countries imposed restrictions on opportunities to

use resources, and perhaps this is one of the highest social costs of the patent system (ibid.:78).

Patents did not mean the transfer of technology, as promised, and in some cases, they hindered

possibilities for domestic research activities.

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The patent system has grown through the pressure of concentrated interests groups (see Chapter

4) and questions of development and the benefits of patents for developing countries has never

been agreed upon. In the context of biotechnology and research technologies, in most cases there

is a centralized concentration of research techniques in the hands of the firms from the developed

world. One could assume that the benefits of patents over research techniques are not

straightforward for developing countries.

Furthermore, for developing countries the relationship between research techniques and patenting

could be viewed as a matter of access to knowledge. In fact, nowadays access to knowledge is a

key issue, especially for developing countries. There is a consolidation of many local and global

social movements working towards better access to knowledge, and campaigning for free and

open source software and affordable essential medicines. For instance, the Access to Knowledge

(A2K) movement takes concerns about copyright law and other regulations that affect knowledge

and places them within an understandable social need and policy platform.

For developing countries like Brazil, access to knowledge is a matter of “asymmetrical power

relations” as the political influence of global high-technology industries continues to shape IP

policy (Sell 2006:59). For instance, “global intellectual property rules in the WTO emerged from

a vigorous corporate campaign to link intellectual property and trade” (ibid.:14). Thus, developing

countries face challenges in moulding their IP systems. Brazil is no exception.

Globally, IP laws govern the use and control of assets in the current knowledge game (Drahos and

Braithwaite 2002:chapters 3 and 10). Nevertheless, the ongoing debate questions the basis for the

current thinking on IPRs with the arrival of the “information era” (ibid.). Nowadays, it is widely

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proclaimed that we live in an “information society” and we are entering the era of the “information

economy”, yet few understand what this fully entails.

To explain, information is unprocessed knowledge that has been turned into something actionable.

Today’s global economy is in transition to a knowledge economy as an extension of the

information society. Knowledge has become the most important factor of production and the most

important source of capital. Thus, knowledge is essential for many human activities and values

such as freedom, the exercise of political power, and economic, social and personal development

(Drahos 2004:142).

It is important to explain that the terms “knowledge economy” and “information economy” are

often used synonymously. Machlup (1962) originally used “knowledge economy” to refer to the

“information economy”. Where the two terms are seen to be different, some authors regard the

“knowledge economy”, and others the “information economy”, as the more encompassing term

(Verzola 2005:paras.1-2). Porat (1977) measured and estimated the size of the emerging “post-

industrial economy” and described it as the “information economy”. Verzola (2005:para. 6)

explains that

Porat categorizes the information sector into the primary information sector and the
secondary information sector. The “primary information sector” workers are those who
are almost wholly concerned with creating or handling information, like scientists, writers,
librarians, etc. The “secondary information sector” workers are those who work mainly
on non-information items but whose work involve information work as a secondary
aspect. They are the workers in non-information firms and industries who produce
information for internal use in the production of agricultural or industrial (i.e. non-
information) goods.

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Porat’s definition has been widely adopted and the OECD in its studies uses this definition. Other

definitions of the information economy are variations of Porat’s or Machlup’s definition (Verzola

2005:para.10).

Today there is the possibility of imitating and sharing products that are knowledge-based because

they are different from physical goods. Certainly, there is a notion that information is not like

physical goods and property rights in information do not exactly parallel property rights in tangible

goods. Drahos (2004:139) explains well this distinction when he makes a comparison between

information and an apple. In his analysis, information exhibits non-rivalry in consumption. For

example, the rules of arithmetic can be used and reused endlessly. In contrast, once an apple is

eaten it is gone forever. Thus, according to him, it makes good economic sense to have a property

right over an apple orchard; without protection, anyone can literally steal the fruits of the farmer’s

labour.

However, property rights in information require a more complex analysis. Drahos (2004:140)

notes that the costs of excluding people from the use of the rules of arithmetic would be very high

in economic terms and in terms of basic human freedoms. This example may seem absurd, as no

one would seek to patent arithmetic. Yet patent claims on genetic sequences or computer software

come absurdly close to just this kind of scenario.

Perversely, society often treats rival (one-use) resources as if they were non-rival (uses natural

resources), while treating non-rival resources (IP) as if they were rival, making information scarce

(Icommons 2006:1). The reality is that property rights reflect a political and economic struggle

between actors with different interests. This fact explains why property rights are ignored in some

cases where they are appropriate (e.g. pollution and resource conservation), and too strictly

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enforced in other areas where they are actually inappropriate (digital information and certain

research techniques of biotechnology).

Hence, one could hypothesize that patented research techniques in biotechnology are non-rival

and not appropriate to promote innovation.

3.5 The Reality of Ownership and Management of IPRs in Biotechnology

The reality of ownership and management of IPRs in biotechnology is that both private and

public sector organizations display a culture of acquiring IP in order to commercialize it. The

expectations placed upon technology transfer offices and the metrics used to evaluate their

success make this apparent. As Bubela and Caulfield (2010:447-451) show, technology

transfer offices are increasingly pressured to advance and implement the commercialization

agenda of the organization to which they belong, especially in the life sciences, and are

rewarded for obtaining patents, granting licenses and creating spin-offs.

This model has a simple understanding of innovation: it is about researchers disclosing

promising inventions to technology transfer offices; technology transfer offices evaluating and

protecting the commercially promising ones; industrial partners or affiliated spin-offs

acquiring rights to the IP, normally on undisclosed terms; and technology transfer offices

occasionally receiving royalties or remuneration for commercialized research (Weigelt

2009:942). The industry perspective follows a similar process: research is basically outsourced

to academic partners that are sometimes given use or royalty rights to new technologies in

exchange for their services (ibid.).

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The following sections investigate this reality of ownership and management of IP in

biotechnology by discussing some trends that tend to dominate legal scholarship, and may be to

some extent consequences of this model that promotes the acquisition of IP towards

commercialization.

3.5.1 Patenting Research Techniques

Concerns with respect of patenting of research techniques and their impact on biotechnology

become prominent when one evaluates the challenges for a patent system that seeks to balance

adequate protection for the inventor with the need to maintain future innovation. In the area of

biotechnology, there can be IPRs on numerous research techniques and these may be owned by a

number of different actors (Hope 2004:47; Nottenburg et al. 2002:4).

Here it is important to clarify what is research technique is. With the exception of the United States

which has made some attempts to characterize the term “research tool” in biotechnology or the

term “research technique”, in the context of this thesis international patent law has not dealt

significantly with this concept (Thambisetty 2008:34). However, several reports that considered

the concerns with research techniques patents such as the NCB’s (2002) report The Ethics of

Patenting DNA; the Royal Society’s (2003) report Keeping Science Open: The Effects of

Intellectual Property Policy on the Conduct of Science; the Commission on Intellectual

Property Rights’ (CIPR 2002) report Integrating Intellectual Property Rights and Development

Policy.

According to Thomas, former Director of the NCB, increasingly research tools are being

patented and various negative consequences may arise from this. For her, patented research

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tools may increase the cost of doing research because these tools have to be licensed and there

are practical difficulties that arise with this licensing process (NCB 2003:12). Moreover, patent

holders may withhold licenses (ibid.). For Thomas, there are three key factors governing the

policy implications of patenting of research tools: 1) Do patents on research tools meet the

patentability criteria? 2) Do these patents adequately reward the inventor? 3) Is such patenting

in the public interest? Thomas suggests that the patenting activity in biotechnology and

genomics shows that patenting in these fields is being used not to protect a genuine invention,

but to safeguard investment and information (ibid.).

The NCB (2002:5.39) report identifies different ways in which patents covering genetic

sequences, whose primary function is a technique, might hinder innovation. These included

increased costs of research and impediments to research because in most situations licenses must

be negotiated. Possible issues with regard to exclusive licensing or the withholding of licenses

also tend to force up prices and impose difficulties in negotiating a number of royalties (“royalty

stacking”). The NCB report makes an important conclusion:

Patent claims amounting to routine discoveries with weakly demonstrated or

speculative uses will seldom deserve the status of patentable inventions; in fact, the
criterion for utility must be rigorously applied so that the grant of a patent more properly
reflects the inventor’s contribution. In general, the granting of patents that assert rights
over DNA sequences as research tools should be discouraged. (ibid.)

In the same vein, the CIPR (2003) in its report concluded that patenting of a single product or

service (such as a research tool) has potential to hinder innovation. The report recommends

that for the so-called developing countries limitations on the patenting of genes and exemptions

for research can possibly mitigate some of the problems of that patenting of research tools pose

to innovation.

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The USPTO has summarized concerns about patents restricting access to genetic research

techniques:

Many feel that by allowing genetic information to be patented, researchers will no

longer have free access to the information and materials necessary to perform biological
research. This issue of access to research tools relates to the ability of a patent holder
to exclude others from using the material. Further, if a single patent holder has a
proprietary position on a large number of nucleic acids, they may be in a position to
‘hold hostage’ future research and development effort. (Clark 2000:3)

A report made to the research arm National Academy of Sciences on Patenting of Research Tools

and Biomedical Innovation (Walsh et al. 2003; “Walsh study”), on the other hand, concluded that

the social costs of research tool patents in biomedicine do not outweigh the incentive benefits.

In fact, the study stated that there should be more patents on research tools (ibid.:17, 20).

Although the NCB affirmed that the granting of patents that assert rights over DNA sequences as

research tools should not be encouraged, it accepted that there was not enough evidence to assess

to what extent DNA sequence patents as a research technique are causing negative effects on

research (NCB 2002:5.39).

Legal cases from the United Sates show that issue of patentability of early-stage technologies

such as gene target identification, pathway analysis and platform technologies is controversial.

Novel gene patents have been limited in scope in University of California v. Eli Lilly (119 F.3d

1559, 43 USPQ2d, Fed. Cir. 1997) because of failure to disclose (disclosure requirement). In

this case, the court held that a patent application containing the sequences of a rat insulin cDNA

and a protocol on how to clone were invalid because the application failed in its disclosure and

claimed beyond the rat cDNA (ibid.).

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These legal disputes have shown that when patents on early-stage technologies are challenged,

they have not stood the test of validity regarding an adequate written description of the

invention. Hence, to some extent, one could conclude that the patent system works and it is a

matter of applying the criteria more rigorously at the granting office.

The USPTO did raise the bar for applicants in biotech through its Utility Examinations

Guidelines. These guidelines state that the utility has to be “well-established” to avoid rejection

and the invention must pass a two-prong test: 1) a Person Having Ordinary Skills In the Art

(PHOSITA) would immediately appreciate why the invention is useful based on its

characteristics; and 2) the utility is specific, substantial, and credible (MPEP § 2107).

Nevertheless, certain patents in biotechnology (e.g. in the area of stem cell research) are

creating new challenges (Section 4.4.1.2 will explain in more detail specific patent law and the

US Federal Circuit’s approach to biotechnology patenting). Patent offices have been granting

patents claiming DNA with narrower scope (claiming splice variants and SNPs) (Hopkins et

al. 2007:25).

One important aspect of research techniques is that an organization may have a patent over an end

product that may be a useful research technique for another organization. In addition, research

techniques have different uses. For instance, a DNA sequence that is protected under patent law

could provide a better understanding of the role of a gene in a disease and as part of a diagnostic

test (ALRC 2004:12.37). Research techniques are commercial end products for biotechnology

companies that have a focus on developing, manufacturing and supplying research techniques to

researchers (ibid.:12.38). These types of companies have a strong commercial interest in

recognition of IPRs over research techniques.

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According to Eisenberg (2002: 223):

Organisations that obtain a competitive advantage from proprietary research tools may
also be unwilling to make them freely available and may seek to limit access, restrict use,
or delay disclosure of research results.

In general, a research technique may be licensed through an exclusive or non-exclusive license.

The licensing of the Cohen-Boyer patents by Stanford University, for example, was subject to the

grant of multiple, non-exclusive licenses in return for minimal license fees. This strategy of

licensing proved to be very successful because users of the invention were inclined to obtain

licenses, which led to the broad distribution of the technology (Clark et al. 2002:3).

On the other hand, in US universities have used IP management strategies that include granting

an exclusive license to one biotechnology firm that will develop and apply the technique, and

make it available to other biotechnology companies through contracts. Examples of such firms

are those that “offer services such as the use of genomic array chips, procedures for producing a

large variety of candidate drug compounds, and use of proprietary cell culture or identification

techniques” (Barton 2002:121-122). This practice of exclusivity is suboptimal given the important

role of universities and their relevance for the OSI model (the OSI model has relevance to

universities too).

Moreover, in some circumstances a licensing strategy may include providing rights to use research

techniques with the purchase of products (ALRC 2004:12.42). The PCR licensing strategy often

involved: a) a biotechnology company having a license to manufacture and sell the Taq

polymerase (the enzyme); b) this company granting users limited and non-transferable rights to

use the enzyme for research purposes; and c) the license included a clause that obliged the use of

the enzyme in thermal cyclers purchased from a licensed supplier (ibid.).

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If one compares Stanford’s University successful strategy to license the Cohen-Boyer patents with

the PCR licensing strategy, PCR may not have been so widely accessible due to the fact that the

licensing was made more expensive than the licensing of the Cohen-Boyer technique. This is a

very important advantage of OSI.

There are also agreements that license the use of research techniques through “reach-through”

provisions. These provisions put the licensee in a position to forego any future IPRs as the first

patent-holder keeps ownership, license rights or royalties in relation to future discoveries.

According to NIH (1998):

In effect, this approach calls for payment in future intellectual property rights or
royalties on future products in lieu of cash … Recognizing that most academic users
will not discover anything of commercial value, the owner of the tool seeks to recover
a substantial profit in the rare case when a valuable discovery is made in order to cover
the costs of all the other, unprofitable transfers.

The NIH Working Group suggested that reach-through licensing agreements occur more

frequently in cases where a research technique may be used directly to produce another product

(e.g. a drug screening tool or a cell line that is used to produce an antibody), and less often in

relation to “more basic research tools that have a more remote relationship to commercial

products” (ibid.). For patent holders, these agreements are a good way to protect their investment.

In summary, the major concerns regarding patents on some research techniques relate to patents

over foundational research techniques because they could “pre-empt large areas of medical

research and lay down a legal barrier to the development of a broad category of products” (Barton

2002: 121-122). Barton also suggests that a similar result is likely in pharmaceutical

biotechnology because “there are so many broadly relevant patents; research builds on the use of

so many prior discoveries, and solid and clear title to a product is so important to the

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pharmaceutical industry” (ibid.). The OECD (2002:12) emphasizes that research tool patents can

have an impact on collaboration and sharing of materials between researchers because the terms

of licenses or material transfer agreements “can be such that they ultimately make collaboration

and communication with other researchers more difficult”.

3.5.2 Gene Patenting

Another counterargument for the justifications of a patent system relates to the fact that today,

with technology advances and IPRs, gene patenting is possible. There are different arguments in

favour gene patenting. Often one hears that because of gene patenting researchers are rewarded

for their discoveries and can use profits gained from patenting to further their research. Also, there

is the classical argument that investment is encouraged through the possibility of gaining a

monopoly by prohibiting competitors from making, using, or selling the invention without a

license. Other arguments are that wasteful duplication of effort is prevented, research is forced

into new and unexplored areas, and secrecy is reduced ensuring access to the new invention to all

researchers.

Studies have analysed the effects of gene patenting (Danish Council of Ethics 2004; NCB 2002;

Thambisetty 2002). At the request of the US Secretary’s Advisory Committee on Genetics,

Health, and Society (SACGHS), a team of faculty, students, and research staff from Duke

University’s Center for Public Genomics studied how patenting and licensing affected clinical

access to genetic testing. They focused the study on eight case studies of 10 clinical conditions

(breast and ovarian cancers, colon cancers, Alzheimer’s disease, cystic fibrosis, hearing loss,

hereditary hemochromatosis, long QT syndrome – a rare inborn heart condition – spinocerebellar

ataxia, Tay-Sachs disease and Canavan disease) (Cook-Deegan et al. 2010:1).

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The study reveals several harms that result from gene patents in the diagnostic arena and assists

in understanding biological IP and its application. The case studies and the SACGHS (2009)

report demonstrate a concern that fragmented ownership of the human genome will interfere with

the genomic analyses critical to such applications. The most concerning evidence is that scientists

will have difficulties gaining access to genomic information that facilitates the application of

multiplex genotyping, multiplex sequencing, and whole genome sequencing because of the

resultant genome “thicket” (Evans 2010:1).

The case studies and the SACGHS (2009) report also demonstrate a number of other harms that

have resulted from gene patents in the diagnostic arena, such as the situation when only one

laboratory is allowed to perform a test and an exclusive (or no) license is issued by a patent holder

(Evans 2010:1). Two other examples of harms are (ibid.):

1) Patient access to testing most likely will suffer when exclusive providers fail to contract
with insurers (such as state Medicaid programs), leaving patients without the option of
a given genetic test if it is recommended by their provider

2) Inability to obtain second-opinion testing and concerns over quality since powerful
means of quality assurance are not available in the context of a single provider.

Regarding medical results, the studies show that laboratories are not reporting medically relevant

test results for patented genes. Thus, when only one laboratory is allowed to engage in diagnostic

testing, the consequence is that clinicians have one choice on picking the laboratory; and it is “the

laboratory, rather than patients and providers, who defined the terms of testing” (Evans 2010:1;

SACGHS 2009).

The studies and the report conclude that gene patents and exclusivity are not necessary for the

development and availability of genetic diagnostic tests (Evans 2010:1; SACGHS 2009). In the

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case study of cystic fibrosis, it was documented that laboratories of Lap-Chee Tsui and Francis

Collins worked to secure broad licensing when they cloned the cystic fibrosis transmembrane

conductance regulator (CFTR gene). In consequence, today, there are dozens of laboratories –

private and public – that “compete on the basis of service, innovation, and quality” (ibid.).

One of the best examples of gene patents and controversy is the diagnostic procedure for

identifying the genes BRCA1 and BRCA 2 (genes associated with hereditary breast cancer).

Myriad Genetics obtained an exclusive license for this technology, which blocked testing by a

University of Pennsylvania researcher (ibid.). Much of the controversy has been in Europe and

the BRCA 2 patent was especially controversial given scientists in the United Kingdom did most

of the work and Myriad had free access to their sequence data.

In the United States, a District Court ruled Myriad Genetics’ BRCA gene patents unlawful on

March 30, 2010. Judge Robert Sweet charged that the BRCA gene patents held by the University

of Utah Research Foundation and exclusively licensed to Myriad “stifle research that could lead

to cures and limits women's options regarding their medical care” (Association for Molecular

Pathology et al. v. United States Patent and Trademark Office). This was reversed on appeal to

the Court of Appeals for the Federal Circuit (CAFC), and in a further decision the Supreme Court

asked the CAFC to reconsider in light of more recent jurisprudence, which it did in August 2012,

whereby it reaffirmed the patentability of isolated DNA sequences having disclosed utility

(Molecular Pathology et al. v United States Patent and Trademark Office [2012] USC).

Stiglitz and Sulston in an article in the Wall Street Journal (2010) provided arguments against

patenting of genes. For the authors gene patenting prevents the use of knowledge in ways that

would most benefit society and might even stop scientific progress:

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 Every scientific advance is built on those that came before it. There is still a great deal to
learn about our genes, particularly how they contribute to disease. Gene patents inhibit
access to the most basic information. As we move into an era where the sequencing of all
of an individual's genes is common and necessary for personalized medicine, free sharing
of information about genes will be vital to understanding the role of these variations in
human disease and other traits. In order to translate this information into medical
advancements, the basic data must be freely available to everyone to interpret and develop.
Our genetic makeup is far too complicated for a single entity to hold the keys to any given
gene and to be able to choose when, if ever, to share. Patents are also not necessary for
ensuring that genetic tests come to market. (ibid.:1)

The authors supported the plaintiffs in the controversial Myriad case (BRAC 1 and BRAC 2) and

revealed that Myriad is able to charge more than $3,000 because of their monopoly to perform

full diagnostic testing on patients in order to tell them whether they are at increased risk of

hereditary breast and ovarian cancer. Other labs have said they would be willing to perform the

test for a few hundred dollars, giving access to many women that currently cannot afford to be

tested. The social benefits of being able to access this type of testing are greater than any

monopoly:

Any marginal social benefits of patenting genes clearly do not measure up to the profound
costs of locking down knowledge. If, as a result of the refusal to grant a patent for genes,
there is a slight slowdown in private research expenditures, it can and should be made up
for by an increase in public expenditures. Like basic mathematical theorems, genes are an
example of “basic knowledge”—the kind of knowledge that typically cannot and should
not be patented. Had Alan Turing's mathematical insights been patented, the development
of the modern computer might have been greatly delayed. It's true that knowledge cannot
be produced without cost, but there is a proven alternative: government- and foundation-
supported research in universities and research laboratories. (ibid.:1)

Gene patenting is controversial, and although it may be legal according to some legal scholarship,

this thesis feels it is wrong as a matter of science.

3.5.3 The Patent Thickets and Anticommons Debate

The patent thickets and anticommons debate reveals further problems with patents and

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biotechnology. The term “patent thicket” refers to obstacles that new entrants to a market may

face when attempting to innovate, or competing within a technology space with existing IPRs.

Shapiro (2003:1) coined the most generally used definition of a thicket: “A dense web of

overlapping intellectual property rights that a company must hack its way through in order to

actually commercialize new technology.” Heller (1998) has described this situation as the

“tragedy of anticommons” because many owners have the right to exclude others from using a

resource that is scarce. The tragedy of the anticommons is the opposite of the tragedy of the

commons first described by Garret Hardin in his 1968 article. Hardin (1968) used the example of

the British commons to explain his theory.

In the tragedy of the commons a resource is overconsumed and there is a depletion of the resource

because too many people have the privilege to use the resource, and no one has a legal right to

exclude others from using it, whereas in the tragedy of the anticommons, the opposite occurs. A

resource is underused because too many owners hold rights of exclusion.

To describe this tragedy, Heller (1998:622,623,633) used the examples of the post-1989 Moscow

storefronts. Heller observed that in many Eastern European cities, following the fall of

Communism, there were many open-air kiosks, but also a lot of empty stores. Heller learnt that it

happened because many different agencies and private groups had rights over the use of store

space. It was very difficult (or even impossible) to negotiate for the use of that space. Although

the parts with ownership rights were losing money with the empty stores, and stores were in great

demand, their competing interests got in the way of the effective utilization of space.

Empirical evidence on the effects of anticommons or patent thickets in biotechnology is mixed.

Murray and Stern (2007) found only a modest anticommons effect in biomedicine biotechnology.

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Walsh et al. (2005) found that limited access to IP does not restrict biomedical research. The

authors conclude that the anticommons problem is manageable. Heller and Eisenberg (1998)

applied anticommons theory to the biomedical context, presenting the proliferation of small-scale

IPRs in biomedical research as an example of an anticommons tragedy. Yancey and Stewart

(2007:12) found some evidence of an anticommons perspective in agriculture.

Walsh et al. (2003) interviewed researchers in the biomedical field, questioning them about

whether their research had been affected by blocking patents. Two different situations were

identified. First, a problem can be caused by patents on research tools. Second, the development

of, or advance towards, a useful product or technique may involve trespassing on several patents

held by different parties (ibid.:5). In their findings there are some noteworthy points:

• Drug discovery has not been substantially impeded by these changes. There is little

evidence that university research and university diagnostic testing has been impeded by

concerns about patents on research tools.

• There are restrictions on the use of patented genetic diagnostics, which is an evidence

of patents interfering with university research and university diagnostic testing.

• There is evidence of delays associated with negotiating access to patented research

tools.

• In some areas patents over targets limit access and access to foundational discoveries.

• There are cases in which research is redirected to areas with more IP freedom.

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 • The vast majority of respondents say that there are no cases in which valuable research

projects were stopped because of IP problems relating to research inputs.

The study observed that firms and universities have been able to develop “working solutions”

such as taking licenses, inventing around patents, infringement (often informally invoking a

research exemption), developing and using public tools, and challenging patents in court. This

solution until now had allowed their research to proceed. In addition, changes in the institutional

environment, particularly new USPTO guidelines, active intervention by the NIH, and some shift

in the courts’ views towards research techniques patents appear to have further reduced the threat

of breakdown and access restrictions, although the environment remains uncertain (ibid.:5-8).

Rai (2001:16) observed that one feature of the biomedical research is that some of the paths

required to fully exploit the potential of upstream inventions involve complex research and that

access to a number of patents in order to commercialize an invention may be necessary. In

some cases the access is restricted, and therefore there is a detrimental effect on subsequent

downstream research (ibid.). According to Heller and Eisenberg (1998:698), this happens

because the nature of an IP is to exclude others, so there will be some “routine under-use”. One

may argue that this is the cost of a system that benefits society, however in inventions that

comprise foundational discoveries, there is a possibility that the system could be more optimal

in its aim to promote innovation.

To illustrate fragmented ownership, Murray and Stern (2007) documented evidence for a modest

anticommons effect in scientific innovation in general. Their study concluded that IPRs have an

impact on the diffusion of scientific knowledge and that the scale and distribution of an

anticommons effect among different groups of researchers has important implications for policy

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making (to the extent that this issue should be used to animate and justify changes in patent policy)

(ibid.:34-35).

Yancey and Stewart (2007:12; see also Yancey 2011:chapter 2) offer examples of patent thickets

and anticommons in agricultural biotechnology, citing broad patents on two plant

transformation techniques which are considered to be two of the most reliable and utilized

techniques. One is Monsanto’s patent on the process of transforming plants through the use of

Agrobacterium tumefaciens. According to the authors, the patent is claimed very broadly and

it could exclude all plant transformation processes that use any engineered bacteria to transfer

foreign DNA into plant genomes (Yancey 2011:7). The other is Cornell University’s biolistic-

mediated transformation method. Cornell produced this research technique and licensed it in

exclusive terms to DuPont, who has blocked competitors from accessing the technology (ibid.).

In the case of patenting a single genomic sequence such as an SNP, patents that overlap another

patent prohibit downstream product development and commercialization because of the high costs

of royalties owed to the patent owners. This is a strong argument against patenting in biomedical

and genomics research. The SNP Consortium avoided a potential tragedy of the anticommons

with respect to SNP data because of collaboration and coordination. It is a notable example and a

sign of cooperation that suggests that open innovation strategies, even in the most proprietary

industries, might have a place (even if complementary to a proprietary business strategy).

Hope (2004:43-46) made an analysis of the anticommons tragedy and whether it was, in fact,

occurring in biotechnology. According to her, the preconditions for anticommons tragedy exist,

but it is fundamentally challenging to perform rigorous studies of bargaining breakdown in

technology licensing markets (Hope 2004:42). For instance, companies normally do not keep

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records of projects that were stopped, nor of the causes for stopping them – even if such records

did exist, these reasons are complex and difficult to explain by a single consideration such as

difficulty in accessing IP (ibid.). Moreover, researchers’ practical difficulties may exist because

some relevant information is commercially valuable and therefore kept in secret (ibid.).

Nevertheless, empirical studies have been attempted (some of which have been referred to in this

section) and imply that the problem of bargaining failure in the market for IP licenses is possible

(ibid.).

Hope concludes that there is insufficient evidence to prove a tragedy of anticommons in the

biomedicine sector. However, in a broader sense, Hope believes that current IP law and policy

hinders the contribution of biotechnology R&D to improved public global health (ibid.). This

conclusion relies on the fact that the high volume of IPRs upstream can inhibit social innovation

farther downstream in the path of research and product development (Hope 2008:40).

Negotiations can break down in any field of activity, however in science this situation is

especially undesirable. Shapiro (2003:1) compares science to a pyramid, explaining that it can

be very tall, especially if the foundation is strong and broad. However, due to patents, any

scientist that would like to scale this pyramid in order to place a new block on the top will have

to gain permission from each researcher who “previously placed a block in the pyramid,

perhaps paying a royalty or tax to gain such permission” (ibid.). To demonstrate this

predicament, the example of golden rice, a genetically engineered rice variety developed using

approximately 70 different patented technologies (including process patents relevant to

creation of the technology and product patents embodied in the rice itself), is often cited (Hope

2004:48; Nottenburg et al. 2002:4; Srinivas 2002:321).

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Shapiro (2003:3) explains that those who seek to use new technologies must obtain licenses from

multiple patent holders, and at worst this may discourage them entirely from engaging in

important areas of scientific investigation (ibid.). These patent thickets can establish many barriers

to scientists such as biomedical researchers and plant breeders (ibid.:29), and allegedly some of

these patents (in the field of biotechnology and in general) have the sole purpose of blocking

research by rivals (ibid.).

In some areas of biotechnology “inventing around” (developing different ways to achieve similar

functions using a different means and not violating the claims of the original patent) is difficult,

so patents can have a blocking effect. For example, there is little inventing around in the context

of gene patents (see Dreyfuss 2010:26 and Dreyfuss and Evans 2011:122). Also, there is a

tendency for close substitutes to existing for many-patented biotech inventions, including drugs,

and consequently patents tend to be more valuable in the life sciences than in most other fields.

Research in life sciences is based on cumulative innovation, and previous findings are essential to

further scientific discovery (Merges 2001; Scotchmer 1991). Shapiro (2003:3) explains that often

researchers do not know what technology is available so to ensure freedom to operate (indeed,

freedom to cooperate, in the context of academic collaboration), one must search the patent

literature to determine which relevant technologies are proprietary, and then try either to

circumvent owned inventions (which, as mentioned, tends to be difficult in the life sciences), or

else negotiate potentially costly and highly restrictive licensing and cross-licensing agreements to

access them (ibid.). The transaction costs involved, in both time and money, challenge the

argument that patents exhaust the possibilities in terms of regulatory and other approaches for

incentivising innovation (ibid.). Thus, according to Shapiro, patenting cumulative innovations can

have the perverse effect of stifling, rather than encouraging, innovation (ibid.).

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Arguably nearly all inventions are cumulative. Cumulative innovation happens when new ideas

are built upon old ones. This concept received significant attention in the literature after Green

and Scotchmer (1995) introduced a two-stage innovation model in which the second innovation

is enabled or builds upon the first. Biotechnology is a prominent example of a field dominated

by cumulative innovation.

For Scotchmer (2006:132) there are three types of cumulative innovations. The first type includes

inventions that are not possible without a prior initial invention (e.g. when the innovation is basic

research such as a gene target) and the later stage innovation is applied research (a new

pharmaceutical product). These types of innovations lead to many follow-on applications. The

second type includes innovations that require inputs from many first-stage innovations; these are

the second-generation innovations (e.g. biotechnology research techniques such as PCR). The

third type includes innovations that successfully improve a prior innovation.

In the recent US CAFC decision in Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc.

[2012], Judge Rader argued that the tragedy of the anticommons is basically an academic myth.

His opinion was based on two arguments. First, there is no empirical research to verify such a

tragedy as surveys of academic researchers have revealed a very modest delay of research

projects and none abandoned projects due to others’ patents. According to Rader, patents do

not impede technological advance because “experiments advancing technology rarely, if ever,

generate commercial value” (ibid.:27). For Rader, owners of patents have very little incentive

to inhibit research and “even if a patent owner wanted to sue or license potential researchers,

experiments do not produce income or a source of damages” (ibid.).

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Second, Judge Rader argues that the character of technological advance has changed in the

modern age of technology. He explains that:

The era when the Bell Labs or some other tech center could hire the most promising
engineers and essentially invent everything for the world has passed. With the vast
specialization of all fields of research, advances in technology require great
cooperation. ([2012], CAFC)

Rader argues that patents are tools for research and experimentation because the system

encourages publication and sharing of research results. In his view, researchers will cooperate

to produce a new product or a new direction in biotechnology, and the patent system has the

potential to serve as an information tool to bring researchers their incremental advances

together “to achieve the next generation of progress in some tiny corner of human progress”

(ibid.:28).

For Adelman (2005, 2008), the discourse of those who defend an anticommons perspective

gives little consideration to “how the practical limits, specific research tools, and technical

details of biomedical science shape patent strategy and incentives”. In addition, economic data

are similarly missing from the debate, although recent studies such as Walsh et al. (2003) are

beginning to have an impact. Adelman (2005:1030) argues that the uncertainty and complexity

of biomedical science give insights to explain some important trends in biotech patenting,

including recent shifts towards free public access to important classes of research tools. He

argues that:

The standard finite commons model is not representative of the essentially unbounded
opportunities in biotech research that exist at this early stage of development. Further,
once the premise of a finite commons is abandoned, the potential for patent anticommons
to emerge largely disappears and patents on most research tools pose less of a threat than

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 predicted. (ibid.)

Adelman identifies two central classes of biotech research tools – common method and

problem-specific – but concludes that only patents on common method tools pose potentially

significant risks to biomedical innovation. However, he argues that factors such as the

existence of non-rivalrous uses have the potential to reduce the likelihood that access will be

limited (ibid.).

Some arguments discussed in this chapter lead to the conclusion that anticommons or patent

thickets will retard innovation, whereas, on the other hand, others argue that there are no

empirical studies to verify such a tragedy and that in fact empirical studies show that these

threats are generally modest in biotechnology. The former argument, in essence, advocates a

need to anticipate rather than react, and the latter advocates that the current patent system has

enough mechanisms to react (deal with any innovation holdups). The latter argument does not

take into consideration the costs of the system such as a cost-benefit analysis (e.g. the cost of

litigation) and potential bottlenecks to research techniques. Yet, both views support OSI. Even

if it is assumed that the anticommons debate is “an academic myth”, this does not preclude OSI

models because OSI offers a win–win situation: OSI can function within the current patent

system and its prospect mechanisms; if properly crafted and managed an OSI strategy has the

capacity to use patents to further encourage publication and sharing of research results (what

Judge Rader called “patents as tools for research and experimentation”).

3.5.4 Research Exemption

Within the framework of this critique of the current IPR-dependent business models prevailing

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within the industry, it is essential to analyse the argument (or counterargument) that although

the system is not perfect, there are some safeguards that can be adopted in order to permit the

ongoing use of technologies. Two examples of safeguards are the research exemption and

compulsory licensing.

Research exemptions may lower the impact of the suboptimal effects of the patent system.

Hence, in the context of a more rigorous treatment of “research techniques”, the concept of

research exemption (or experimental use exemption) requires particular attention as it may

permit the ongoing use of technologies developed with public funds for non-commercial

research. A further analysis of the scope of the research exception is useful in order to map its

impact.

Rai (2003:1041) has argued for an expanded research exemption to patent infringement to

mitigate further the adverse effects of patent anticommons. Dreyfuss (2003:1) suggested the

use of research exemption tied to a commitment that any inventions generated by the research

would not be patented. The idea is that a university or non-profit research institute would be

immune from prosecution for using patented materials in situations where the terms of

availability were not reasonable and when research organizations and universities agree not to

patent results of the research (Nelson 2003a:1).

Currently, Article 30 of TRIPS (research exemption) permits exceptions to the exclusive rights of

the patent holder providing it is limited, does not prejudice the patent holder's legitimate interests,

or conflict with its normal exploitation of the patent. Thus, some countries allow generic drugs

manufacturers to use a patented invention without the patent owner’s permission in order to obtain

marketing approval.

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Nevertheless, TRIPS does not explicitly engage with the possibility of a research use exemption.

This leads to interpretations, and in fact, in order to evaluate the broader effect of Article 30, the

standard legal practice refers to judicial decisions that have interpreted the provision.

3.5.4.1 The Canadian Patent Act and the WTO Dispute

A dispute involving the Canadian Patent Act is one of the most important cases that discusses

research exemption. This is the only WTO decision on research exemption and it refers to a

dispute over the provision found in Canada’s Patent Act (Section 55.2(1)). Subsection 55.2 (1) of

the Canadian Patent Act states that:

It is not an infringement of a patent for any person to make, construct, use or sell the
patented invention solely for uses reasonably related to the development and submission
of information required under any law of Canada, a province or a country other than
Canada that regulates the manufacture, construction, use or sale of any product.

The EU challenged this aspect of the Canadian Patent Act at the WTO, but it was settled that:

Under the regulatory review exception, potential competitors of a patent owner are
permitted to use the patented invention, without the authorization of the patent owner
during the term of the patent, for the purposes of obtaining government marketing
approval, so that they will have regulatory permission to sell in competition with the patent
owner by the date on which the patent expires. (WTO 2000, Dispute DS 114)

Also, this dispute repealed subsection 55.2(2) of the Canadian Patent Act, concerning the

“stockpiling” provisions. Subsection 55.2(2) allowed a person (mainly generic manufacturers) to

manufacture and stockpile a generic version of a drug six months before the relevant patent

expired. This possibility no longer exists because in DS 114 the EU challenged the so-called

stockpiling exception. The EU argued that it was inconsistent with Article 28.1 of TRIPS and not

covered by the exception in Article 30 of that Agreement. Under the stockpiling exception,

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competitors are allowed to manufacture and stockpile patented goods during a certain period

before the patent expires, but the goods cannot be sold until after the patent expires. The panel

considered that, unlike the regulatory review exception, the stockpiling exception constituted a

substantial curtailment of the exclusionary rights required to be granted to patent owners under

Article 28.1, to such an extent that it could not be considered to be a limited exception within the

meaning of Article 30.

One can draw a few conclusions from this decision. First, there are three separate and independent

criteria that a research exemption must satisfy:

1. It must be limited.

2. It must not unreasonably conflict with the normal exploitation of the patent.

3. It must not unreasonably prejudice the legitimate interests of the patent owner, taking

account of the legitimate interests of third parties.

The WTO panel explained that a research exemption must be limited in accordance with the

judgment of “the extent to which the exclusive rights of the patent owner have been curtailed”

(DS 114 para.7.30). The focus must be on “which legal rights have been curtailed, rather than the

size or extent of economic impact” (ibid.). Regarding the unreasonable conflict with the normal

exploitation of the patent, the decision of the panel elucidates that “normal exploitation means the

exclusion of all forms of competition that could detract significantly from the economic returns

anticipated from a patent’s grant of market exclusivity” (DS 114 para.755).

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To explain unreasonable prejudice to the legitimate interests of the patent owner and account of

the legitimate interests of third parties, the panel made reference to the experimental use exception:

To make sense of the term “legitimate interests” in this context, that term must be defined
in the way that it is often used in legal discourse – as a normative claim calling for
protection of interests that are “justifiable” in the sense that they are supported by relevant
public policies or other social norms … We may take as an illustration one of the most
widely adopted Article 30-type exceptions in national patent laws – the exception under
which use of the patented product for scientific experimentation, during the term of the
patent and without consent, is not an infringement. It is often argued that this exception is
based on the notion that a key public policy purpose underlying patent laws is to facilitate
the dissemination and advancement of technical knowledge and that allowing the patent
owner to prevent experimental use during the term of the patent would frustrate part of the
purpose of the requirement that the nature of the invention be disclosed to the public. To
the contrary, the argument concludes, under the policy of the patent laws, both society and
the scientist have a “legitimate interest” in using the patent disclosure to support the
advance of science and technology. While the Panel draws no conclusion about the
correctness of any such national exceptions in terms of Article 30 of the TRIPS
Agreement, it does adopt the general meaning of the term “legitimate interests” contained
in legal analysis of this type. (DS 114 para.7.69)

Hence, any patent’s right restriction could occur under TRIPS if it is limited; if it does not reduce

the patent’s economic benefit significantly and is for the legitimate purpose of public policy.

Research exemptions have a number of effects, including:

• To subsidise collection of information to enable prosecution of a patentee that may have

acquired an invalid patent

• To subsidise extension or improvement to the invention within the same technological

trajectory

• To subsidise application or adaptation of the invention within a different technological

trajectory

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 • To subsidise the process of inventing around the patent

• To subsidise expansion of knowledge of the user more generally. (OECD 2006:13)

3.5.4.2 Research Exemption in the EU

The research exemption is interpreted in different ways in different jurisdictions. In the EU, the

courts have created decisions that add different interpretations to statutory provisions. Most EU

countries have statutory exemptions that implement Article 27(b) of the Community Patent

Convention (CPC) that refers to research exemption. Article 43 states that “the rights conferred

by a Community patent shall not extend to: … (b) acts done for experimental purposes relating to

the subject-matter of the patented invention”.

In Germany, for example, the courts have taken a “very liberal” approach to the experimental use

exemption (ACIP 2004a:40). Two decisions of the German Supreme Court in Klinische Versuche

I ([1997] RPC 623) and Klinische Versuche II ([1998] RPC 423) created a position in which

“experiments or trials were permitted on a patented substance … both to test its claimed properties

and to test for indications different from those claimed, insofar as the experiments were directed

to the substance itself” (ACIP 2004:4). The Constitutional Court of Germany in 2000 concluded

that patent owners had to “accept such limitations on their rights in view of the development of

the state of the art and the public interest” (ibid.).

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 3.5.4.3 The US Narrow Perspective

The US case law recognizes the research exemption, but it is limited because of a number high-

profile decisions (e.g. Roche Products Inc. v. Bolar and Madey v. Duke University).

In Roche Products Inc. v. Bolar, Bolar used a patented chemical in its experiments of a generic

product in order to obtain FDA approval and argued that the use of the patented product was not

an infringement under the experimental use exception to the patent law. The CAFC rejected

Bolar’s contention holding that “the experimental use defence could not be interpreted to allow

a violation of the patent laws in the guise of scientific inquiry when that inquiry has definite,

cognizable and not insubstantial commercial purposes”. The court found that the exemption was

limited to experiments “for amusement, to satisfy idle curiosity, or for strictly philosophical

inquiry”, and did not extend to use for business reasons. The law was subsequently changed to

provide the so-called Bolar (regulatory review) exemption.

The CAFC sustained the narrow interpretation of research exemption of Roche v. Bolar in the

decision of Madey v. Duke. The court confirmed the earlier case, making clear that the

experimental use defence was narrow. Madey v. Duke University raised concerns as it gave the

same restrictive interpretation of the common law “experimental use exception” for researchers

(64 USQP 2d 1737 Federal Circuit 2002). The decision restricted experimental use to actions

performed “for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry”. The

court ruled that universities are in the business of providing education and their activities are

conducted with a commercial aim, therefore research activities conducted by private universities

do not generally fall under an experimental use exception (Madey, 307 F.3d at 1362). It is

important to say that state universities are largely immune under the US Constitution from patent

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infringement suits. Duke University is private and, according to CAFC, a business engaged in

business activity when it infringed Madey’s patent.

Furthermore, in 2005 the US Supreme Court held in Merck KGaA v. Integra Lifesciences Ltd. that

the use of patented compounds in preclinical studies is protected under a federal law known as the

“FDA safe harbor” (35 USC §271(e)(1)). The argument is that there is protection if there is a

reasonable basis to believe that the compound tested could be the subject of an FDA submission

and if the experiments will produce the types of information relevant to an Investigational New

Drug or New Drug Application. In this case, the Court refused to object to the CAFC’s conclusion

that the exemption “does not globally embrace all experimental activity that at some point, it

attenuated, may lead to an FDA approval process”. The Court held that:

Basic scientific research on a particular compound, performed without the intent to

develop a particular drug or a reasonable belief that the compound will cause the sort of
physiological effect the researcher intends to induce, is surely not “reasonably related to
the development and submission of information” to the FDA. It does not follow from this,
however, that §271(e)(1)’s exemption from infringement categorically excludes either (1)
experimentation on drugs that are not ultimately the subject of an FDA submission or (2)
use of patented compounds in experiments that are not ultimately submitted to the FDA.
Under certain conditions, we think the exemption is sufficiently broad to protect the use
of patented compounds in both situations.

So far, although there is the argument that the research exemption based in legislation or in court

decisions may be a way to mitigate some suboptimal features of the patent system, the above

discussion leads to the conclusion that there is a wide variation in the exemptions and

interpretations that allow for the use of patented inventions (either for research purposes or for the

purposes of gaining regulatory approval).

Moreover, a research exemption may be an effective mechanism to minimize the chance that

patents will adversely affect future research; however there is not sufficient empirical data at this

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stage to demonstrate that the research exemption would be more effective than any other

alternative strategy. Alternative strategies for the management of IPRs such as open collaborative

licensing may coexist with research exemptions and, in fact, there is no reason why they should

not. The strongest argument may therefore be that countries should have or should introduce

statutory exemptions with a broad scope.

3.5.5 Compulsory Licensing

Strictly speaking, compulsory licensing is not an essential element for OSI; however similar to

the research exemption, it is a tool that can be useful to permit the use of patented technologies,

and deserves further analysis in order to map its impact within the current patent system. A

monopoly, or the power to exclude others from using a patented technology, is not absolute, as it

is possible to subject IPRs to a compulsory license. Article 31 of TRIPS provides for states to

grant a compulsory license where efforts have been unsuccessful to obtain one on reasonable

commercial terms.

The compulsory license is an authorization that a country can issue to a third party for the use,

without the consent of the right owner, of a patent or other IPR. Importantly, such a license may

be subjected to time restrictions and other conditions (e.g. the payment of royalties to the right

holder). A government can also find it necessary to issue a compulsory license to use a patented

invention for non-commercial purposes, either by itself or through a subcontractor.

Although misinformed government officials and industry lobbyists say that the WTO rules on

compulsory licensing are strict, this is not true as they are quite liberal in terms of the grounds for

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granting compulsory licenses. There are a number of precedents for the use of compulsory

licenses, in both developed and developing economies.

3.5.5.1 European Court of Justice Decision in IMS Health v. NBC

The European Court of Justice in IMS Health v. NBC issued a preliminary ruling on compulsory

licensing of IPRs under European competition law. It held that under certain circumstances an

obligation to license an IPR exists. The four conditions established were:

1) The IPR should constitute, upstream, an indispensable factor in the downstream

supply of a (secondary) product.

2) The potential licensee should intend to produce new goods or services not offered

by the owner of the right, and for which there is a potential consumer demand.

3) The refusal should not be justified by objective reasons.

4) Any refusal should be of such a nature that it reserves for the owner of the right the

market for the provision of the product, by eliminating all competition on that market.

3.5.5.2 Regulation (EC) No. 816/20066

Regulation (EC) No. 816/2006 of the European Parliament handles the compulsory licensing

of patents relating to the manufacture of pharmaceutical products for export to countries with

public health problems and sets out some requirements and conditions for issuing compulsory

licensing (according to the WHO’s August 30, 2003, decision on the export of medicines to

countries that lack sufficient manufacturing capacity). The requirements are:

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 1) There are no limits on the scope of diseases. It extends to all medicinal products as
defined in Article 1(2) of Directive 2001/83/EC on medicinal products for human use,
active ingredients and diagnostic kits ex vivo.
2) The compulsory licenses are mandatory: “the Member States shall grant a
compulsory license to any person making an application in accordance with Article 6
and subject to the conditions set out in Articles 6 to 10”.
3) Prior negotiation with right owners is waived “in situations of national emergency
or other circumstances of extreme urgency or in cases of public non-commercial.” In
these cases, “the remuneration shall be a maximum of 4 % of the total price to be paid
by the importing country”. In other cases, remuneration may consider “humanitarian or
non-commercial circumstances relating to the issue of the license.”
4) The “safety and efficacy of medicinal products” may be evaluated through evaluation
of “the scientific opinion procedure as provided for under Article 58 of Regulation (EC)
No 726/2004, or . . . any similar procedures under national law, such as scientific
opinions or export certificates intended exclusively for markets outside the
Community”.
5) In Article 18.2, when compulsory licenses to data are issued under this regulation,
EU “protection periods” for test data “shall not apply”. This waiver of data exclusivity
for a case involving a compulsory license is quite important. Note that the remuneration
for the patent is the sole remuneration in such cases.
(EC No. 816/20066)

3.5.5.3 United States

The US Federal Trade Commission (FTC) in 2002 ordered a compulsory cross-license of the

“immunex tumor necrosis factor” (TNF) patent to Serono, including the “freedom to practice in

the research, development, manufacture, use, import, export, distribution and sale of TNFbp-I

Products and certain glycosylated and nonglycosylated fragments, derivatives and analogues

thereof in the United States” (see FTC 2002). The FTC also ordered in 2005 a compulsory license

of Guidant’s IP surrounding the RX delivery system for Drug-Eluting Stents (DES) as a condition

of Guidant’s acquisition by either Johnson & Johnson or Boston Scientific (see FTC 2006).

The justifications for these orders are potential violations of federal antitrust laws – specifically

section 7 of the Clayton Act and section 5 of the FTC. The other justification is to improve

competition. Jeffrey Schmidt, Director of the FTC’s Bureau of Competition, explaining the

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second compulsory license, makes the argument that “the order protects competition and

consumers whose very lives may depend on their ability to obtain treatment with these devices”

(FTC 2006).

3.6 The Evolution of IPRs in Biotechnology and the Regulatory Space

This chapter has so far provided a context and sketched a cursory outline of the changing

regulatory basis of biotechnology and IPRs. The aim has been to ascertain more clearly the

extent that biotechnology regulatory activities in the context of IPRs have evolved. The

analysis has drawn on knowledge of the field, a review of relevant documentary sources (laws,

rules, guidelines and so forth), and the international legal and literature on biotechnology and

IP. Presenting a fully detailed, exhaustive regulatory space analysis was not possible. This

chapter has instead concentrated on presenting major findings, conclusions and reflections.

From this perspective, the chapter has looked at the interrelated features of the regulation of

biotechnology and IPRs. Firstly, it has explored how IPRs are justified, and secondly it has

outlined the nature of the strategies and resources employed by the actors in the field of

biotechnology. In doing so the chapter has to some extent mapped the power, status, roles and

interrelationships of the actors that regulate IPRs and biotechnology.

At international level, the main actors are the governments that are present in the debates and/or

negotiations of the WTO, WHO and WIPO. It is true that some of these organizations do not

enjoy any formal regulatory or enforcement power, but they are responsible for coordination

and leadership in the area.

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At the national level, different bodies such as national patent offices, food and drug regulatory

bodies, courts, and legislatures create regulations in biotechnology, whether through creating

new regulations, setting standards, issuing guidance, monitoring compliance, enforcing the law

or otherwise. There is strong support for the view that these bodies are influential whether via

formal law-making, or through informal prestige, power, size, organizational capacity, or

active participation in issuing documents or reports.

In addition to assessing the formal actors, it is important to analyse how far and through what

methods, patterns or networks any other informal, unofficial or hidden actors perform a

governance role in respect of biotechnology and IPRs. In this the empirical work of this

research is significant as it analyses the interactions between stakeholders.

The research undertaken in this chapter identified two layers of informal actors. The first layer

comprises industry associations and funding bodies which have a powerful influence in the

space of biotechnology and IPRs. The second layer comprises NGOs and academics.

Publicly funded research councils and government departments responsible for funding

biotechnology activities have the power to determine how research is conducted and in this

they influence the perceptions as to how regulators should regulate biotechnology and IP.

Industry associations exert considerable influence over biotechnology and IPR policy. These

bodies typically are funded by pharmaceutical and biotechnology corporations and have status

and authority. They possess considerable regulatory space resources, especially information,

expertise and wealth. For example, the pharmaceutical lobby is particularly strong because of

its economic power, its well-connectedness, and its particular unity in the preferences it puts

forward. On many occasions during FTA negotiations the USTR’s position is one of absolute

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inflexibility when it came to IPRs – the US government position has become highly reliant on

the lobbying of the pharmaceutical industry (see Mathews 2002).

Mathews (2002:17) explains that at the beginning of the Uruguay round of the General

Agreement on Tariffs and Trade negotiations in 1986, not many individuals in the USTR were

aware of IP, and the strong lobbying activity from industry, mainly in the United States, planted

the seeds of linking IP protection to trade in the multilateral context. Indeed, the copyright and

patent business groups drove the policies related to trade and IP in the 1980s and 1990s, with

the USTR conducting the diplomacy on their behalf (Ryan 1998:8). Those two business groups

were the most active in lobbying because they were in sectors that had relatively low entry

barriers and as a result elevated exposure to piracy (see Mathews 2002). The key strategy of

these actors is advocacy, mostly through courting media attention and lobbying policy makers

and lawmakers.

NGOs and academics have a less powerful influence and form the second layer. Mathews

(2011) explains that during the implementation phase of TRIPS, NGOs began to play a much

more significant role in the debate over IPRs. Indeed, the influence of NGOs and social

movements has grown in the area of IPRs, highlighting “concerns about the impact of

intellectual property rights on developing countries and engaging with intellectual property-

related policy-making and norm-setting activities in multilateral institutions to an extent not

seen previously” (ibid.:221). NGO engagement has covered different issues and specifically it

has played an important role in contributing to the debate on policy-making and norm- setting

activities of the TRIPS Council, Convention for the Protection New Varieties of Plants, Food

and Agriculture Organization, the CBD Conference of the Parties, WIPO on access and

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ownership to plant varieties, genetic resources and traditional knowledge, and the WIPO

Development Agenda (ibid.).

NGO strategy in order to influence IP-related policy involves engaging in conventional forms

of advocacy and lobbying of developing-country delegates to multilateral institutions

(Mathews 2011:222). This process is often informal, i.e. NGOs individually interact with

delegates of developing countries mainly (and their counterparts in national government

departments in national capitals) who are often keen on collecting different inputs to make

decisions. NGOs harness public opinion in developed countries and influence the media and

public opinion. They also provide support to developing countries’ negotiators. For example,

developing-country delegates are often replaced and new people join national missions all the

time who may well know nothing about IPRs; therefore NGOs help these new individual with

technical expertise (ibid.:223). Mathews makes clear that international NGOs are very

important for enhancing the capacity of developing countries to negotiate, “by raising

awareness of the significance of intellectual property issues when delegates first arrive and,

after that, by providing advice and technical expertise to keep delegates informed”.

3.7 Conclusion

The chapter has analysed how the regulatory arrangements and rules governing biotechnology

and IPRs evolved, were negotiated, renegotiated and reshaped from the 1980s until the present

day. The intention was to utilize Hancher and Moran’s conceptual lens to test whether or not

OSI is feasible by understanding the international TRIPS and post-TRIPS scenario and developing

a critique of the current IP-dependent business models prevailing within the biotechnology

industry. To frame the examination, the mobilization of the regulatory space concept focused

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on two interrelated aspects of this process: 1) how a regulatory mandate for the protection of

IPRs on a global scale (TRIPS) was initiated, debated and developed by key actors in the

process; and 2) the nature of the strategies and resources utilized by these actors throughout

the process.

Overall, the most important revelation from the regulatory space analysis is that the regulatory

changes the thesis investigates developed rapidly in advance of international developments in

regulatory oversight. This realignment did not emerge in a vacuum and regulatory

developments at the global level have been driven by the implicit influence of copyright,

patents business groups and developed economies. However, this thesis recognizes that

recently we have seen the emergence of defiance, led by NGOs. This offers considerable

support to developing countries to balance the weight of political backing of developed

economies for the establishment of global IPRs. Hence, this chapter argues that, contrary to

some recognized theories, certain forms of regulatory capture can be used to advance public,

rather than private, goals.

Moreover, the influence of NGOs is having a positive effect on the process of diplomacy

regarding IPRs and human rights and access to medicines issues. A confluence of factors may

create circumstances under which private entities with strong regulatory capture may change

their private agendas in order to change their public image. Private companies can use OSI

strategies to improve the perception the public has of their business.

The research findings outlined in this chapter have also emphasized the pros and cons of the

patent system and the reality of ownership and management of IP. A review of the literature,

legislation, legal cases and empirical work demonstrates that the subject remains controversial.

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The explanation for this can be found in the conflicting evidence from a range of sources that

either indicates that the patent system works well or that the patent system is problematic. This

chapter has identified the key trends as an attempt to stimulate a comprehensive debate about the

justifications for a patent system and the counterarguments.

Although the empirical evidence is often not conclusive, this chapter has provided at least some

support for an incentive effect of patents and also identified the shortcomings of the current

system, especially in relation to publicly funded research, pro-poor innovation such as in the

area of neglected diseases, and academic research. Furthermore, the evolution of IPRs and the

regulatory space analysis shows that the regulation of biotechnology and IPRs did not emerge

in a vacuum and that regulatory developments were influenced by different players.

Thus, mapping the regulatory space of IPRs and biotechnology is a revealing analytical tool

that helps this thesis unpack and understand better the complexities of biotechnology

governance, how the existing framework applies to biotech, and its strengths and weaknesses.

This serves as invaluable background for a study of OSI and the case of Brazil to inform

formulate specific policy recommendations for improvement in the sector (e.g. OSI policies).

The analysis and conclusions presented here are an important part of our review of the

governance framework surrounding biotech. Chapter 4 will further apply Hancher and Moran’s

methodology and further survey debate about biotech regulation and the current IP regime.

In relation to this thesis’s central research question, it may be hypothesized that the prevailing

patent management strategies are not optimal in certain circumstances. There is evidence to

support the position that Brazil needs to understand how to formulate alternatives to help the

biotech sector as a whole in the long term. Before studying OSI per se as an alternative and the

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case of Brazil, the next chapter will investigate how IPRs evolved at international level and the

consequences of this shaping and reshaping of IPRs. This analysis is important to understand

why issues with patents exist in the first place.

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 4. Why the Current Patent System Is Suboptimal

4.1 Introduction

The previous chapter identified controversial issues that suggest the patent system is

suboptimal. Nevertheless, in order to critique the current IPR system and investigate the

feasibility and desirability of new ways to manage IPRs it is essential to understand why these

issues exist in the first place. One conclusion could be that this has happened because the reality

of ownership and management of IPRs in biotechnology confirms a dominant culture of

acquiring IP in order to commercialize it. However, this explanation is not enough per se.

This cahpter examines how the industry captures regulators and whether or not the shaping and

reshaping of IPRs has developed in an impartial, informed and objective manner. This will be

useful in understanding some deeper reasons for the dominant culture of acquiring IP in order

to commercialize it, and therefore the reasons why suboptimal issues exist in the patent system.

It is important to note that there is an existing scholarship applying public choice theory to

patent law, and generally scholars agree that the conditions of public choice theory are met in

the patent framework. They tend to evoke negative images of private interests applying

disproportionate influence on government actions to advance their own agendas at the cost of

the public interest.

Nevertheless, this chapter offers a different perspective which takes the idea of capture as a

starting point and frames the main issues raised in patent law in terms of influences that interact

within Hancher and Moran’s concept of regulatory space. The analysis debates a commonly

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accepted wisdom that certain forms of regulatory capture may be used to advance public, rather

than private, goals.

4.2 Influences in Shaping and Reshaping IPRs: From Regulatory Capture to

Regulatory Space

In the last century domestic and regional/supranational-level changes in just two parts of the

world (the United States and Western Europe) drove almost entirely changes in IPR law at the

international level (Dutfield 2002:64). These changes moved mostly in the direction of more

and stronger private rights and the most economically dominant countries have influenced their

development far more than developing countries (ibid.). In part, as some scholars suggest, these

changes happened because the regulatory IP system was skewed in favour of powerful

corporations’ interests. This thesis argues that two principle factors are central for a deep

understanding of how decision-making in patent law was susceptible to power and influences

of corporations: the influence of interest groups and TRIPS, which are interrelated.

4.2.1 Interest Groups

Empirical work undertaken during this research suggests that private interest groups, mainly

the pharmaceutical industry, have played a dominant role in the formulation and

implementation of international and domestic IPR policy and IPR lawmaking. Doern (1999:49)

confirms this and points out that patent-holding organizations are the main interest groups since

they have the biggest stake in any redefinition or reallocation of rights. Large chemical and

pharmaceutical firms have usually been among the most powerful and determined, and the

biotechnology and computer industries have become influential stakeholders in recent years

(ibid.).

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In fact, these private groups’ successful lobbying activities have triggered changes in patent

regulation and influenced trade sanctions. One of the most prominent examples is the US

government’s sanctions against developing countries and the generic pharmaceuticals

companies therein. Sources involved in the diplomacy of IPRs confirm that the pharmaceutical

industry used its strong lobbying power to influence US trade sanctions against certain

developing countries in order to force them to take certain measures regarding patents and

pharmaceutical product protection.

Although the empirical evidence indicates that certain interest groups used their lobbying

power to influence IPR regulation, a theoretical analysis is helpful to verify how the capturing

of IPRs happens. Scholarship on the theory of regulation has attempted to explain the

phenomenon. Eggertsson (1990:147), in the general context of economic regulation, explains

that often special-interest groups or special interests capture the regulatory process:

Part of the strategy for minority interest groups is then to spread false information about
the costs and benefits of the regulatory measures. For example, it is commonly argued
that the absence of regulations will bring one or more of the following: destructive
competition (among airlines, in the stock market), the elimination of desirable cross-
subsidies (no more service to small communities by airlines or trucking), excessive risk
and harm to consumers (electrocution of users if terminal telephone equipment is
supplied by others than a national monopoly).

Baldwin et al. (1998:9) explain that the state acts in the public interest to tackle market

imperfections. This public interest approach, where public officials are the translators of and

act as agents for the public interest, has been challenged by other approaches and concepts that

attempt to explain interest group analyses of economic regulation.

For example, Doern (1999:50) challenged the public interest approach. He explains that in the

last decades there have been many changes in ideology as governments started to rely more

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and more on big business as job creators and sources of innovation. Dutfield (2001:68) further

analysed larger corporations and how they learned how to organize themselves and showed

how they were much better at lobbying than other interest groups. For Makkai and Braithwaite

(1998), the capture of regulatory agencies is a phenomenon known colloquially as “the

revolving door”. Nader popularized this term through his argument

that capture was a consequence of both employment of former business executives by

regulatory agencies and, more importantly, the aspirations of regulators to move to
more lucrative positions with corporations they used to regulate. (cited in Dutfield
2001:67; see also Dutfield 2000:30)

In a similar vein, Stigler’s (1971) theory of regulation assumes that utility maximization

motivates firms just as it motivates individuals (including politicians and bureaucrats) (see

Dutfield 2003:29). However, utility for firms means profit, while utility for civil servants or

politicians is likely to be non-monetary.

States have the unique powers to “prohibit or compel, to take or give money” (Stigler 1971) and

therefore firms can be expected to try to use the state to increase their profitability. There are four

likely means to this end: a) to seek monetary subsidies; b) to control market entry of rival firms;

c) to restrict substitute products and services while supporting complementary ones; and d) to fix

prices. Stigler argues, following those assumptions, that regulation tends to be acquired, designed

and operated for the benefit of industry and with the collusion of the relevant state agencies.

Empirical research conducted for this thesis indicated that the public interest of IP regulation

has been subordinated to the joint interests of the most powerful. IP regulation is about

distributing income from some sectors of the economy to others, and the winners are likely to

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be the special interests (firms and politicians) while the losers are likely to be the weaker and/or

more dispersed interests such as consumers.

To a large extent, the scholarship on the theory of regulation provides theoretical support for

interest-group regulatory capture as a useful concept to explain how patent law has been

skewed in favour of interest groups. Although one may argue that regulators (public servants)

act independently from the influence of special interests, this author is unconvinced that this

really happens, at least in the case of the patent system (see Dutfield 2001:63; 2003:29). Yet,

the question is whether interest groups used regulatory capture in patent regulation and how

this has led to lower or suboptimal patentability standards.

Taking the above into account, this thesis will attempt to establish how far this has happened

in the IPR sphere. This thesis finds the term “capture” too one-dimensional to characterize the

dynamic process of change that has occurred. As Hancher and Moran (1998:151) argue, “the

fusion of private and public ownership is … now a common feature of advanced capitalist

economies”; thus this fusion may be better framed in terms of influences that interact within

the regulatory space.

It is critical that regulatory space is understood as one of the important explainers of the current

patent system. In line with this, it is important to not place undue emphasis on a single entity

such as interest groups or actors. For example, in developed economies, the wider public

undoubtedly has a stake in the patent systems, but the fact is that consumer groups have had

little involvement in the shaping of law or policy. Doern (1999:46) describes consumers in this

context as being a “weak, diffused, virtually voiceless interest”.

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Along similar lines, regulators have been sensitive to pro-patent groups’ lobbying. Drahos

(1999a) coined the term “patent community” and explains that it consists of

Patent attorneys and lawyers, patent administrators, and other specialists who play a
part in the exploitation, administration and enforcement of the patent system. They form
a community by virtue of their technical expertise and general pro-patent values.
Regular users of the patent system (like the pharmaceutical companies) might also be
said to be part of this community. (ibid.)

In the patent community members speak the same language and share basic assumptions about

patent law. Since some members have strong economic power, one perspective of patent law

can become the conventional wisdom within regulatory agencies and processes, government

trade and industry departments, and throughout society. Haas (2000:117) defines the patent

community as “networks of professionals who share common normative and causal beliefs,

accept common truth-tests and are engaged in a common policy enterprise”, and Dutfield

(2001:78) explains that “the patent community is not just an economic interest group ‘pool’

but also an epistemic community”. According to Braithwaite and Drahos (2000:75):

The dominant core of the epistemic community of intellectual property is comprised

of transnational elites with important intellectual property portfolios to protect – and
their lawyers. Lawyers, by virtue of their technical knowledge, are a driving force in
this epistemic community.

And according to Dutfield (2001:87):

Another way to conceive of the array of interest groups promoting pro-IPR values in
government and throughout society as a policy network which operates nationally,
supranationally and now globally, and which includes the public and private sectors. It
is well known that patent communities and/or members of such communities combine
internationally to form both transnational lobby networks and specific organisations.

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This thesis argues that these organizations collaborated to promote their shared interests. In the

case of national patent laws, statutes and statutory instruments design the rules and the creation

of the implementation agencies (the national patent offices). These agencies are also

responsible for the interpretation of the rules in individual cases (patent examiners judge

whether or not the claims submitted in a patent application fulfil the criteria of novelty,

industrial application and inventive step) (Dutfield 2011:79). National courts also interpret the

rules in ways that bind patent offices and give assistance in defining the criteria of patentability.

Moreover, in disputes over the scope of patent grants often courts determine the final rules

(they have to enforce patent rights through the law) (ibid.).

Nevertheless, a patent owner has the enforcement role “both indirectly and directly by

monitoring the commercial activities of rivals, and through litigation, threats of legal action,

and out-of-court dispute settlement” (ibid.:81). In fact, the regulatory system has companies

not just as “customers”, but also as its designers, funders, interpreters, and even its enforcers

(ibid.). Part III will analyse the specific case of Brazil. In the next section, this thesis will

analyse how this occurred in the international scenario.

4.2.1 TRIPS

The TRIPS agreement marked a turning point in the history of IP as it introduced IPRs into the

international trading system. Before TRIPS, the WIPO administered IPR issues through a

number of treaties. However, in the 1970s and 1980s, many developed nations became

concerned that the WIPO treaties were not protecting their technology-intensive industries.

These industries (e.g. multinational pharmaceutical companies) saw trade losses, especially in

developing countries, and therefore started to lobby for a system to enforce their IP worldwide.

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TRIPS, taking effect on January 1, 1995, became the first multilateral treaty solely dedicated

to IP. The agreement is complex and involves many considerations relating to the economics

of international trade. Nevertheless, the basic thrust of TRIPS is to enforce a universalist

conception of IPRs, despite the fact that different countries have different needs, and no one

approach can possibly address them in an equitable manner.

During the negotiation of TRIPS, the pharmaceutical industry, a sector that had been exempt

from patent protection prior to the formation of the WTO, drove its agenda to create an

enforcement mechanism and expanded the level and subject matter of patent protection. Hence,

TRIPS is arguably the product of certain business and political interests in the developed world

attempting to construct a regime that benefited them. Indeed, Drahos and Braithwaite

(2002:214) argue that TRIPS is an example of rent-seeking on a global scale.

TRIPS made all members of the WTO obliged to issues patents on any inventions in any field

of technology (as long as the inventions met the criteria of novelty, inventive step, and the

presence of industrial applications) (TRIPS 1994).

The question is: Why did most countries of the world accept TRIPS? Scholars explain this

outcome through the approaches of “power, propaganda and forum-shifting” (Braithwaite and

Drahos 2000). Patent communities in developed countries had the dominant interest groups,

including many TNCs that would benefit from an international system with higher standards

of protection (Dutfield 2001:83). So, those companies convinced their national governments

that the interests of the country “are best served by raising standards globally so as to create a

level playing field that prevents free-riding, especially in developing countries” (ibid.).

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Consequently, these governments pressure individual developing countries to raise their

standards of protection or enforcement. According to Dutfield (2001: 84):

Such activist governments may either use their economic dominance to bully
developing countries or adopt a more subtle approach arguing that raising the standards
will benefit all countries, in effect to persuade them that ‘what’s good for Pfizer is good
for the world’. Naturally, for TNCs based in countries like the United States and the
various European countries, there is much to be gained from building strategic alliances
with firms sharing the same interests in these other countries. After all, the costs of
doing so are likely to be vastly outweighed by the potential benefits.

Braithwaite and Drahos (2000:564) explain that forum-shifting has three main strategies:

1) moving an agenda from one organization to another;

2) abandoning an organization; and

3) pursuing the same agenda in more than one organization.

Dutfield (2001:88) argues that forum-shifting is not without risks, and according to Braithwaite

and Drahos (2000:564):

Bringing IPRs out of relatively esoteric forums such as specialised United Nations
agencies like WIPO and into international negotiations dealing with more mainstream
issues like trade is likely to attract the interest of other well-organised non-
governmental actors such as environmental pressure groups and lobby group networks
which have experience in overlapping issues and are likely to take a more sceptical
view of IPRs. Moreover, the possibility for economically weak but well-organised
opponents to take advantage of forum-shifting or even to play the forum-shifting game
themselves cannot be discounted, especially as the number of available forums
increases.

In fact, at the end of the last century international law solidified the trend of accepting

biological inventions as patentable subject matter and major knowledge corporations made a

systematic effort to extend proprietary exclusivity. Drahos and Braithwaite (2002) suggest that

the signing of TRIPS represents the global nature of the political and economic struggle over

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the control of knowledge. The authors have documented how major knowledge corporations

made a systematic effort to extend proprietary exclusivity in order to obtain protection from

competition (ibid.:chapters 3 and 10). They call this phenomenon the “knowledge game”. Sell

(2006) also observes that IP is an obstacle to access to academic and scientific publications,

drugs and seeds.

TRIPS, until very recently, seemed to be the key instrument in the effort to raise standards of

protection and enforcement of IP in developing countries to developed countries’ standards.

Nonetheless, regarding patents, there are still important differences. For example, different

countries can apply the novelty, inventive step, and industrial application tests in different ways

(Dutfield 2006:10). As a result, we have seen the emergence of new strategies from richer

countries, led by the United States, to burden developing countries with higher IP protection

standards than TRIPS compliance requires (and higher even in some aspects than is available

in US domestic law). For example, with many developing countries the United States has

negotiated (and still negotiates) a substantial number of bilateral FTAs (ibid. 2006:1).

One FTA that has major implications for patents was signed between the United States the

Republic of Korea (Free Trade with Korea Summary FTA 2007). One finds in this FTA some

standard clauses, such as:

 Extension of patent terms to compensate for delays in granting the original patent

 Protection against arbitrary revocation of patents and assured protection for newly

developed plant varieties and animals

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  Requirements for test data submitted to a government for the purpose of product

approval, these shall be protected against unfair commercial use for a period of five

years for pharmaceuticals and 10 years for agricultural chemicals

 Measures to prevent the marketing of pharmaceutical products that infringe patents; it

provides for a notice period when the validity of a pharmaceutical patent is to be

challenged. (ibid.)

The US-Chile FTA, meanwhile, prohibits generic companies from marketing a new chemical

entity for at least five years after the approval date. As a condition for approval, undisclosed

clinical trial data on a drug must be submitted to the US government (US-Chile FTA). This has

the potential to “hold up the marketing of some generic drugs until some years after the expiry

of any patent on the drug” (Dutfield 2008:318).

The above provisions are good examples of clauses encountered in many FTAs. Most

importantly, often they require an extension of the patent term for pharmaceutical products (or

other products) under certain prescribed circumstances. The web of FTAs continues to grow

(Abbott 2005: 348-358; Drahos 2002:765) and the deeper significance of this is that developing

countries will have to face the burden of being involved in FTAs (ibid.). In situations of double

breach, where the United States is the complainant and it chooses the FTA forum, the weaker

state will not be able to use the WTO to defend its case against the United States (Drahos

2007:14). Evidently, there is a real danger that dispute mechanisms will be used to enforce

rent-seeking bargains (Drahos 2007:21) and a system of many trade courts may simply push

the trade regime in the direction of a disorderly mixture of confusing obligations, rule

uncertainty and prolonged litigation patterns (ibid.).

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In addition, in WIPO’s Standing Committee on the Law of Patents (SCP) there was a focus on

the harmonization of substantive aspects of patent law; that is, on the global standardization of

substantive patentability requirements and criteria. Perhaps the most stunning outcome of the

proposed Substantive Patent Law Treaty (SPLT) would be the elimination of flexibilities that

member states of WIPO and the WTO are able to take advantage of under existing international

law (e.g. TRIPS). For example, the United States has a position that opposes the introduction

of flexibilities:

The delegation of the United States of America stated that it could support neither a
“technical” requirement in the SPLT nor the importation of the very minimal standards
of protection that were to be found in the TRIPS Agreement, nor an “industry” or
“industrial-based” standard on the issue of industrial applicability or utility. The
Delegation expressed the view that the inclusion of “technical” or “industrial”
requirement would result in the standards for protection for inventions throughout the
world to slip backwards, eroding the level of protections for inventions throughout the
world. (WIPO SCP 2002)

Thambisetty (2008:6) explains that “industrial” and “technical” requirements are related

requirements that constrain patentable subject matter, and that the lack of these requirements

has the potential to allow patents to be granted in “all fields of activity (rather than

technology)”.

Although the analysis in this section could imply that Brazil is highly constrained, it has been

able to be assertive in international negotiations. Brazil is one of the countries that has been

effective in blocking the SPLT. In the SPLT negotiations, Brazil has held a position that

harmonization of patent law is not in its best interests as it may introduce distortions that are

detrimental to the interests of developing countries.

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Initially, the proposed Free Trade Area of the Americas (FTAA) aimed to provide for TRIPs-

plus IP protection. Nevertheless, negotiations are slow because the Brazilian position is that

that “IP matters should be conducted under the TRIPS umbrella” (Barbosa 2001:18). In fact,

according to the Brazilian government:

The pressure from the US targeted a set of rules stricter than the WTO standard in areas
of services, investments, and IPRs. The compensating interests in areas of interest of
the MERCOSUL (Southern Common Market) such as antidumping and agriculture
were, however, not felt as acceptable by the United States. The rise of US protectionist
barriers for agricultural products and some manufactured as footwear, textiles, and steel
aggravated the gap. As notes the Brazilian State Department, there are seven thousand
brackets (indicating unsolved positions) in the draft agreement. (ibid.)

The Brazilian position indicates that the country has no interest in incorporating maximalist

mechanisms of IP enforcement in FTAs as it could result in abuses and retaliations in the case

of misunderstandings in the area of IPRs (ibid.).

Brazil has been able to be assertive in international negotiations because of the high quality of

its negotiators and a robust international relations agenda, which has led to Brazil’s influence

in international negotiations through a strategy of approximation between Brazil and emerging-

power nations such as India and China.

Some of the actions of Brazilian diplomacy include: a) regional cooperation policies; b)

assertive presence in international decision-making forums; c) expansion of diplomacy; and d)

the reconfiguration of the Brazilian National Bank for Development (BNDES) role as a

principal agent for financing investment abroad and encouraging the internationalization of

Brazilian capitalism (Pinho 2011:19). Moreover, Pinho explains that new actors such as

intellectual thinkers and businessmen participate in the design of the international agenda

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(ibid.:20). Brazil is showing growing assertiveness in international diplomacy: it has

recognized the Palestinian State, criticized the US military expansion in Colombia, declared its

discordancy with the US position that does not allow Manuel Zelaya, the former Honduran

president, to return to Honduras after he was seized by the military and secreted to Costa Rica,

and defended the end of the embargo on Cuba (ibid.).

4.4 Patenting in Biotechnology

One of the reasons for a suboptimal patent system for biotechnology might be the rules of

patenting biotechnology. Legal scholarship, in essence, advocates one of three approaches to

improve biotechnology patent policy: 1) a traditional law-and-economics approach,

emphasizing bright line rules and market roles; 2) an agency-based approach, relying on

experts to intervene when necessary to overcome market failures or to protect scientific norms;

or 3) a judicial activist model, relying on so-called patent “policy levers” latent in existing legal

doctrines (Adelman 2005:990-991). A fourth approach is the legislative one, which

commentators widely agree “would fall prey to undue public choice pressures from specific

industry interests” (ibid.).

Next, this chapter explores patenting biotechnology and the law in the United States and

Europe in order to further investigate possible reasons of why in biotechnology the patent

system is suboptimal. It is also important to link these discussions to the broad idea of

regulatory capture. EU and US legislation, such as the Bayh-Dole Act 1980, has heavily

influenced Brazilian legal scholarship and legislation. In fact, the Bayh-Dole Act been touted

as model legislation for other countries, including developing countries (Sampat et al.

2008:2078). Furthermore, the European patent system is being more widely adopted than US

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law (including implementing Article 27(3)b of TRIPS, which largely concerns

biotechnological inventions).

4.4.1 The United States’ perspective

In the United States IPR levels of protection have increased over time. In its first Copyright

Act of 1790, the United States conferred an initial copyright protection term of 14 years with

a possible 14-year extension (chapter 15, § 1, 1 Stat. 124). This protection has increased over

the years and today it is the life of the author plus 70 years (17 USC § 302(a)). Similarly, US

patent law also has changed: the Patent Act of 1790 provided for patent rights “for any term

not exceeding fourteen years” (chapter 7, § 1, 1 Stat. 109), which was subsequently extended

and today the term of protection is 20 years from the date of filing. However, it is not only the

period of IP protection that has been prolonged. Court decisions and new legislation have

strengthened IPRs.

In fact, there is evidence that patenting has increased in response to the evolution of the legal

environment in the United States. Patent applications have been increasing steeply at the

USPTO since 1980 and the management of R&D has changed as a result. In 1980, two

significant legal changes in IPRs and biotechnology occurred. One was the decision of the US

Supreme Court in Diamond v. Chakrabarty (1980), and the other was the enactment of the

Bayh-Dole Act.

In Diamond v. Chakrabarty the Court allowed a patent over a microorganism (in this case a

bacterium). Accordingly, a live, human-made micro-organism was deemed to be patentable

subject matter under Title 35 of the United States Code (USC), the official compilation and

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codification of the general and permanent federal statutes of the United States. The enactment

of the Bayh-Dole Act, or University and Small Business Patent Procedures Act, also played a

very important role in the further development of IP law and policy in the United States

(Boettiger and Bennet 2006:320).

With these changes, the US biotechnology sector business model adopted an aggressive

acquisition and assertion of IP, and this in part explains why there has been such a growth in

patents. A full explanation also has to take into account the fact that the US Patent Office

refused applications for patents on living organisms before 1980. But decisions after

Chakrabarty went even further in opening up the patent system for life forms. In 1985 the US

Patent and Trademark Appeals Board granted a patent for a type of genetically engineered corn

(Ex parte Hibberd) (227 USPQ 443 Bd. Pat. App. & Interferences 1985). Later, in 1987, the

USPTO established that, in principle, patents could be granted on non-human higher animals

(Ex parte Allen) (2 USPQ 2d 1425 Bd. Pat. App. & Interferences 1987). Patenting was extended

in 1988 when the USPTO granted a patent to Harvard University on “any non-human mammal

transgenically engineered to incorporate into its genome an oncogene tied to a specific

promoter” – exemplified by the “oncomouse” (Transgenic Nonhuman Animals, United States

Patent No. 4,736,866, April 12, 1988).

This chapter has already analysed the influence of interest groups and TRIPS, and an important

question here is whether the changes after 1980 in the United States were motivated by interest

groups. This authors feels that the changes happened along a spectrum of interest-group

representation. Next, the chapter discusses the Bayh-Dole Act and specific US law related to

biotechnology and relates them to the broader picture of regulatory capture.

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 4.4.1.1 Bayh-Dole Act

The passing of the Bayh-Dole Act constitutes an important event because it expanded both the

range of entities patenting inventions and the types of inventions being patented. Bayh-Dole

enabled US universities to patent the results of federally funded research (Boettiger and

Bennett 2006:320). This encouragement for universities to assert ownership of any IP

generated by their faculty, and then to leverage it financially, led to universities licensing their

rights in the IP to private industry. A steep rise in the patenting of basic-science research

techniques also accompanied the increase of university patenting (ibid.).

Bayh-Dole’s purpose is “to use the patent system to promote the utilisation of inventions

arising from federally funded research or development” (35 § 200 USC). Under Bayh-Dole,

universities and small businesses are allowed to choose ownership of inventions made under

federal funding. Exclusive licensing is also permitted, provided the licensee undertakes the

diligent commercial development of the invention, while the government retained a royalty-

free, non-exclusive license to practise the invention for government purposes (Council on

Governmental Relations 1999:6).

Even though many believe that Bayh-Dole is still crucial for the “successful transfer of

technology from university to industry” and that it is “a catalyst for economic growth”

(Economist 2002:3), some critics reason that the Act did not have good consequences for

innovation, and modified the nature of public research for private interests (see Boettiger and

Bennett 2006; Rai and Eisenberg 2004; Sampat et al. 2008). Bayh-Dole is often the subject of

debate in academic writings and conferences.

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Subsequent legislative initiatives broadened the reach of the Act even further by relaxing anti-

trust restrictions on joint funding of R&D, and by authorizing federal laboratories to enter into

cooperative R&D agreements with private firms and universities (ibid.).

The impact of the Act was not immediately noticeable, however since 1980 proprietary claims

have proliferated in biotechnological research due to the advent of Bayh-Dole, and R&D costs

have become more significant (Rai and Eisenberg 2003:289). As Rai and Eisenberg suggest:

The presumption that patent incentives are necessary to promote research and
development has less force, however, from inventions arising from government-
sponsored research than for inventions arising from purely private funding. (ibid.:37)

Furthermore, Rai and Eisenberg believe that patenting the results of government-sponsored

research should proceed cautiously on the basis of balancing the costs and benefits of such

patenting for the future. Current law entrusts these decisions to the discretion of institutions

such as universities which receive federal funds. However, “universities may be inadequately

motivated to take the social costs of their proprietary claims into account” when deciding what

to patent. For Rai and Eisenberg, “a more sensible approach would give research sponsors,

such as the NIH, more authority to restrict proprietary claims on publicly-funded research when

such proprietary claims are more likely to retard than promote subsequent R&D” (ibid.).

Boettiger and Bennett (2006) presented a very good discussion on Bayh-Dole, and whether it

should be changed. Their main argument is that universities are not managing IP for the public

benefit.

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As a result of Bayh-Dole, companies have bought patents from universities since it allows and

encourages private companies to acquire proprietary rights in core technologies. This potential

commercialization of research resulted in an emergence of technology transfer offices (TTOs).

Another important feature of Bayh-Dole is the possibility of “march in” rights in “furtherance

of the public interest if the contractor or assignee has not taken or is not expected to take, within

reasonable time effective steps to achieve practical application of an invention developed

through federal money” (35 USC; Thambisetty 2008:40). Reichman (2004) criticizes Bayh-

Dole’s “march in” provisions because they do not express a regime of price controls. Canada

and many EU countries have mechanisms to control prices, but Bayh-Dole’s “march in” rights

do not require regulatory approval of prices and in general leave “patentees free to adopt the

marketing strategies they deem suitable” (ibid.).

Although one could suggest that lobbying activities of universities and of TTOs motivated the

statute’s passage, empirical findings suggest there is no evidence that this was the case.

Interviews confirm that Stanford’s TTO held various congressional hearings which were

helpful to the statute’s drafters. Moreover, memoranda and reports from industry executives

convinced Congress of the necessity for reform. The contributions from the regulated parties

were useful, but it is unlikely they pushed Bayh-Dole through Congress single-handedly. In

fact, Bayh-Dole appears to be a case of compromise. Its negotiation and enactment happened

in a space populated with complex university-industrial actors that had different views about

the statute, but there is no evidence indicating that an industry railroading occurred.

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 4.4.1.2 Biotechnology-specific Patent Law

Taking a step back and considering patent legislative and regulatory climate is also informative.

Title 35 of the USC stipulates that patentable inventions are:

101. Inventions patentable. Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful improvement
thereof, may obtain a patent therefore, subject to the conditions and requirements of
this title [35 USC § §1 et seq.].

Burk and Lemley (2003:1) observe the proportional simplicity of the patent statute and

encourage patent law to avoid adopting the model used by the US copyright statute because

“technology-specific patent legislation will encourage rent-seeking by those who stand to

benefit from favourable legislation”. In relation to biotechnology, the authors caution that the

rules that the Federal Circuit has created present the following problems: a) increased

divergence between court rules; b) the Federal Circuit holds that “uncertainty in predicting the

structural features of biotechnology renders them non-obvious, even if the prior art

demonstrates a clear plan for producing the invention”; and c) the “person having ordinary skill

in the art” (PHOSITA) is responsible for a variance in patent standards; “the level of the skill

in the art affects not just patent validity, but also patent scope” (ibid.:3).

Although applicants for biotechnology inventions face a rejection under 35 USC § 103, which

bars the patenting of obvious inventions, the standard of review for the Federal Circuit when it

reviews factual findings of obviousness depends on upon the route by which the issues came

to the Federal Circuit. The question of obviousness remains “a vague and amorphous concept”

(Harmon 1988:54) and whether or not a DNA sequence constitutes an invention or mere

discovery is crucial to the patentability of DNA (ibid.). Burk and Lemley (2003:21) believe

that the current standards for non-obviousness consider most DNA claims non-obvious and

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therefore subject to patentability. Rai (1999:833) has a similar opinion: “in considering DNA-

based inventions, the CAFC has employed non-obviousness in a manner that dramatically

lowers the bar for patentability and, therefore, significantly impoverishes the public domain”.

Whether regulatory capture may actually lead to lower or suboptimal patentability standards,

however, is not clear. Burk and Lemley (2002) do not provide any explanation as to how

conflicts among interest groups in patent law stop one interest group from passing an interest-

group particular preferential measure. They do explain, however, that spending time on such

efforts may be inefficient because of the pace of technological advancement.

To manage the problems created by biotech patenting rules in the United States, Burk and

Lemley (2002) propose a broad policy synthesis. Their proposal relies on judges actively

calibrating patent doctrines, which they refer to as “policy levers,” on a technology-specific

basis. According to them, because the notably weak obviousness standard and exceptionally

stringent written description requirements that the Federal Circuit has applied to biotech

patents, biotech patents are in a favourable position for a technology-specific patent law

(ibid.:1669, 1678).

Burk and Lemley’s (2002) proposal links policy lever regimes to specific technologies through

an approach that integrates prospect theory, Merges and Nelson’s (1990) competition-based

model, and the Heller and Eisenberg’s (1998) anticommons theory. In the case of biotech, the

option is to favour a policy that sustains a relatively small number of broad patents. This could

be achieved by raising the patentability standard of “non-obviousness” and reducing the written

description required of an invention (ibid.:593-594).

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Wagner (2003:1358-1360) contests the synthesis approach, arguing that disclosure

requirements and the obviousness standard affect the scope of a patent and, at the same time,

are connected via the legal concept of the PHOSITA. For him, the skill level of the PHOSITA

is directly proportional to a patent disclosure, but obviousness is indirectly proportional to

disclosure. Moreover, disclosure requirements and the obviousness standard are indirectly

proportional to the patent’s scope (ibid.:1348). His conclusion, in essence, is that Burk and

Lemley’s application of policy levers is “hopelessly indeterminate” (ibid.:1348-1349). He

offers scepticism since judges will not make the right judgments when aligning legal doctrine

with good policy (ibid.:1359). The solution is based on the traditional economic theory that

calls for clearer, more stable patent doctrine and less, not more, judicial discretion (ibid.:1358-

1360).

Section 3.4 of this thesis analysed Merges and Nelson’s (1990:843) rejection of the prospect

theory. This rejection deserves further analysis in view of Merges and Nelson’s approach to

improving the patenting of biotechnology. In their approach, they explain that there are several

models of technological invention (ibid.:880-883): (a) discrete inventions that are relatively

insensitive to patent scope (e.g. inventions like the safety razor, some pharmaceuticals and

toys); (b) cumulative technologies that are highly sensitive to patent scope (e.g. those

associated with aircraft, automobiles, lights, semiconductors and computers); (c) chemical

technologies that are similar to cumulative technologies (e.g. manufacturing processes); and

(d) science-based technologies that tend to be a blend of the other categories and reliant on

unpredictable factors (e.g. biotechnology). These categories of inventive activity must have

distinct rules in the application of patent doctrines and optimization of patent scope.

To improve the patenting of biotechnology Merges and Nelson (1990) envisage an active role

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for judges and the patent examiners. The modified theory’s narrow patent principle should

guide judges when they face the application of patent doctrines, such as patent disclosure

requirements and non-obviousness. For biotech and cumulative technologies, judges should

limit the patent scope and apply the doctrine of equivalents narrowly (ibid.: 906-911, 915).

This means that the legal rule of the doctrine of equivalents that allows holding a party liable

for patent infringement, even though the infringing technique does not fall within the literal

scope of the claim, should be applied with much caution. Biotechnology has a complexity that

most likely will benefit from a diversity of approaches and the competition engendered by

numerous narrow patents (ibid.:915).

Here, it is important to summarize a few thoughts in relation to biotech patenting that have

emerged in this thesis. A prospect theory argument for broad patents suggests that the control

of research techniques will ensure efficient coordination of innovation. According to the

standard economic theory, clear rules, strong property rights, and low transaction costs are

more important than the scope of a patent (Wagner). The modified market approach has its

grounds on the fact that innovation is proportional to the number of independent inventors,

which entails narrow patents (Mergers and Nelson). Also, there is a theory that challenges these

competitive market models and calls for intervention by experts in federal agencies from the

perspective of fragmentation of patents and anticommons (Heller and Eisenberg). Finally, the

synthesis theory argues that other theories are correct, but only for specific technologies, and

trusts judges to handle patent policy on a technology-specific basis. In a succinct manner these

propositions reduce to: (1) more is more (broad patents preferred); (2) less is more (narrow

patents preferred); (3) more is sometimes more and sometimes less; and (4) neither (patent

scope is irrelevant) (Adelman 2005:996). None of these theories has prevailed (ibid.).

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In general, whether or not suboptimal patent standards happened because of the regulatory

capture is not easy to assess in the context of patent law in the United States. However, one

would expect that different actors would hold different views on proposed changes. Of course,

the presence or absence of legislative lobbying could be identified, and one would expect to

find fewer changes that achieve IP-protectionist purposes in fields where interest groups have

conflicting points of view about the substantive qualities of any modifications.

4.4.2 A European Perspective

The following analysis is a discussion of European law based largely on the morality

exclusions. The intent is to show another perspective that might differentiate legislative

enactments in the patent area, where the different interest-groups account does hold, from

enactments in patent law.

It is true that in Europe the patenting of biotechnological inventions is, in comparison with the

United States, much more controversial and has encountered more opposition. For instance,

several groups in Europe showed opposition over a patent for a method of cryopreserving

selected sperm cells (EP1257168) because the patent covers non-patentable human germ cells

and constitutes a violation of the Directive on the Legal Protection of Biotechnological

Inventions (98/44/EC).

The EU ensures patent protection through two different systems: the national patent systems

and the European patent system. The European Patent Convention (EPC), which is separate

from the EU, and is an integral part of the Agreement relating to Community Patents, is the

basis for the European patent system (Leskien 1998:17). The CPC is not in force, but some of

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its provisions have voluntarily been incorporated into some national patent laws in Europe.

Whoever wants to apply for patent protection in Europe should apply for a national patent to

the national patent offices or for a European patent to the EPO.

In Article 6 of Directive 98/44/EC there is a non-exhaustive catalogue of the subject matter

which has been excluded from patentability on grounds of morality and public order:

(a) Processes for cloning human beings

(b) Processes for modifying the germ line genetic identity of human beings

(c) Uses of human embryos for industrial or commercial purposes

(d) Processes for modifying the genetic identity of animals which are likely to cause
them suffering without any substantial medical benefit to man or animal, and also
animals resulting from such processes.

Here it is important to cite two significant rulings that interpreted the provisions of Directive

98/44/EC. First is the decision G-2/06 of the EPO in relation to the Wisconsin Alumni Research

Foundation (WARF) patent application (WO 96/22362) that held that a patent cannot be

granted for an invention which necessarily involves the use and destruction of human embryos.

Second is the finding of the Court of Justice of the EU in Case C-34/10 (Brüstle v Greenpeace)

that ruled that a process which comprises removal of a stem cell from a human embryo at the

blastocyst stage, entailing the destruction of that embryo, cannot be patentable subject matter.

In Directive 98/44/EC, there is the identification that inventions which are new, involve an

inventive step, and are applicable for industrial purposes shall be patentable “even if they

concern a product consisting of or containing biological material or a process by means of

which biological material is produced, processed or used”. This obviously gives a legal right

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to obtain patents for higher organisms, such as plants and animals. In general, Directive

98/44/EC allows for a broad scope of biotechnology patents. According to it, the following are

patentable:

Biological material: Patents on a biological material possessing specific characteristics

shall extend to any biological material derived from the patented material, provided the
patented material still possesses those same characteristics.

Biotechnological processes, and patents on processes that enable a biological material to be

produced possessing specific characteristics, can be extended to all material, directly and

indirectly, obtained through that process. Patent protection can also cover all biological

material directly derived from that material provided that the derived material still possesses

those same characteristics. Products containing or consisting of genetic information can be

extended to all material (except human beings) in which the product is incorporated and in

which the genetic information is contained and performs its function.

Exclusions are provided on grounds of being contrary to public order and morality. These

exceptions are applied only in exceptional circumstances. Of course, problems occur because

it remains unclear how to apply these concepts and how opponents of particular patents can

demonstrate that the invention in question breaches these principles.

In principle, a European patent will be granted for any invention which is new, involves and

inventive step, and is susceptible of industrial application. However, the EPC excludes a

number of inventions. In view of the matter of patenting biotechnology inventions, two

provisions are relevant.

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Article 53(a) stipulates that European patents will not be issued in respect of inventions the

commercial exploitation upon morality grounds. This article is in line with Article 6(1) of

Directive 98/44/EC that establishes a general principle of exclusion for inventions whose

exploitation would be contrary to public order or morality.

Article 53(b) states that European patents shall not be granted in respect of plant or animal

varieties or essentially biological processes for the production of plants or animals; this

provision does not apply to microbiological processes or the products thereof.

As Van Overwalle (2005:13) suggests, Article 53(b) of the EPC does not give a clear-cut

answer to the question of whether or not subcellular fragments, like DNA sequences, genes,

plasmids and vectors, can be subject to patent protection. However, she says that according to

the academic writers and practices of the patent-issuing authorities, there is a general consensus

that subcellular fragments are patentable (ibid.).

Article 5(1) of Directive 98/44/EC stipulates that the human body, at the various stages of its

formation and development, and the simple discovery of one of its elements, including the

sequence or partial sequence of a gene, cannot constitute patentable inventions. On the other

hand, according to Article 5(2), an element isolated from the human body or otherwise

produced by means of a technical process, including the sequence or partial sequence of a gene,

may constitute a patentable invention, even if the structure of that element is identical to that

of a natural element.

At present, there has been no change to the guidelines for examination before the EPO for

biotechnological inventions, but some principles have become fairly established. Article 54 of

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the EPC imposes a standard of “absolute” novelty as any disclosure before filing date (or

priority date if claimed) of the application defeats novelty. Article 54(3) provides “secret” prior

art – the contents of a published European patent application is prior art as of its filing date and

as to other applications filed after that date.

Article 3(2) of Directive 98/44/EC states that for legal purposes once “biological material …

is isolated from its natural environment or produced by means of a technical process … then it

may be subject of an invention even if it previously occurred in nature.” This means that the

act of isolating the material confers novelty. The recent legislative action in Europe denotes in

practice that naturally occurring material is patentable provided that the method of replication

is inventive and the useful end result novel, in the sense of not having previously been achieved

in that form – this mirrors the policy and practice in USPTO (Llewelyn 2005:18). As Llewelyn

points out, not surprisingly this approach is criticized because it is a legal obfuscation. To treat

the genetic material as a novel substance, merely because it has been extracted, or copied, from

its natural source is “regarded as an extension of patent law too far” (ibid.:4).

Also for the patentability of naturally occurring genes, Directive 98/44/EC only reaffirms the

long-standing practice of the EPO and most national patent offices: naturally occurring

substances are considered to be patentable inventions provided they first have to be isolated

from their surroundings, have been properly characterized and, finally, are “new” in the sense

of having no previously recognized existence.

Article 56 of the EPC requires that invention possesses an “inventive step” over the prior art.

The requirement for determination of the inventive step is as follows:

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 An invention shall be considered as involving an inventive step if, having regard to the
state of the art, it is not obvious to a person skilled in the art. If the state of the art also
includes documents within the meaning of article 54, paragraph 3, these documents are
not to be considered in deciding whether there has been an inventive step.

Given that something more than pure interest-group determination was needed to drive patent

legislation in Europe, it is important to determine which actors provided the energy for ratifying

changes.

The empirical research conducted for this study confirmed that many European and

supranational bodies are persuasive via formal law-making and through informal prestige.

These bodies have power, sheer size, organizational capacity, and are active in issuing

documents or reports tackling topics related to biotechnology. The main actors with formal or

informal power are EU bodies (e.g. the Council of Ministers, Parliament, Commission) and the

Council of Europe (Committee of Ministers, Parliamentary Assembly, and European Court of

Human Rights). Also, there are the European Society of Human Genetics (a professional

association), European Science Foundation (a medical research funding body), and the

European Molecular Biology Organisation (EMBO – a European research institute). Hence,

biotechnology and specifically in this case the issues of morality exclusions in biotechnology,

are surrounded by a complex regulatory space where different organizations share authority,

power and control, with the basis for their authority and influence varying significantly.

4.5 Conclusions

The analysis of Chapter 4, in conjunction with that of Chapters 2 and 3, has showed that the

process of regulatory reform within biotechnology is complex and at times contradictory. The

mapping of the regulatory space is a revealing analytical tool for helping to understand the

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complexities of biotechnology and IPR governance. This chapter adopted Hancher and

Moran’s concept of regulatory space mapping in an adapted form, and combined it with

evidence and opinions collected from empirical research. This approach is valuable because it

shows how the existing framework applies to biotechnology, as well as its strengths and

weaknesses.

The argument here is that this analysis has implications for scholarship in public choice theory

and IP. Thus, although the public choice analysis is valid, it is better if deployed along a

spectrum of interest-group representation. This chapter suggests that a spectrum of interest-

group representation is in fact part of the process of patent and biotechnology regulation.

Regulatory power is not the only source of formal legal authority as the formal authority may

be moderated by the informal authority as well. In reality, regulatory authority and

responsibility tend to be dispersed between many different public (state) and private (non-state)

actors. In this space, laws are often passed where the relevant regulatory power is (unevenly)

dispersed because the key resources that confer it are fragmented. Which actors enjoy the

power and the extent depends upon how resources are dispersed.

It is true that early regulatory surges in biotech and IPRs were driven more by economic

imperatives; however more recently the regulatory motivations have been counterbalanced by

concerns about environmental degradation, public health and issues of access to technologies

and knowledge.

Moreover, this chapter finds that this approach is very important as it can serve as a foundation

for applying normative theories and principles so as to articulate certain policy proposals for

advancement in the area. Indeed, this thesis argues that the approach taken is innovative as it

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offers a helpful framing device for capturing and mapping the key actors that exercise formal

or informal authority over at different levels. The analysis and findings presented in Chapters

2–4 represent a crucial step in this thesis’s review of the governance framework surrounding

biotechnology.

The perspective presented in this chapter to some extent led to a critique of the patent system

since the evidence presented makes this author conclude that the existing patent system has

flaws. This is not, of course, to suggest that any system can be perfect. This chapter has found

that legal scholarship, in essence, advocates one of three approaches to improve patent policy:

(1) a traditional law-and-economics approach, emphasizing bright-line rules and market roles;

(2) an agency-based approach, relying on experts to intervene when necessary to overcome

market failures or to protect scientific norms; or (3) a judicial activist model, relying on so-

called patent “policy levers” latent in existing legal doctrines. Although it is difficult to say

definitively, this thesis feels that the first and second approaches would be most appropriate to

Brazil. Brazil has proper regulation for biotech patenting (as Chapter 6 will show), so the first

approach is not as important as the second one, although it could be useful for instance in

improving INPI’s patent guidelines – calling for clearer, more stable patent doctrine. The third

approach seems not to be very desirable since Brazilian judges are not well trained in handling

patent policy on a technology-specific basis.

In relation to this thesis’s central research question – whether OSI is feasible and desirable in

Brazil – it is possible to suggest that alternative proposals such as those relating to OSI will be

subjected to commercial interests of interest groups and their active engagement, and they may

be opposed if they are considered to threaten profitability. It therefore behoves promoters of

OSI to demonstrate that its wider application can stimulate rather than inhibit innovation in

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ways that can actually enhance business growth. OSI has the potential to achieve this when

regulatory capture engages private expertise to advance public goals.

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 PART II

UNDERSTANDING OPEN SCIENTIFIC INNOVATION

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 5. Understanding Open Scientific Innovation

5.1 Introduction

The preceding chapters of this thesis analysed the complexity and contradictions of the process

of regulatory reform within biotechnology and the strengths and weaknesses of the existing

framework to regulate IPRs and biotechnology. The findings of that analysis to some extent

criticized the patent system and its regulatory framework for biotechnology.

Although the global order for the promotion of innovation stresses the function of IP as a closed

proprietary model of knowledge production and protection, in recent times there has been

increased movement in the direction of open, collaborative, shared, communal, and

interdependent models of innovation.

New realities point to “open innovation” as a new innovation paradigm. In the context of

scientific innovation, interfirm collaborations has been characterized by increasing diversity of

collaborators, with respect to partners’ nationalities, motives and goals, and the formal

structures used in collaborations. Moreover, because of the increasing complexity of

knowledge, more and different kinds of partners are often needed to achieve a certain goal,

including partners from other industries, universities and public research organizations as well

as competitors.

OSI is a new approach to the management of IPRs. This chapter describes and critically

appraises a number of studies reporting on OSI. It discusses innovation in the context of three

streams of research (open, user and cumulative innovation); briefly outlines the history of

science; and then moves into a discussion of open innovation in the context of biotechnology.

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The goal is to provide an understanding of the nuances of open innovation and taxonomy of

OSI. Within this context, this chapter explores further the central research question of the thesis

– whether or not Brazil would benefit from OSI as viable alternative model for providing open

access to capabilities for innovation in biotechnology.

This chapter employs both theoretical and empirical data. Initially, a literature review and

exploratory interviews guided the study of OSI. Emphasis is placed on cases of firms involved

in a particular R&D collaboration. Appendix I provides a summary of the case studies, which

are based on a variety of data sources, including a number of semi-structured interviews. The

chapter applies Hancher and Moran’s methodological device of “regulatory space” to OSI.

5.2 At a Glance: Open Innovation

5.2.1 Defining Innovation

Innovation scholars define the industrial innovation process as a combination of two

components: a technical component (invention) and the commercialization of that technology

(innovation) (Bogers and West 2010:4). While for Schumpeter (1934:88) technical inventions

“not carried into practice … are economically irrelevant”, Freeman (1982:7) rationalized that

“inventions … do not necessarily lead to technical innovations”. For Freeman, the first

commercial transaction is the accomplishment of an innovation in the economic sense (ibid.).

However, the dissemination of an innovation through a non-commercial process has economic

or societal impacts (Bogers and West 2010:4). One example is open and free software. Roberts

(2007:36) provided a good definition that includes those cases: “Innovation is composed of

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two parts: (1) the generation of an idea or invention, and (2) the conversion of that invention

into a business or other useful application”.

The definitions of innovation vary as some researchers take on a narrow technical or economic

scope for innovation, “such as those that limit it to discontinuous or radical innovations that

are ‘new to the world’”. For this thesis the broader definition of innovation, which researchers

in the field of open innovation use, is more appropriate. Hence, this thesis adopts Nelson and

Winter’s (1977:36) definition according to which “any nontrivial change in a product or

process, if there has been no prior experience, is an innovation”.

5.2.2 Open Innovation, Cumulative Innovation and User Innovation

This section identifies three main streams of research that focus on distributed models of

innovation. Significantly, these three streams provide a basis for definitive discussion of OSI

and its analytical parameters.

Innovation scholars have studied how firms develop technical inventions into technological

innovations, and then commercialize these innovations through an internal process of R&D,

production and distribution (Bogers and West 2010:3). Innovation was thought to be a

vertically integrated process (ibid.:1; see also Chandler 1977, 1990). More recently, innovation

theory emphasizes that the world has entered the era of intellectual and alliance capitalism

(Gerlach 1992; Granstrand 2000; Narula and Duysters, 2004; Teece 2000). This trend in

innovation shows that firms have began to open their boundaries to extract knowledge from

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the outside and to use the market as an extension of the firm (Chesbrough 2003, 2006;

Dahlander and Gann 2010; Elmquist et al. 2009; Enkel et al. 2009).

In 1988, researchers in the area of innovation started to consider innovation from a different

perspective; that is, they started to think about the many sources of the innovations that firms

commercialize. Research investigating this new, more distributed model focused on three main

streams of research: open innovation (Chesbrough, 2003, 2006; Laursen and Salter, 2006);

cumulative innovation (Scotchmer 2004; Murray and O’Mahony 2007) and user innovation

(Von Hippel 1988, 2005).

Chapter 3 discussed the concept of cumulative innovation (a two-stage innovation model). In

this concept ideas are built upon old ones. Researchers in this area assume that in the innovation

process there are spill-overs between competing companies which are very important to

advance innovation and improve the welfare of society (Scotchmer 2004).

Chesbrough (2003, 2006) studied different firms and their challenges in the innovation process,

and promoted the term “open innovation”. In general terms researchers identify open

innovation as “the leverage of capabilities and expertise of others to delivery differentiated and

meaningful innovation” (Perkins 2008). In this model there is the assumption that in many

circumstances it is better for firms to commercialize external sources of innovation and look

for outside paths of commercialization of internally sourced innovations. The most common

application of an open innovation strategy uses collaborative agreements between

organizations (Hagedoorn, 2002; Narula and Duysters, 2004; Perkmann and Walsh, 2007).

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User innovation is a concept that Von Hippel (1988) developed to explain the functional

sources of innovation. In the user innovation model users are the initial source of an innovation

because they have the knowledge and motivation to generate innovations that solve necessities

that often producers don’t have the motivation to do. Frequently user innovation happens

because users have a personal need and or they have process benefits (they enjoy doing it).

This is quite different to the traditional manufacturer innovation model when the developer of

an innovation expects to benefit from selling. The following table summarizes the key streams

of research in innovation.

1: Key Streams of research in innovation (based on Bogers and West 2010).

Research stream Key premise Seminal authors

Vertical integration (VII) Firms need to control the Chandler (1977,

creation and commercialization 1990)
of their innovations.

Open innovation (OI) Firms often do better with Chesbrough

external creation or (2003, 2006)
commercialization

User innovation (UI) Users often know best how to Von Hippel
create innovations (1988, 2005)

Cumulative innovation (CI) Innovation often depends on Allen (1983);

rival firms building upon each Scotchmer (2004)
other’s work

These different streams of distributed innovation models have different characteristics

regarding their “enabling assumptions about the sources, incentives and success criteria for

creating and diffusing innovations” (Bogers and West 2010:11). They focus on innovation that

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combines knowledge created at different loci, across multiple stakeholders in a value network

(Bogers and West 2010:11; Chesbrough 2006; Murray and O’Mahony 2007; von Hippel 2005).

These distributed innovation streams emphasize that in a firm’s value network the sources of

innovation come from one or more external stakeholders. The research on open innovation

considers that there is a great value for a firm to have the widest possible variety of external

sources of innovation (including customers, suppliers, competitors and complementors)

(Chesbrough and Rosenblom 2002; Larsen and Salter 2006; Poetz and Schreier 2009).

It is important to distinguish two parts of the innovation process: 1) the conception of an

innovation or technology; and 2) the commercialization of that invention (Bogers and West

2010:14; Freeman 1982; Schumpeter 1934). It is also important to explain that in the second

part one should include non-commercial diffusion of innovations and make the distinction

between inside (internal) or outside (external) creation and commercialization (Bogers and

West 2010:15).

In view of that, the streams of research of open innovation, user innovation and cumulative

innovation and their models of innovation have different paths for the commercialization or

diffusion of innovations: a) created outside, commercialized inside; b) created outside,

commercialized outside; c) created inside, commercialized outside; and d) created and

commercialized at or across firm boundaries (Bogers and West 2010: 14). The following table

summarizes the models of innovation and the commercialization paths for the different

innovation research streams.

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2: Models of Innovation and Commercialization Paths

Research stream Innovation model Commercialization path

Vertical integration Vertically integrated innovation The firm commercializes

(VII) own innovations

Open innovation Outside-in The firm commercializes

(OI) other’s innovation
Inside-out Others commercialize the
firm’s innovations
User innovation Lead users By producers
(UI)
User self-help Enhances own utility, but
not diffused
User sharing Non-commercial
diffusion
User entrepreneurship Self-commercialization

Cumulative Cooperative Innovators share

innovation (CI) knowledge
Rivalries Knowledge leaks between
competitors

The commercialization or diffusion of innovations in distributed models of innovation often

includes all possible sources and outlets for innovation, which is different to the

commercialization path of the traditional model of vertical integration (created inside,

commercialized inside). Different sectors have different contingencies, therefore there is no

one-size-fits-all model. An optimal exploitation of OSI may require a calibration of different

models and commercialization paths.

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 5.3 History Matters: A Spotlight on OSI’s Origins

Before providing a more holistic perspective on open innovation in the context of R&D

collaborations in the area of sciences and some concrete strategies of OSI, it is important to

explore the relationship between the history of science and OSI in order to establish a historical

basis for OSI. This section explores the concept of openness and its roots and investigates

whether or not a closed culture of science is to some extent an anomaly in the history of science.

It asks:

a) Is the history of innovation comparable to contemporary IPRs?

b) Was innovation open because property rights had been withheld or did it exist in the

spaces between property rights?

c) In the absence of IPRs, open innovation is surely the default given the intrinsic non-

rivalrous nature of information?

5.3.1 OSI and Its Origins in Agriculture

The origins of OSI principles in biology go back 12,000 years, to the birth of agriculture.

Mooney and Fowler (1990:22) explain that “agriculture does not have one birthplace, but

many”. Accordingly, “people learnt through teachers from foreign lands; others taught

themselves” (ibid.).

For Mooney and Fowler, with the birth of agriculture new environments were created and for

12,000 years plants changed as a result of domestication (ibid.:24). For instance, the size of the

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edible plant parts increased, maturity became uniform, and dormancy and defence mechanisms

weakened. These crop adaptations occurred when people began to practise agriculture by

selecting and sowing the seeds of their harvest (ibid.:17). Also, ancient societies, when

cultivating certain species, noticed the mutations and changes that took place in their crops and

favourable traits were selected (ibid.:21). What humanity eats nowadays is owed to nameless

ancestors and “to a process begun in Neolithic times, long before recorded history” (ibid.:17).

Evidently traditional and ancient crop improvement innovations were not disseminated and

further improved upon by means of open collaborative licenses. However, a philosophy that

embraced openness was the default historical policy in plant breeder’s methods. It was the

exchange of seeds and knowledge among communities that maintained agro-biodiversity

(ibid.).

Perhaps the most persuasive and best example of a crop that was developed on the basis of

radical innovation, according to an open philosophy, is maize. About 6,300 years ago, maize

was domesticated from teosinte, a weedy looking wild grass found in Mexico, which is barely

recognizable as the ancestor to maize. Jaenicke-Després et al. (2006:1206) argue that early

farmers, after the initial domestication of teosinte, continued to select maize for advantageous

morphological and biochemical traits. For 4,400 years, alleles typical of contemporary maize

have been present in Mexican maize. This shows that selection by farmers had profound

genomic effects relatively early in the history of this crop (ibid.:1208). The evolution of maize

demonstrates that ancient farmers propagated the seeds themselves. According to Federoff

(2003:1158), farmers were selecting teosinte seeds for favourable features, such as kernel

quality and cob size. This suggests a “bottleneck” in corn evolution that was overcome by

radical innovation (ibid.).

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Logically, in many respects maize is a human artefact built on an open approach. It is an

example of a major crop with no similar wild relative, and this implies that it was transformed

by collective and conscious improvement. It is difficult to see how it could have been done if

different people had kept their knowledge and improved varieties as a secret (see Mann 2005).

Arguably, all early-domesticated crops fit the case of maize, although maize is apparently still

a bit of a mystery because it appears to be a case of conscious improvement, reflecting a

significant creative leap that may have been achieved over quite a brief period. Other major

crops are much more similar in appearance and characteristics to their closest wild relatives.

More broadly, crop improvement was something conscious, at least in this case. According to

Pavord (2005:22), most of the early Greeks did not see things this way, since they “cultivated

types of grape, plum, peach, apple as gifts from the Gods, in benign mood after a particularly

good day on Mount Olympus”. On the other hand, the philosopher Hippon did suggest that

cultivated varieties were derived from wild ones. However, this is not generally accepted

(ibid.).

Nonetheless, while open innovation was the general norm, there are some features that are

problematic and antithetical to the “sharing” of information to all classes of people in some

ancient societies. Some traditional societies were often paternalistic and used cultural norms to

routinely exclude and include. For instance, a number of anthropologists have documented the

importance of gender, sexuality and reproduction in Melanesian ontology (Gillison 1993;

Mimica 1998). In some indigenous societies, only the men who have undergone certain

traditional ceremonies can carry the knowledge (Rodrigues 2001:5).

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Although customs of ancient societies often emphasize group ownership and community

involvement in decision-making (Dutfleld 1999:1), the traditional knowledge is not always

common or commonly distributed in a community. For instance, the Kadazan/Dusun people of

Sabah in east Malaysia share the knowledge of efficacy and usage of certain medicinal plants

among all (Takako 2003:110), however specialized skills and knowledge of specific plants for

the treatment of patients are possessed only by the Bohizan, or high priestesses. At times their

practice restricted to individual experts (Tabuti et al. 2003:123; Takakao 2003).

According to Kamau (2009:148), in indigenous societies the level of the knowledge dictates

how it is shared:

Knowledge held at general community level is disseminated freely through exchange

between individuals within a community, or neighbouring communities. Knowledge
held at individual level is considered secret and hence exchanged between close
confidants. This pattern of diffusion of traditional medicine knowledge is maintained
down the generation as the older members of the community informally (most orally)
pass it over to the younger ones.

5.3.2 OSI and the Nature of Science

Since ancient Greek times, philosophers have portrayed scientists as seekers of universal truths,

and the pursuit of truth, openness and objectivity is deemed to be inherently intrinsic to science.

This thinking enjoyed a revival during the so-called scientific revolution of seventeenth-

century Europe.

The philosophical thought of the Royal Society, founded in 1660, was to create a network

across the globe to remove barriers within the sciences. The Royal Society aimed to pursue a

free flow of information and encourage communication. Robert Boyle, in particular, began the

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practice of reporting his experiments in detail so that fellow scientists could repeat them

(Shapin and Schaffer 1985:3).

Bronowski and Mazlish (1960) documented the phenomenon of scientific publication, which

the Royal Society launched with its Philosophical Transactions Journal (which is still

published). According to their analysis, the publication of scientific work, as the natural way

to make it known to others, was an invention of the seventeenth century (ibid.:191). Scientific

publications were initially based on correspondence between scientists, and then between

scientists other non-scientists (clearing houses for scientific information) (ibid).

The perception of science as a disinterested, truth-yielding process of open inquiry has been

revised (Biagioli 2006). Biagioli is sceptical of claims that science was once open and now is

becoming increasingly closed, and argues that the discussion seems to be a mythological origin

story and that the issue is not whether science was “secret” or open, but that the open/close

dichotomy confuses the historical record more than it illuminates it.

Biagioli (2006:chapter 2) questions this dichotomy and looks at the specific ways in which

people disclosed or did not disclose their work. One example is Biagioli’s “revisionist history”

of Galileo’s telescopic discoveries in 1609–1610 (ibid.). Analysing Galileo’s monopolistic

tactics, Biagioli showed that, depending on the economies in which Galileo’s work circulated,

it could be put in different boxes (invention, discovery, artwork), each of them attached to

different standards of visibility, disclosure, and secrecy. Biagioli explains that because Galileo

was afraid of free-riders that could easily replicate his claims without crediting him, he tried to

slow down potential competitors by not providing other practitioners access to high-power

telescopes, and by withholding detailed information about how to build them (ibid.:305).

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Accordingly, Galileo gave the telescope to the Venetian Senate in exchange for tenure and a

salary raise – Galileo felt obliged to share the secret of the telescope with the Senate, his

institutional patron, and not the readers of the Nuncius or fellow astronomers (ibid.:309). This

was the way in which the early privilege system worked (ibid.).

Although secrecy was resorted to at times during the 1600s, open strategies constituted the

larger part of the innovation scenario (Biagioli 2006:166). For instance, the approach that

instrument makers and mathematical practitioners used around 1600 was very similar to the

current open source software model (ibid.; see also Section 5.3.6). IP did not protect most parts

of paper or metal instruments, despite their circulating in a commercial environment. These

instruments were copied, circulated, “patched” and developed by a variety of practitioners (just

like happens with open source code). Biagioli suggests that, even though instrument makers

received income from making and selling instruments (unlike modern hackers who neither buy

nor sell their code), their businesses’ main concern was not IP. Mathematical practitioners

designed instruments and made money by “publishing and teaching their operations, that is, by

assisting their users” (ibid.).

Long (2001) confronts the question whether science by its nature was open, whereas

technology and artisanal craft were secret. She argues that from the early fifteenth century the

technical arts, political power and knowledge had a closed interaction (Long 2001:2). This

development indicates a growth of open traditions of authorship on the mechanical arts, while

a concurrent renaissance of Neoplatonic writings promulgated secrecy (ibid.). Numerous

manuals involving material production and technologies of different kinds expressing

Vitruvian ideals mirrored an apparent openness (ibid.:4). However, esoteric knowledge was a

fertile ground for secrecy from the second to the fifth century (ibid.:61). Alchemists transmitted

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their teachings within small esoteric groups (ibid.:63). Long explains that in general the secrecy

of those centuries is linked to the intimate spirituality of esoteric groups (ibid.:70), and that in

contrast there is not much evidence for craft secrecy in the ancient and late antique world’s

ordinary crafts such as carpentry, glassmaking, pottery, masonry, stonecutting, leatherwork,

cloth-marking, and thousands other artisanal crafts (ibid.).

Secrecy is an “intentional concealment” that must be distinguished from privacy (Long

2001:7). Privacy occurs when someone protects something because he does not want to provide

access to others. According to Long, issues regarding secrecy present problems of evidence,

meaning and motivation (ibid.). On this view, the rubric “secret”, which is often placed on

several categories and phrases, means something other than intentional concealment (ibid.).

Yet, while the detailed assertions of some of these studies have been the focus of criticism and

debate, overall it is clear that knowledge was frequently shared in the past. This single fact

provides basis to the argument that science has had some emphasis on disclosure and

epistemological openness, which is complementary to OSI.

Scientists performed research long before IPRs existed and are often intrinsically motivated

(Murdock 2002; Stern 2004) and concerned about academic freedom (Aghion et al. 2005).

Sociologist Robert Merton (1973) argued that the spirit of science is “communitarian”. Science

creates a whole set of knowledge and techniques that are of common ownership. The

community of scientists is free to test the results of scientific finds and also free to validate or

not support their fellows. All scientists are also free to build on these results in their own work.

Some may question whether science is always done this way and yet this remains for many

scientists the only way that science should be done.

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 5.3.3 Open Society

The concept of the Open Society, which elucidates the concept og openness in the context of

science, originally appears in Karl Popper’s philosophy of science. Popper (1986:158) argued

that humans were radically fallible; that there was no ultimate truth. Nonetheless, he also

argued that scientific investigation must remain epistemologically open if we are to continue

to make progress. Following Popper, in 1979 George Soros launched the Open Society Institute

to promote the principles of democracy throughout the world, particularly in the Soviet Union’s

sphere of influence.

In his article entitled “Toward Open Societies”, Soros (1995:65) said that society has to look

for international political arrangements that can meet the requirements of an increasingly

interdependent world. He explained that these arrangements ought to be built on the principles

of the Open Society. According to him, a Perfect Society was beyond reach, so humans must

content themselves with a society that held itself open to improvement. For Soros, Open

Societies should form alliances with two distinct but interrelated goals: to foster the

development of Open Societies within individual countries; and to establish international laws,

rules of conduct, and institutions to implement these norms (ibid.).

Soros (1995) believed that the collapse of the Soviet system was a revolutionary event whose

outcome would shape the course of history. For Soros, the Open Society was not a simple

matter of capitalism versus communism. Instead, the Open Society was an ideal against which

all countries and societies can be measured (ibid.). Any country, rich or poor, may fall

somewhere along a spectrum from open to closed, and even within that country there are

different spheres where economically or politically it may be more open or closed (ibid.). For

example, the United States, an affluent nation, may rate well for political freedoms but poorly

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on measures such as providing a safety net for the most disadvantaged. Bolivia, a poorer nation,

may still rate well on dimensions other than economic.

OSI, with its emphasis on disclosure and epistemological openness, is complementary to the

Open Society. It is also and a way to prevent “excessively broad IP rights” from emerging in

the first place.

From the discussion in Section 5.2, we can draw the following conclusions: a) OSI was the

default policy with respect to plant improvement including, until recently, scientific breeding

(there is an argument that scientific breeding has vastly accelerated the pace of crop

improvement, but of course the Green Revolution was not at all IP-dependent); b) knowledge

is not always common or commonly distributed in a community and there are some of features

that are problematic and antithetical to the “sharing” of information to all classes of people; c)

the history of science suggests that secrecy has been resorted to sometimes, but knowledge was

frequently shared; d) despite the elitism of the Royal Society, its ideals of the “modest witness”

pioneered some of the ideals behind OSI; d) OSI and the Open Society are complementary to

each other as both have emphasis on disclosure and epistemological openness.

When trying to answer question a) at the beginning of this section – whether or not historically

innovation is comparable to contemporary IPRs – the history of science shows an evolutionary

development of property rights depending on the historical period, group of peoples and area

of science. For example, traditional medical knowledge in some instances resembles the

contemporary Trade Secrets Institute in IPRs. Similarly, alchemists kept secret and transmitted

their teachings only within small esoteric groups. Thus, the answer is yes, to some extent.

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In answering question b) – whether innovation historically was open because property rights

have been withheld – there is no evidence that this is true. On the contrary, history shows that

some inventors were afraid of free riders due to lack of protection and therefore withheld

detailed information about inventions. Nevertheless, open strategies constituted the larger part

of the innovation scenario and did exist in the space between the property rights.

Finally, in answering c) – whether open innovation is surely the default given the intrinsic non-

rivalrous nature of information – to a certain extent this follows the same patterns of the history

of sharing as Biagioli suggested. Hence, although secrecy was resorted to at times, open

strategies constituted the larger part of the innovation system.

In the context of this chapter it is also important to emphasize that the epistemological openness

of science has been to some extent modified because of the context in which science is now

conducted. Section 3.5 discussed the reality of ownership and management of IPRs in

biotechnology. The bottom line is that IPRs in biotechnology introduced a culture of acquiring

IP in order to commercialize it, and this has impacted on openness in science.

Moreover, today science is embedded in a different context in which there are constraints on

resources and the need for upfront investment or public sector funding. The relationship that

science has with venture capital raises a few concerns when it comes to the norms of sharing.

Scholars have paid attention to increasing secrecy among scientists (see Blumenthal et al. 1997,

2006; Campbell et al. 2002). Some have asked whether commercialization encourages secrecy

(e.g. Argyres and Liebeskind 1998; Cook-Deegan and MacCormack 2001; Louis et al. 2001;

Murray and Stern 2007; Walsh and Hong 2003).

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Argyres and Liebeskind (2002:205) explain that commercial firms introduced a shift in the

norms of sharing in science (especially in biotechnology) because “scientists’ discoveries are

owned by the firm, and recognition is often obscured or denied by firms’ need for secrecy”.

Private companies often do not allow or impose limits and control on collaborations to protect

IP interests (ibid.).

In the context of the last few decades there is the possibility that the commercialization of

science, and specially biotechnology, motivated more restrictive communication

practices because the prospect of private ownership of scientific discoveries. With respect to

knowledge dissemination today, there are in fact constraints on resources and the need for

upfront investment or public sector funding for science; therefore, exclusivity in scientific

research is important in some circumstances to secure capital investments.

5.4 Contrasting OSI and Open Innovation within Intellectual Property

The following sections will combine innovation theory with actual case studies of OSI. The

core elements of the next sections are studies based on the experiences of different

organizations. The organizations surveyed are from different countries, and each case study

provides an analysis of contemporary issues with regard to OSI models.

Naturally, the analysis will place particular emphasis on OSI and its relationship to IP and

development, the core areas of focus of this thesis. Thus, the primary objective of the next

sections is to identify and present the most relevant alternative models for innovation and to

explain how these models can be interpreted and used in OSI policy design. It is also the

objective is to define OSI and outline the role that managing IP can play in encouraging

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collaboration and partnership between research institutions, business, government and civil

society and offer an option for policy makers to leverage IPRs to improve innovation

5.4.1 Defining OSI

This section looks into the concept of openness in the context of science, innovation and IP (as

a strategy to manage IP). Open innovation in this context of increasingly distributed regulatory

and governance system involves a dispersion of power over a wide variety of actors and groups

(Phillips 2008:307, 326). According to de Beer et al. (2013):

Potential confusion around the concept stems from the elusiveness of agreement about
what openness is. Whether a system can be considered open or not depends on a variety
of factors including, significantly, the degree to which people are free, or even
empowered, to universally access a system and to participate, collaborate and share
within that system.

This thesis therefore defines Open Scientific Innovation (OSI) as any viable model for

providing open access to capabilities for innovation in science such as Scientific Commons

(see Section 5.4.4.2) and open source models (see Sections 5.4.5). When developing an OSI

strategy for R&D one needs to take into account the different meanings of the word “open”.

Hence, it is important to explain that “open” could refer to information as a public good, such

as an open information commons – here “open information” means “free information”. A prime

example of “open” being used this way is open source software. The other main way in which

“open” is used is in the sense of “open innovation”, which refers to corporations “looking

outside” for solutions to the firm’s existing R&D problems (Chesbrough 2003, 2006).

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In the context of this thesis, OSI is about alternative approaches that maintain and enhance

one’s ability to innovate through distributed research by allowing access to the techniques and

skills necessary to participate in innovation. This thesis divides OSI into two different

approaches: a) free-revealing to build the public domain; and b) open collaborative licensing.

5.4.1.1 Free-revealing to Build Public Domain

The Public Domain Manifesto (2010) defines the public domain as “the wealth of information

that is free from the barriers to access or reuse”. The rationale behind the public domain is to

provide society raw “material at its cost of reproduction – close to zero – and that all members

of society can build upon it”.

While this general notion of public domain is usually associated with copyright, this thesis

suggests that copyright access, as a form of access to knowledge, is important, but equally

important is access to (capability to use) technologies (in the context of this thesis, enabling

technologies). But when it comes to patent law, the notion of public domain has some different

nuances in regard to the rules of access.

It seems oxymoronic to talk about rules of access and public domain as one of the main

characteristics of public domain work is that it can be used in any way without the permission

of the owner, and without payment of a remuneration. Nevertheless, one particularity of patent

law is that the private rights of patent owners are not absolute. They are not absolute because

the state grants the right of patents as rewards for invention; they are of a temporal nature and

can be revoked or subject to use without the authorization of the right holder (e.g. Bolar

exemptions and compulsory licences). This has consequences in regard to the rules of access

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because others may lawfully use a technology (an enabling technology in the context of this

thesis). It is important to emphasize that in the public domain one may find works whose

protection term has expired (e.g. expired patents or copyrighted material, subject matters that

do not meet the legal conditions to be protected by law and invalidated subject matters).

The WIPO Committee on Development and Intellectual Property (CDIP) debated this subject

and provided interesting commentary:

Public domain in the patent system differs from public domain in other intellectual
property rights: there are effectively two dimensions to the patent public domain,
namely, the information domain and the action domain. The information domain relates
to the information contained in published documents relating to the patent application
and grant, as well as to data gleaned from office actions such as opposition proceedings
and judicial decisions. The action domain relates to what may be done with the above
public information, which is partly defined by each national law in terms of the scope
of patent rights and exceptions and limitations to such rights. (WIPO 2011:2)

In the context of this thesis, apart from the role that the public domain has for the progress of

science, it also has an impact on individual institutions’ IP management strategies. For

example, one reason for disappointing financial returns on investment in acquisition-oriented

IP management strategies is the significant expense of acquiring and enforcing rights,

especially patents (Section 8 discusses the possible economic returns from TTOs’ patenting

and licensing activities). These costs can be entirely eliminated by choosing to forego any IP

protection and instead freely revealing knowledge and technology directly into the public

domain.

There is a possibility of confusion when differentiating this approach from other “open” models

of IP management. The open source approach taken by some software developers (see Section

5.4.6), the Creative Commons system of licensing copyright protected works (see Section

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5.4.4.1), and several examples of open source biotechnology (see Section 5.4.7) depend,

fundamentally, on acquiring IP protection. The novelty of such open source systems is that IP

is then licensed to require rather than restrict access to the protected content or technology. The

free-revealing approach is distinctive because it sidesteps the IP system altogether. It not only

involves foregoing IPRs; it also develops strong community norms that ensure what is publicly

revealed not be appropriated by others.

Perhaps the best example of an unrestricted public domain model of IP management is the

Structural Genomics Consortium. Its access policy prohibits affiliated scientists or

collaborators to seek patents that would grant exclusive rights over its research outputs, and it

encourages funders from government, industry or civil society to similarly forego patent rights.

Unlike some other models that use the IP system through licenses to enforce such conditions,

the Structural Genomics Consortium relies on a combination of contracts and social norms

such as trust. The organization’s non-proprietary philosophy is a key reason cited for its success

(Edwards 2008:731-733; Edwards et al. 2009:436-440; Weigelt 2009:941-945).

A good illustration of an IP management model on the border between the public domain and

open source is the Public Library of Science (PLoS). While everything published in its

repository is publicly available for free, some copyright restrictions still apply. Specifically,

content remains copyright-protected and is licensed on one of the standard terms of the Creative

Commons system, which permits use and reuse on the condition of attribution of source and

authorship. Sage Bionetworks, a non-profit biomedical research organization, takes a similar

approach to providing data, tools, analysis and models (see Appendix I, Sage Bionetworks).

While the orthodox approach rests upon acquisition and commercialization of IP, Boyle

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(2008:xv) argues that “the opposite of property” is a concept that is much more important when

we come to the world of ideas, information, expression, and invention. Society wants a lot of

material to be in the public domain, “material that can be spread without property rights”

(ibid.). Rai and Boyle (2007:358) apply this principle in the specific context of synthetic

biology, and in the process explore tensions among different ways to create openness, including

both public domain and open source models. As a promising example of the public domain

model, they mention the Registry of Standard Biological Parts created by MIT, which indexes

biological parts, offers assembly services to construct parts, devices and systems, and could

grow into a repository of information and specifications to facilitate synthetic biology (see

Appendix I, Biobricks).

Such public disclosure makes the parts and trivial improvements unpatentable by others and

also readily adoptable by scientists in developing countries. In fact, this thesis makes the case

that one of the best arguments for the feasibility of OSI right now is that industry is not

discovering new drugs at the rate that it was; that quite a lot of investment is going into complex

diseases like cancer and Alzheimer’s, but we are a long way from developing new cures.

Therefore, a lot of the research is at the pre-competitive stage where open science norms may

well be in the interests of industry actors.

Free-revealing may in some cases, however, leave open the possibility that others will attempt

to acquire IPRs over public domain knowledge or technologies. Therefore, some organizations,

such as the British Columbia Cancer Agency (BCCA) and the Consultative Group on

International Agriculture Research (CGIAR), seek patents for defensive reasons – to guarantee

freedom to operate for themselves and their constituencies (see Appendix I). Also, the

International HapMap project initially used licenses to stop external users from obtaining

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patents from the compilation of incomplete public HapMap data with their own data (Hubbard

2005:2). Restrictions were removed when the resource was complete and fully in the public

domain and there was no risk of such patenting (ibid.).

5.4.1.2 Open Collaborative Licensing

Recognizing that current models of technology transfer have proved less successful than

desired, and pursuing the ethos of publicly accessible science, a number of organizations have

begun to experiment with middle-ground models of IP management. These models rely on IP

protection, but leverage protection to implement creative licensing practices that encourage

cooperation and facilitate collaboration.

Their common feature is that they help to facilitate multilateral IP transactions, either through

the creation of centralized or decentralized structures. The OECD Working Party on

Biotechnology (2010:17) explains how in centralized systems, like a patent pool, an agent (a

rights holder or third party) bundles IPRs and provides standard licenses covering that bundle,

while in decentralized systems, like a clearinghouse, an agent merely provides a mechanism

through which rights holders and licensees can efficiently interact.

Due to IP regulation, open collaborative licensing strategies require legal mechanisms to ensure

the process remains open, and that all participants have the capacity to use a technology. Open

collaborative strategies basically consist of two related components:

1) Distributed innovation (peer production) (see Section 5.4.3), which increases

efficiency by allowing many participants in diverse locations to work in a coordinated,

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 loosely cooperative manner (the process is neither hierarchical, nor centrally managed).

2) Open licensing, which uses legal tools that can facilitate peer production by lowering

transaction costs, creating freedom to operate, and enabling research by requiring that

research techniques, materials and knowledge are made available.

In open source software (see Section 5.4.6), the general public license (GPL) has codified the

informal sharing practices that arose in the programming community. Likewise, open

collaborative licensing in biotechnology relies on a set of licensing agreements that create a

protected commons. The key feature is that this legal mechanism ensures that the parties have

the capability to use technologies created within the community (Hope 2008:chapter 5).

Hope (2008:152) explains that the difference between open source licenses and proprietary

licenses relates to “the structure of collaboration they seek to engender”. For example, a

collaborative license may aim to provide the licensee enough access and freedom to operate,

so it would be possible to take the technology to a higher step in the value chain (ibid.:153). In

addition, if the licensor wants that technology to be improved and integrated into downstream

product, whilst preserving characteristics of exclusivity and rivalry in use in order keep the

technology as a private good, he/she may condition the contract upon payment of licensing

fees, exchange of cross-licensing rights, or other concessions (ibid.). The licensor in an open

collaborative license has the choice to waive the value of the technology as a private good in

order to establish it as a public good (ibid.).

Open source software licensing allows anyone “to copy, modify and distribute the licensed

software – for free or for a fee – without having to pay royalties to the licensor” (Rosen et al.

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2003:39) and allows maximal external contributions to technology development, making

possible for the licensor “to invite the broadest possible range of participant to helps realise the

technology’s full potential” (ibid.).

Copyleft is not an obligatory feature of an open source license, but a means “to extend rights

beyond the technology to follow on innovations” (Hope 2008:183). A copyleft license imposes

an obligation “on the licensee to make any downstream innovations that it chooses to distribute

beyond the boundaries of its own organisation available under the same terms as the original

technology” (ibid.:182). These types of licenses, also known as “reciprocal licenses”, remove

from the licensee the right to exclude others from using improvements protected by IPRs, but

in return they give access to developments contributed by others (ibid.:184). The Berkeley

Software Distribution (BSD) license is an example of a copyleft license that has only one

requirement: in order to give freedom to use and distribute the licensed technology, the licensee

has to respect the author’s moral right of attribution (ibid.).

5.4.1.3 Shortcomings of Open Collaborative Licensing

One concern in the context of open collaborative licensing in biotechnology is the difference

between copyright and patents. Patents protect the majority of biotechnology research

techniques, whereas in the context of software, the source code is protected under copyright

law. Copyright owners gain exclusive rights, including the right to reproduce and distribute the

program and to prepare derivative works. Hence, copyright protection is different to patent

protection because it could be applied to unpublished and published works (source code can be

simultaneously protected by copyright and as trade secret).

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Moreover, copyright is less expensive and arises automatically (there are no mandatory

registration requirements). The bundle of exclusive rights associated with patents is different

from those associated with copyright, and presents a different configuration for “viral”

licensing mechanisms. Independent creation is not a defence to claims of patent infringement:

patents prohibit any making, using, selling or offering for sale, or importation of the claimed

invention, whether or not the infringement device is derived from the invention or information

provided by the patent holder (Hope 2008:152).

Open source patenting may also be complicated by the existence of improvement patents. The

patent system was meant to reward innovation, even if the innovative activity was a follow-on

improvement of, or is otherwise closely related to, an existing patented invention. Hence,

patents sometimes overlap, and so-called blocking patents are often filed. Granstrand (2003)

shows the various ways patents were used to create a nuisance for competitors. He explains the

various different approaches or strategies, “for early as well as late movers to reap or

appropriate the benefits from innovations” (ibid.:4). For instance:

The innovator, being in fact the first mover, can create a lead time to late movers by
being secretive about the innovations, relatively faster in its exploitation and more
skilful in subsequent development (upgrading), production and marketing to various
users of the innovation, and in forging durable links with them for sharing advantages.
(ibid.)

For Boettiger and Burk (2003:226), patented inventions have “non obvious improvements”

that may be entitled to a new patent – albeit they fell within the scope of the original patent

claims. In this situation “the two patents exclude one another where their claims overlap”

(ibid.). The initial patent, in most cases, is broader (dominant) and will prevent innovators from

practising the improvement. Unless a sort of cross-licensing agreement is reached, not even the

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patent owner can practise the improvement, because the “subservient patent precluded the

owner of the dominant patent from practising the patented improvement” (ibid.:227).

Cambia’s Biological Open Source (BiOS) licenses (see Appendix I, Cambia) restrict the

copyleft condition to improvements on the technology and do not inhibit patenting on end

products. This distinction between research technique and product may be easier to make where

the research technique in question has a relatively clear innovation trajectory as in the situation

of BiOS (Rai 2009:216; Rai and Boyle 2007:392). But the strategy of drawing ex ante

distinction may be problematic in the circumstances where a technology “is likely to lead in

diverse, and perhaps unanticipated directions” (Rai 2009:216). These licenses also may pose

gaps in circumstances where the licensing provision is not feasible because reverse engineering

of the product is difficult (e.g. a vaccine or biologic medicine) (Chokshi and Rajkumar 2007).

In these cases, one solution would be the adoption of a “global access strategy” (see Appendix

I). Such a strategy would require the licensee to sublicense “IP at a low cost, make its own

product available at a low cost, or participate in patent pools with other companies or

institutions to better enable cross-licensing agreements that would increase access to the

product” (ibid.).

Therefore, any open collaborative license for biotechnology must draw a line between an

improvement and separate application technologies (ibid.). Improvements have to be made

subject to open access provisions. However, a licensee may need to privately appropriate

application-level technologies in order to have an incentive to participate in open source

licensing (ibid.).

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Another concern is that as much as standardized legal documents may reduce transaction costs

in transfer of technology between private sector and academics (Rai and Reichman 2009:256),

“full standardisation will be difficult to achieve, or even affirmatively undesirable” (ibid.:257).

Such contracts also represent a collective action problem and given the divergent perspectives

of academia and private sector, solving this problem may not be straightforward (ibid.; Rai

2009:215). Standardized agreements may be successfully crafted and implemented, but the

“universe of transactions would be limited to circumstances in which significant work had

already been carried out” (ibid.).

Furthermore, in the life sciences innovation cycles take longer (a new plant variety or drug will

often not be ready until 10 years or longer after the first cross or its initial discovery) and

scientists deal with less codified information, use technologies that are more diverse and the

costs of innovations are higher than software development (Hope 2008:152). The development

of products in biotechnology is usually a very large and complex task to undertake in isolation;

from basic research to regulatory approval and marketing, different entities participate in

different phases. Often, the technology “is licensed at an early stage

of development before the precise nature and utility of the product is known” (WIPO 1992:19;

see also Hope 2008:152). Thus, “the licensing agreement is not usually meant to facilitate the

sale of a product directly to the end user, but to facilitate the integration of valuable information

from a range of resources” (Hope 2008:152). “Most proprietary biotechnology licenses are

designed, like open source licenses, to promote collaboration of early stage technologies”

(ibid.).

Finally, in the United States there are concerns that an open source biotechnology license may

raise issues about antitrust and patent misuse (Feldman 2004:119; Rai and Boyle 2007:0391).

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Nevertheless, these concerns should be relatively small, given that the goals of the license are

to expand the commons and “the relatively permissive, rule-of-reason-based approach taken

by contemporary US antitrust law” (ibid.).

This chapter has so far canvassed OSI, providing a discussion of its basic contents and

analytical parameters. OSI strategies discussed thus far are: (1) supporting the public domain

through free revealing of knowledge and technology; and (2) leveraging IPRs through

collaborative or “open” licensing models. However, there are other dimensions to OSI that

need to be considered for a full understanding of the concept.

5.4.3 Peer Production

OSI can be viewed as part of a larger, emerging method of economic production called “peer

production”. The leading scholar in this area, Yochai Benkler (2002, 2004), explains that

commons-based peer production originated from the reciprocal sharing practices that

characterize interactions between family members and neighbours in small communities.

For example, Benkler (2004:283) examined car-pooling as a response to congestion in San

Francisco. When a car owner drives to work, he provides at least four seats travelling from

point A to B of which one is occupied. The car contains three vacant seats. The driver picks up

three additional passengers, and then takes advantage of the high occupancy vehicle lane on

the way to work. Everyone benefits. By carpooling, it is possible to provide transportation

through a system of social sharing (ibid.). Under those conditions, this strategy is cheaper and

more efficient than a market equivalent in a private taxi service (ibid.).

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With the rise of the internet and networked technologies, peer production is now possible on a

grand scale. Whereas before, cooperation was only viable when it involved close family

members and personal friends, or as in the car pool example, a few hundred participants, the

internet now enables the coordination of vast numbers of strangers working on a common

project (Benkler 2002:334).

Recently, peer production has become a global movement of sorts. The internet has allowed

communities to form around diverse interests ranging from open politics to open ecology, and

even the open car project (designers are creating sharable plans for a solar car) (Noronha,

Icommons 2006). Both volunteer and commercial efforts could use such a freehand-open

paradigm. Two features characterize this collaborative/open model (Benkler 2004:60).

First, there is the participative process, recruiting large numbers of collaborators to work on a

problem. It is this distributed, decentralized method of using the collective labour of many

contributors that gives peer production its unique economic advantages over traditional models.

Under such an approach, large groups of contributors could outperform, or match the

performance of small groups of experts, while cutting costs. Take an ideal case. In software,

an army of coders, each working on a small piece of the problem would be many times more

productive than a small team of full time programmers. Likewise, in science distributed teams

of scientists might solve research problems by dedicating some of their excess capacity to

research.

Networks of scientists in different labs can form a community to solve a particular research

problem during their spare time. One example of this network is the Genome@home project.

This project aims to design new genes that can form working proteins in the cell using a

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computer algorithm. The idea is to compare “virtual genomes” to those found in nature, in

order to gain a better understanding of how natural genomes have evolved and how natural

genes and proteins work. Some important applications of the Genome@home virtual genome

protein design database are: a) engineering new proteins for medical therapy; designing new

pharmaceuticals; c) assigning functions to the dozens of new genes being sequenced every day;

and d) understanding protein evolution.

Nevertheless, to design hundreds of new sequences for hundreds of proteins, thousands of

computers would be needed. Thus, anyone can lend a computer to the Genome@home. In

essence, you download the Genome@home protein sequence design client and it runs

alongside your other programs. It is said that a day or two of running Genome@home would

be enough to design new protein sequences.

A researcher might dedicate 20 per cent of his time during the week to working on some aspect

of a neglected disease. Equipment use, bioinformatics computation, etc., might be similarly

allocated towards the neglected disease project on a part time basis. In this manner, ten labs

employing five researchers each could solve a problem faster and more cheaply than could a

full time team of five scientists at one lab. Each researcher works forty hours per week at his

university or other institution. Spending 20 per cent of his time on the side project works out

to 8 hours, multiply this by 50 individuals, and there are 400 allocated to work on the neglected

disease. In contrast, each person on a 5-person full-time team would have to work an 80-hour

week.

The second crucial aspect of peer production is the governance mechanism used to manage

cooperation and preserve the community’s common pool of resources (Benkler 2002:296). To

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ensure the process remains open, and that all participants have continued access to the

commons, there must be a protective mechanism. Without such a mechanism, there is a danger

that participants can defect from the community, or that third parties can take the community’s

work and capture it in a closed, proprietary format (ibid.:296-340).

5.4.4 Commons

Commons is “a particular institutional form of structuring the rights to access, use, and control

resources” (Benkler 2004:60). In this sense, it is the opposite of property because, “with

property, law determines one particular person who has the authority to decide how the

resource will be used” (ibid.).

Clippinger and Boyle (2005) called the recent emerging of the commons “the Renaissance of

the Commons”. The phenomenon can be defined as a social regime for managing shared

resources and forging a community of shared values and purpose (ibid.:263-264). A commons,

in opposition to markets that have their basis on price, is organized around broader components

of human needs “for identity, community, fame and honour – which are indivisible and

inalienable, as well as more tangible rewards” (ibid.). An impersonal, episodic, exchange of

money is not a characteristic of a commons, which has its basis on its ongoing moral, social

and personal relationships (ibid.:264).

Openness is also an important feature of a commons, which makes it possible for the whole to

evaluate the developments affecting the community’s interests (ibid.). The logic is to be able

to identify and punish free riders, preventing the so-called “tragedy of the commons”.

Clippinger and Boyle understand that markets are necessary to stimulate innovation, efficiency

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and growth, and in this respect price is a powerful organizing tool that is facilitated by division

of resources into private property. However, societies also need indivisible and inalienable

things, and this is the essence of the commons (ibid.:265).

5.4.4.1 Creative Commons

Creative Commons applies the commons approach to a copyright setting. Lessig, Boyle, and

Carroll (academic lawyers), together with Hal Abelson (computer scientist) and Eric Eldred

(publisher) started Creative Commons in 2001 (Kelty 2004:550; Creative Commons). It takes

a two-pronged approach. It challenged IP law in the courts in the Eldred v. Ashcroft case, and

it attempts “to achieve similar goals privately (outside of the courts and legislature but within

the limits of existing law” (ibid.).

Essentially, it builds a layer for reasonable copyright through a licensing mechanism that aims

to develop public licenses – legal licenses that can be used by any individual or entity, so their

works can be made available in an open model format. The Creative Commons license

establishes a legal instrument so the copyright owner can choose how he/she would like to

license his/her work. In essence, it is a model licensing system that allows owners to clarify

that they are renouncing some parts of the bundle of rights provided by copyright law.

The Creative Commons license allows authors to grant the use of their work in eleven different

ways (versions). For instance, the author can demand attribution, prohibit commercial

exploitation, allow derivative or modified works to be made and circulated, or some

combination of all these. These different combinations actually create different licenses, each

of which grants IPRs under slightly different conditions. For example, the author of an essay

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can go to the Creative Commons webpage and compose an appropriate license for the work by

clicking on different options related to specific license provisions. The owner of the copyright

can choose a license that may, or may not, require attribution, payment for commercial use, or

reciprocity with derivative works (share-alike option) (ibid.).

To make it user friendly, the licenses are written at three layers. The first is at a beginner’s

level, so those who have no legal training are able to understand it. It explains what the license

is and what rights the copyright owner is providing. At the second level, the license is written

in legal terms. This is a license for lawyers, making it applicable to a particular jurisdiction.

The third layer is at the technical level (metadata tags – machine-readable), where a license is

transcribed into computer language, allowing the works to be authorized under a digital format.

The license is digitally translated with the license terms, allowing a computer to identify the

terms of use (ibid.).

The layer approach has a downside because it might generate uncertainty as to which version

of the license agreement is authoritative in case of conflict (Hope 2008:225). A simple solution

for this concern would be a “lawyer readable license drafted in plain language in accordance

with international best practice” (ibid.).

Interestingly, the Creative Commons model does not require state intervention or any change

in the law. Reichman and Uhlir (2003:315) argue that, through such licenses, there is the

possibility to reconstruct a public domain for data that is increasingly subject to private control.

These licenses, similar to a copyleft license, employ copyright law to modify the very same

copyright on a case-by-case basis (ibid.). Despite being an initiative that started in the United

States, the Creative Commons today has global reach.

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 5.3.4.2 Scientific Commons

Although scientists are usually focused on problem solving, a desire to publish poses other

challenges to openness, sharing and, hence, problem-solving (Lakhani et al. 2004). Lakani et

al. researched the value of openness in scientific problem solving in fields ranging from biotech

to consumer products and agrochemicals. Their study reveals that the broadcast of problem

information to outside scientists resulted in a 29.5 per cent resolution rate for scientific

problems that had previously remained unsolved inside the R&D laboratories (ibid.:4).

In the biotech era, it is evident that “both funders and the undertakers of research often have

well in mind the possible social and economic payoffs from what they are doing” (Nelson

2004:456). Hence, following Creative Commons, the idea of a new approach of scientific

commons for private ordering to resolve research holdup gains more supporters day by day. In

fact, especially in the United States, federal and state agencies, universities, non-profit

organizations, and disease advocacy groups are inserting terms and conditions to ensure that

recipients of funding of vital research support make resulting patented inventions widely

available for non-commercial research purposes. Essentially, “these institutions are

contractually constructing a biomedical research commons” (Lee 2008:1).

One example of a scientific commons approach is the California Institute for Regenerative

Medicine’s (CIRM) solution to manage IPRs (2006:1). CIRM is a Californian state agency that

intends to give $3 billion over ten years for human embryonic stem cell research. The new

CIRM regulations allow the recipients of funding to patent inventions derived from their

research, but the quid pro quo condition for receiving public money is to make those patented

inventions readily available to Californian institutions for non-commercial research purposes.

Basically, CIRM (2006) is contractually creating a research commons within the state of

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California. According to Lee (2008:1), such models of private ordering rely on three defining

elements:

1) Institutions engaged should contribute valuable research support leading to patented

inventions

2) Advanced norms emphasising access to resulting technologies rather than strict

exclusivity

3) Implementation of these norms through contractual mechanisms to enhance access

to patented inventions.

However, the contractual creation of a biomedical research commons faces limitations. For

example, lack of good management could drive away private incentives, and generate conflicts

between two decisions: research techniques dissemination or profits through exclusivity

(ibid.:9). Thus, “carefully crafted agreements and faithful adherence to self-articulated values”

are necessary (ibid.).

Today there are also growing movements towards the establishment of non-profit foundations

that are participating in drug discovery efforts. Commons efforts are very meaningful because

they provide considerable freedom for institutions to effectively make norms to favour a wide

dissemination of research technologies.

The efficacy of problem solving through a commons approach is demonstrated through the

SNP Consortium. In essence, this consortium is a collaboration of several companies and

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institutions to produce a public resource of SNPs in the human genome (International SNP

Map Working Group 2001:928–933). The initial aim was to discover 300,000 SNPs in two

years, but the final results showed that 1.4 million SNPs had been released into the public

domain by the end of 2001 (ibid.).

Launched in 2002, the International HapMap Project aimed to provide a public resource to

accelerate medical genetic research through mapping and understanding of “the patterns of

common genetic diversity in the human genome” (Thorisson et al. 2005:159; International

HapMap Consortium 2005). In its beginning the HapMap adopted a commons approach so that

its data was available “for unrestricted public use at the HapMap Web site” (ibid.). The idea

was to put together “bulk downloads of the data set, as well as interactive data browsing and

analysis tools that (was) not available elsewhere” (ibid.).

Considering the current problems inherent to drug discovery, John Willbanks and Marty

Tenenbaun (2008) of Science Commons envision a solution through a virtual marketplace, or

ecosystem, where participants share data, knowledge, materials and services to accelerate

research. They propose a Health Commons, where standard, pre-negotiated, terms and

conditions would eliminate delays, legal wrangling and technical incompatibilities that

frustrate scientific collaboration (ibid.).

In a Health Commons researchers, institutions and companies would be able to publish

information about their expertise and resources so that others in the community can readily

discover and use them. Core competencies, from clinical trial design to molecular profiling,

would be packaged as turnkey services and made available over the internet. “The Commons

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will serve as the public-domain – a non-profit hub – with third-parties providing value added

services that facilitates information access, communication, and collaboration” (ibid.).

Reichman and Ulhir (2003:418) claim that, because of competition between research entities,

there is a real danger of obstructing and disrupting the scientific data commons. To avoid this,

there are two options:

1) A reactive option that calls for the scientific community to adjust “to the pressures

as best it can without organising a response to the increasing encroachment of a

commercial ethos upon its upstream data resources”

2) An option that favours a strategy in science policy. The scientific community could

elaborate a strategy in order to enable command over its basic data supply and to

manage “the resulting research commons in ways that preserved its public good

functions without impeding socially beneficial commercial opportunities”. (ibid.

417)

For the latter option, the authors indicate that the first programmatic response would look to

the strengthening of existing institutional, cultural, and contractual mechanisms, which already

support the research commons. The second logical response would be to collectively react to

new information laws, and related economic and technical pressures, by negotiating contractual

agreements between stakeholders to preserve and enhance the research commons (ibid.).

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 5.4.5 Patent Pools

A patent pool is basically an agreement between two or more patent owners to license one or

more of their patents to one another or third parties (Verbeure 2009:5). There are many forms

of patent pool, but the basis for such an arrangement is an interchange (cross-licensing) of

rights to essential patents by a number of companies (Krattinger et al. 2006:84). In addition, it

establishes an agreed framework that provides “for out licensing the pooled IP to third parties,

including an agreed pricing and royalty sharing scheme” (ibid.).

Recent years have seen several proposals promoting patent pools for IP “assembly” of essential

biotechnology components. Verbeure (2009:5) suggested that a patent pool might be an option

to overcome an anticommons effect in gene-based diagnostic testing. However, the feasibility

of such an arrangement is unclear and, in particular, it is not certain how such a mechanism

would specifically benefit developing countries.

As Krattiger and Kowalski (2007:131) caution:

It is important to remember that a patent pool simplifies the assembly of intellectual

property, but does not in itself do much or necessarily lead to technology transfer or
market access and distribution.

Patent pools, in conjunction with humanitarian license provisions, could be an important part

of a strategy to boost biotechnology capacity; however, the danger is that this is a “solution in

search of a problem” (ibid.). In a study titled “Intellectual Property Management Strategies to

Accelerate the Development and Access of Vaccines and Diagnostics: Case Studies of

Pandemic Influenza, Malaria, and SARS”, Krattiger et al. (2006:69) examined patent pools as

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one of a variety of models, and concluded that, currently, for the above three diseases, “a patent

pool seems premature at best and irrelevant at worst”. The key reasons for this conclusion are:

1) The interests of the players are not aligned.

2) The cost of establishing a pool (many millions of US dollars)—much less the funds
required to maintain the pool—could not easily be funded.

3) Antitrust considerations are real and might require significant legal expenses to be
overcome.

3) No product exists that needs its IP to be pooled; rather, the priority should be licensing
production and ensuring product availability. (ibid.)

Thus far, case studies have not found broad-based patent pools to be the most compelling

mechanism for overcoming obstacles and, instead, recommended in-licensing or other

clearinghouse approaches (ibid.).

The existing proposals for patent pools, including those for SARS, and the AIDS medicines

proposal from Essential Inventions (2005), suffer from the same difficulties of multiple patent

holders, lack of an independent standard setting body, and the inclusion of potentially

competing technologies in the same pool (ibid.).

Krattiger and Kowalski (2007:141) explain that patent pools have arisen in such areas as DVD

technology because companies are mutually stymied by blocking patents and collectively

benefit from a decision to seek revenues from sales of products, rather than licensing fees. This

is not yet the case for biomedicine and agriculture, which are much less mature fields. The

many complexities in setting up a patent pool (e.g. its economic feasibility depends on multiple

factors) mean that one must be wary of advocating it as a general solution to biotechnology

patent thickets (ibid.).

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Krattiger and Kowalski (2007:141) further observe that one area where biotechnology exhibits

the maturity that makes patent pools compelling in industries like electronics, is diagnostic

genetics. Verbeure (2009:29) also suggests that, in the future, patent pools might be helpful to

clear patent thickets in the area of genetic testing.

In the context of patent pools, a good illustration of an IPR clearinghouse is the Public

Intellectual Property Resource for Agriculture (PIPRA), which supports the broad application

of agricultural biotechnologies developed in public and non-profit institutions (Bennett and

Boettiger 2009:320; see also Appendix I, Pipra). Such tools are especially valuable for creating

and modelling best practices (Krattiger et al. 2009), and useful in the context of IP landscaping

– a key part of effective and efficient IP management (Lewensohn and Gold 2011:1). This

thesis argues that such landscaping is very important and essential in assessing the scale of the

problems that OSI is meant to resolve.

In the case of the Medicines Patent Pool, for example, a partnership has formed under the

auspices of the global health initiative UNITAID to provide a “one-stop shop” for clearing

patent rights related to antiretroviral medicines for treating HIV (Bermudez and Hoen 2010:37-

40; Childs 2010:33-36; Gold et al. 2007:2). Similarly, the OECD Working Party on

Biotechnology (2010) describes the important steps taken by Syngenta, in partnership with the

researchers who genetically modified rice to produce β-carotene (provitamin A), to establish

the Golden Rice Humanitarian Board with authority to license a large number of patents for

free to subsistence farmers. Golden Rice has, despite this license, still not achieved its promise

because of regulatory barriers related to the deployment of genetically modified organisms.

This reinforces the point that IP management is simply one of many issues in translating

genomics into practical impacts.

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For Brazil and developing countries, patent pools “would mainly assist with licensing

intellectual property” (Krattinger and Kowalski 2007:138) in biotechnology. They are not an

IP management panacea as they would not necessarily give developing countries equal benefits

from sharing know-how, show-how and trade secrets (ibid.). It remains to be seen whether

these models can work successfully outside of the humanitarian context, where there are fewer

incentives for firms to voluntarily pool IPRs with other organizations.

5.4.6 Open Source Software

Today open source in the context of software development has been widely accepted, and in

the context of open collaborative licensing, a discussion of the concept of open source software

helps one better understand how it could function in biotechnology.

Open source software is a commitment to enshrine the norms of sharing within a formal legal

framework. Many factors differentiate open source software production from closed source

software production. In technical terms, “open source” refers to the source code. Software is a

sequence of computer instructions that programmers write in a binary source code form (Hope

2008:7).

Computers only execute instructions encoded as strings of binary numbers. Thus, open source

is the software source code available to users. The main difference from proprietary software

is that the latter is distributed in binary format, in a closed manner to ensure that IP remains

privately held. Some say that closed source software “is delivered in frozen format” (Golden

2005:6). In this model, anyone who buys a copy of a software program is prevented from

changing the program, or using bits of it to make a new program, because the source code is

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kept secret and it is protected by the terms of a copyright license agreement, which typically

reserves the right to make copies, and to modify and redistribute the program (Hope 2008:7).

Many understand that “open source software” and “free software” refer to the same thing. The

principle of developing programs and distributing them freely (free software) follows four

basic freedoms (Free Software Foundation): freedom to run the program; freedom to study how

the program works by giving access to the source code; freedom to redistribute copies; and

freedom to improve and distribute improvements to the public.

In order to be approachable to businessmen, a group within the free software community

created the term “open source”. In this new scenario, the “cathedral and the bazaar” theory had

a significant role in disseminating the idea (Raymond 2001; Välimäki 2005:36). Raymond

(2001) explains how the cathedral model (exemplified by closed source software) differed from

the bazaar model (exemplified by open source). In essence, the model of the cathedral is rigid,

centralized and hierarchical. Its planning is carried out by a small group of programmers; the

launch of new versions of the software is rare. On the other hand, the bazaar model is less

centralized (though there are leaders of projects), and contributions from anyone are accepted.

The users make corrections of bugs in the software and new versions of the software are

released frequently. Due to these features, it is said that the software is more efficient and

secure. Raymond argues that internet-based open source software development method, as

used for example in Linux (a “bazaar”), is fundamentally superior to the alternative, where

development is restricted to a closed group (a “cathedral”) (ibid.).

Raymond (2001) made clear that his ideas were different from the free software ideology and

persuaded Netscape to be the first well-known open software company in January 1998

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(O’Reilly 2005). After Netscape, O’Reilly organized a meeting to discuss a common public

strategy for open source, and the Open Source Initiative was founded in February 1998 in order

to unify open source principles and certify licenses (O’Reilly 2005; Valimaki 2005:36).

The software industry embraced open source gradually. IBM started to support Apache, and

Oracle started to port its flagship database into Linux (Rosen 2004:37). The internet is an open

source software program. The Google search engine and Firefox internet browser also run on

open source platforms. In the last 20 years, open source software has emerged as a common

practice in software programming, distribution and licensing. The number of open source

software projects has grown rapidly. Sourceforge.net, a single major infrastructure provider

and repository for open source software projects, in 2005 listed 50,000 projects and more than

500,000 registered users. As of February 2009, there were more than 230,000 software projects

registered and more than 2 million registered users (Source Forge). In 2012 Sourceforge.net

increased these figures to 3.4 million developers (users), over 324,000 projects, 46 million

consumers and an average of 4,000,000 downloads a day (ibid.).

The success of open source started with Linux. According to Webber (2004:chapter 4), Linus

Torvalds, a student at Helsinki University, wrote the first version of the program in 1991. This

first version was not very usable, so Torvalds posted it to an internet newsgroup. Consequently,

there were collaborations and, by the end of the decade thousands of programmers were

contributing to Linux’s development. Ever since Linux’s success, a great number of private

companies started to invest in open source software and today many private enterprises (e.g.

IBM) are investing in licensing open source software.

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 5.4.7 Open Source Biotechnology

Cambia, an Australian non-profit institute creating new technologies, tools and paradigms that

enable innovation in agricultural biotechnologies through its BiOS framework, is probably the

most famous example of an adaptation of open source software in the context of biotechnology

(see Appendix I). Its “Patent Lens” project and the related “Initiative for Open Innovation”

provide cyber-infrastructure to access key legal, scientific, technical and business data. Cambia

attempted to make biological parts available through open source style licenses with a

“transbacter” plant transformation system to bypass the patent-stacked Agrobacterium-

mediated gene transfer technology, using its diversity array technology (DArT) to analyse

genomes. IPRs related to DArT are currently being licensed by a privately held company on

non-exclusive and reportedly fair and equitable terms that the technology’s proprietors describe

as open source (see Appendix I). The BioBricks Foundation (see Appendix I) is another

example of an enterprise making biological parts available through open source style licenses.

Apart from practical models, several authors have in theory proposed open source in the

context of biotechnology. Hope (2006) wrote the first book-length empirical study on open

source biotechnology. Mayer (2003) and Srinivas (2003) recommend the creation of open

source projects for agricultural biology as do Rai et al. (2004) for biomedicine.

Mayer (2003:5) explains that developing countries are usually net importers of technology and

that it would be desirable for these countries to become generators of technology. Such a shift

might put developing countries in a better legal position, but they would not be in a better

technical position than developed countries to access patented technologies. IPRs were never

designed to prevent development but to promote it; IPR laws will be essential for the

acquisition of agricultural biotechnologies for developing countries and open source might be

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a feasible alternative (ibid.:5). The Biolinux model (Srinivas 2003:1-3) understands that

farmers are both users and innovators of technology, and proposes the creation of a GPL for

agricultural biotechnology. The core idea is to place no restrictions on developing, or

experimenting on, new varieties; but all the new varieties derived from the Biolinux model

should be available, without monopolistic claims or restrictions, for further development. An

agency would coordinate such activities, with a common pool to which farmers could

contribute and solicit for samples. This common pool of germplasms could also exchange

material with other pools under Material Transfer Agreements (MTAs).

Rai et al. (2004:1) point out that only 1 per cent of newly developed drugs are for tropical

diseases, such as African sleeping sickness, dengue fever and leishmaniasis. Two proposals

have been suggested for tackling the problem. The first would be to ask sponsors, such as

governments and charities, to subsidize developing country purchases at a guaranteed price.

The second involves charities creating non-profit venture capitalist firms or “Virtual Pharmas”.

Rai et al. discuss the limitations of these two approaches and suggest open source drug

development through contracts with corporate partners as a feasible third approach.

One argument for an open source approach is that subsidies have a weakness, in that it is nearly

impossible to determine correctly what size the subsidies should be (Rai et al. 2004:183).

Another argument is that the Virtual Pharma approach has had some success and been

responsible for most candidate treatments for tropical diseases currently under development

(ibid.). For example, the DNDi has a portfolio of many projects spread out across the drug

development pipeline for the treatment of leishmaniasis, sleeping sickness, Chagas disease and

malaria. Nevertheless, the Virtual Pharma approach has faced three important problems: a)

guessing private sector R&D; b) virtual Pharma’s development pipelines will run dry without

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more upstream research; and c) research has been weak in exploiting genomics, and tropical

disease research is badly underfunded (ibid.).

Rai et al. (2004:184) argue that a well-designed open source mechanism would help fill Virtual

Pharma’s pipeline. The authors propose a website where volunteers could use computer

programs, databases and computer hardware. Pages would host tasks, such as searching for

new proteins or finding chemicals to attack known targets. Volunteers would be able to use

chat rooms and bulletin boards to publicize discoveries and debate forthcoming research

directions. Dedicated and skilful volunteers would become leaders. The authors believe that,

in practice, this effort would likely include modest experiments. One practical examples of this

model is the Synaptic Leap (see Appendix I).

5.5. Hancher and Moran’s Methodology in the Context of OSI

This section applies Hancher and Moran’s methodology in the context of the definition of OSI

in order to develop a deeper analysis of OSI. It will use the methodology to look into the fusion

of private and public ownership in terms of influences that interact within the regulatory space

of OSI.

OSI is a new trend and can be perceived as a space inhabited by several organizations: not just

the organizations that promote models of OSI, but also the bodies involved in the promotion

and regulation of biotechnology and IPRs. In addition, given that OSI is a fairly new concept,

the space is also available for occupation.

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The analysis here is tied to the findings of Chapters 3 and 4. This thesis argues that OSI is tied

to the evolution of IPRs in biotechnology and the regulatory space. In fact, OSI exists today

because of the criticisms that many have levelled against the IPR regime. So, the changing

regulatory basis of biotechnology and IPRs surveyed in Chapter 3 has heavily influenced OSI.

In OSI the power of regulation is not concentrated in one entity, the state authority – that power

of regulation is instead fragmented among organizations that take part in the regulatory process.

Similar to the findings of Chapter 3, the regulation of OSI at international level is allocated

among governments that are present in the debates and/or negotiations of the WTO, the WHO

and the WIPO. At national level, the regulation of OSI is and will be performed by different

bodies such as national patent offices, food and drug regulatory bodies, courts and legislatures.

In regard to informal actors, the conclusions of Chapter 3 are very applicable to OSI. The so-

called informal actors perform a very important governance role in respect of OSI. These

informal actors consist of two layers: the first layer are the industry associations and funding

bodies and the second layer are the NGOs and academics advocating OSI.

Take, for example, a publicly funded research council and/or government department

responsible for funding biotechnology activities that decides that companies and organizations

engaged in a specific area of research must adopt OSI innovation strategies in their research.

Given that those organizations have power to determine how research is conducted, they will

influence how regulators should perceive OSI.

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Take another example: a certain biotechnology association of a country decides to promote

OSI. As Chapter 3 discussed, industry associations exert influence over biotechnology and IPR

policy because these bodies typically are funded by pharmaceutical and biotechnology

corporations and have status and authority. If a biotechnology association starts to promote

OSI, they will certainly have influence over the regulation of OSI.

NGOs and academics are the two categories responsible for the visibility of OSI today.

Although, as Chapter 3 explained, these two categories have limited influence in the regulation

of IPRs and biotechnology, they would be able to play a more significant role in an OSI regime.

In fact, OSI is a fine example of how NGOs and social movements have become more

influential in the debate process. As this thesis has repeatedly stressed, academics and NGOs

have been highlighting many of the concerns about the impact of IP and have promoted

alternative solutions such as OSI. Through conventional forms of advocacy and lobbying these

two categories are very important in the governance of OSI, in the sense that regulation of OSI

will not be captured by certain groups only (e.g. associations and TNCs). Through the informal

process such as interacting with delegates of countries mainly and associations, academics and

NGOs have the power to harness public opinion and influence the media and public opinion

regarding OSI. Academics and NGOs therefore play a pivotal role in assisting capacity-

building, especially in developing countries, to build capacity to negotiate at international level

and develop proper regulations and policies at national level.

Overall, one important revelation of this chapter’s regulatory space analysis has been the role

played by NGOs and academics in OSI. Given the absence of specifically tailored,

comprehensive, formal legal provisions for governing OSI, it follows the regulation of IPRs

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and biotechnology. Hence, in general, OSI is embedded within a negotiated regulatory space

wherein many different bodies share authority, power and control; although the bases for their

authority and influence vary.

The situation raises questions about how OSI should be governed, if at al. Some important

questions for OSI theorists are: a) What is the proper role and scope of formal laws and legal

measures? b) Should a desirable balance (if any) exist between formal and informal devices?

and c) Can informal methods – especially those that evolve organically – ever be relied upon

to compensate adequately for defects or gaps in the formal regulatory framework pertaining

IPRs and OSI? The empirical research conducted for this thesis suggests that currently OSI

relies on the IPR regime (at international and national levels) and therefore that its informal

actors do not remedy, but rather compound, its shortcomings. This thesis makes three points in

regard to the combination of the analysis in Chapter 3 and that carried out in this chapter.

Firstly, the regulatory space of OSI arguably is populated by a large number of instruments and

competing actors. Therefore, it is very complex and lacks coordination, which may cause to

some extent confusion, incoherence and uncertainty.

Secondly, currently OSI is dependent on self-regulation or “soft” regulatory techniques.

Therefore, what emerges is a predominantly self-regulatory system, heavily reliant on

voluntary compliance for research undertaken under OSI terms. This may raise the risk of

regulatory capture from some actors.

Thirdly, OSI has legitimacy. It upholds some fundamental regulatory principles – especially

transparency, accountability (including the democratic principle) and consistency. Arguably,

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today the key resources are allocated among the actors that are debating the regulation of OSI.

Today there is no evidence of undue concentrations of power, particularly in the hands of

certain informal bodies, who can effectively exclude other stakeholders. In fact, one can see

NGOs and academics having more and more say as to how OSI, and in particular biotechnology

and IPRs, should operate. This public accountability is vital for bolstering public trust,

confidence, support and participation – all of which are important for OSI.

In conclusion, mapping the regulatory space has proved to be efficient analytical tool for

understanding better the governance of OSI in order to formulate specific recommendations

for OSI.

5.6 Making Profit with OSI

It is true that an unfettered openness has the potential to discourage investments from

enterprises, which are vital to translate invention into innovation for society’s common good.

Nevertheless, there is the possibility of reaching an optimal exploitation of innovation through

open innovation, which may require a deliberate calibration of hybrid models (i.e. both

exclusive and open models).

Schumpeter`s economic theory of innovation and progress, the “creative destruction” theory,

explained that the prime motivator, or “the premium put upon successful innovation”, is

entrepreneurial profit. Industry participants try to duplicate innovation when they find a new

level of profit. On the other hand, the entrepreneur aims to preserve his high profit for the

longest period of time possible, through further innovation, the use of patents, secret processes,

advertising, and “aggression directed against actual and would-be competitors” (Schumpeter

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1920:51-52). Thus, according to Schumpeter, when a new competitor enters into an existing

industry it faces different challenges posed by the older players (McCraw 2007:240).

Competitors try to prohibit, discredit, or otherwise restrict the advantage afforded to the new

company by its innovation (ibid.). However, high profit is temporary and, as competitors copy

the innovation, prices fall. Schumpeter called this sequence of cutting prices “competing

down”. It happens in all industries, except those protected by government monopoly, but it

sometimes takes several years and is often hard for contemporaries to see (McCraw 2006:240).

In the biotech context, the costs associated with relinquishing IPR (free-revealing) are likely to

be higher than in software (Hope 2008:15). In biotechnology, production costs are sensitive to

economies of scale, and the cost of reproduction is higher than in software (ibid.). In addition,

to obtain and maintain a patent takes time and money, especially when patenting an invention

internationally (ibid.:159). Hence, it may not be worth going through the trouble of obtaining

a patent if the intention is to free-reveal the invention later on (ibid.:160).

In organizational science, there are two models of innovation that prevail. One is the private

investment model, where there is the assumption that returns to the innovator result from

private goods and efficient regimes of IP protection. The other is the collective action model,

whereby under conditions of market failure, innovators collaborate in order to produce a public

good (Von Hippel and Von Krogh 2003, 2009).

This thesis suggests that an open collaborative model strategy would depend mainly on public

funding. Nevertheless, although interest group politics may oppose OSI, they may also find

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OSI in their interests as complementary approach to R&D. Commercial entities may participate

in this strategy but they could face some challenges in making profit from open models. A good

argument for private business is that, with OSI, instead of having to develop and support the

technology alone they can take advantage of improvements made in collaboration with other

entities, sharing expenses. One good example is Lilly Research Laboratories’ Open Innovation

programme. Lilly proposes to engage the global academic community through a “new Open

Innovation drug discovery initiative in order to identify novel molecules active in relevant

disease biology models” (Palkowitz 2009:2). Lilly is attempting to “provide academic and

biotech investigators access to sophisticated in vitro model systems while simultaneously

increasing Lilly’s partnership with top global research talent” (ibid.:6). GSK also has an

initiative called Pharma in Partnership, and is supporting the Stevenage Bioscience Catalyst in

the United Kingdom, which claims to be an open innovation campus.

From a non-use point of view, there are other ways to leverage the extra user-appeal of an open

source product. For example, the more widely a technology is used, the larger the market for

complementary goods or services, such as technical support, customization, hardware or

wetware supplies, kits and so on. Leading a successful open source project can boost an

organization’s reputation or learning capacity, both of which can be translated into economic

benefit. Open source licensing can also be used as a competitive weapon, for example to

prevent a competitor gaining a chokehold over an important platform technology (Hope:139-

141).

One specific practice of OSI is free-revealing. The main question here is why someone would

voluntarily relinquish the rights to his/ her research. Commercial interests of private enterprises

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conflict with this mode of scientific production. The impetus behind private enterprises is to

create innovations that are protected by national and international IP legislation (ibid.:142).

Von Hippel and Von Krogh’s (2006:297) argument is that

When benefits from free revealing exceed the benefits that are practically obtainable
from holding an innovation secret or licensing it, free revealing should be the preferred
course of action for a profit-seeking firm or individual.

According to Von Hippel and Von Krogh (2003:7), in the private investment model of

innovation incentives it is assumed that any free-revealing or uncompensated spill-overs of

proprietary knowledge developed by private investment directly reduces the innovator’s

profits.

Hope (2008:158) identifies some factors that favour open source over straightforward free-

revealing. Many biotechnologies confer ownership rights that arise automatically. For

example, many innovations incorporate software code, data, written protocols, or other

elements that may be subject to copyright protection. In addition, there are biological

innovations with tangible material components, such as cell lines or germplasms, which

constitute personal property (despite any IPRs that may be associated with the technology). For

these situations, an open collaborative license may reduce the transaction costs of transferring

the technology to other prospective users by clarifying the owner’s intention to make the

technology available on non-proprietary terms (ibid.:160). In some cases a patent loses its

value, and the owner may opt for an open source style approach in order to license the

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technology towards the end of its protection. Open source is an alternative to abandoning the

patent (ibid.:161).

If patent protection has not been secured, in some circumstances (e.g. BCCA in Section 5.4.1.1

and Appendix I) open source could be preferable to straightforward free-revealing since

making it available for the public leaves the possibility that someone else will pursue a

proprietary exploitation strategy (ibid.:161). Even if someone intends to license the technology

on academic, or permissive, open source terms, the innovator might choose to obtain patent

protection. This gives the option “of making the technology available under more than one

license – the approach known as dual license” (ibid.:163).

As an alternative to free-revealing, open source licensing may be a suitable option because

patent ownership gives the innovator an ability “to set terms of use and exclude anyone who

will not abide by those terms of use, thereby opening up a wider range of strategic options than

mere publication or defensive disclosure” (ibid.:163).

Although the traditional view of sources of innovation is “that product manufacturers would

be the developers of all or most new products” (DeMonaco et al. 2006:4), some recent

empirical research has shown that today the actual developers of many of the commercially

important new products are product users rather than manufacturers (ibid.). Urban and Von

Hippel (1988), Herstatt and Von Hippel (1992), Olson and Blake (2001), Linen et al. (2002)

and Franke et al. (2006) have showed through practical demonstrations that user innovation

methods may generate ideas for new products that have commercial applications in an effective

and systematic way. In addition, studies have shown that user-developed products tend to be

“functionally novel”. The central idea of the user innovation theory is that the users are more

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aware of their needs and of the context in which the use of innovation takes place, and therefore

it is reasonable to say that many discoveries will only be made through learning by doing.

In biotechnology there are conditions favouring user innovation R&D (Hope 2004:149). For

example, collaborative arrangement between companies to help them print their own arrays, as

a way of obtaining the technology at a reasonable cost (ibid.). Alfred Gilman explained that

this was not unusual:

The biggest challenge is finding the technologies: applying what’s available and
developing new ones. Some technology development is incorporated into the
experimental scheme; a percentage of the money is invested in projects in individuals’
labs to give someone who is working on a specific project a little extra money to try to
facilitate development of the technology in a way that might help us directly. One
example ... is to develop technologies to measure concentrations of very large numbers
of cellular lipids. (ibid.)

Not all OSI models disregard property laws, and, on the contrary, they may in fact utilize a

form of property to govern a “protected commons” in information-based goods. It is about

collective action strategies, such as open source, patent pools, public private partnerships, and

institutional consortia, designed to license research techniques broadly and non-exclusively, to

all who wish to participate in solving mankind’s problems. These models offer a range of

benefits that can be translated into profits. For industry there are benefits such as sharing risks

and costs, leveraging new funds, access to the best academic scientists and ability to focus

resources (more profitable). For academia the benefits include: resources to explore unknowns,

opportunity to publish and gain recognition and opportunity to collaborate openly. For

governments some of the benefits are: job creations (direct jobs and start-up creation),

balancing public health expenditure and quicker, cheaper and better cures and treatments for

diseases.

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 5.7 Key Objectives of OSI

5.7.1 Open or Publicly Accessible

A first key objective of OSI is full disclosure of research techniques and accessibility of

research techniques. To some extent the patent system is parallel to this key objective. At least

in theory, the patent system, through its disclosure mechanism, keeps the characteristics of the

invention open or publicly accessible. Nevertheless, the open informational nature of patents

does not necessary mean that the invention is open in the same sense that public use of the

invention is available, or that the invention is publicly accessible. The patent may block use,

even as it discloses and enables the inventions. A key policy option to achieve this favours no

IP protection, supporting strong norm development to ensure a vibrant public domain.

5.7.2 Freedom to Fork

A second key objective of OSI is freedom to fork. This means that OSI must ensure that users

have the capability to exercise freedom with respect to a technology, and allow for competition

and technological improvements or “forks”. Following Sen’s (2005:152-163) capabilities

approach, this means the ability to freely use, modify and redistribute research techniques, for

a price or gratis, and often but not always imposing on licensees reciprocal obligations to share

their improvements on similar terms. Altogether, this means that any individual has the

freedom to fork and can take a development project in another direction, provided he or she is

able to attract support. This is the ultimate “check and balance” in a system of technology

governance configured around the rights of users.

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 5.7.3 Credible Commitment

A third key objective is credible commitment. Following Hope (2008:179), having standard

licenses that can accommodate the complexity and variety of biotechnology transfer

agreements, yet remain faithful to the underlying logic of open source is a way to achieve

credible commitment. A technology in the public domain to some extent lacks credible

commitment because it is vulnerable to opportunistic exploitation. In this sense, IPRs protect

a technology that may be distributed under a license whose terms are legally enforceable by

both licensor and licensee (ibid.).

5.7.4 Competition

A fourth key objective of OSI is competition. Competition refers to the fact that users have the

right to use and improve the technology, and to sell or distribute the initial innovation and their

own improvements (Hope 2008:180). The licensor cannot exclude others so everyone must

compete on quality, price, and innovation (ibid.:181). An open source licensor also encourages

others to invest in ongoing technology development that ultimately benefits the licensor, either

as a user of the technology or by boosting other revenue streams (ibid.). This feature is

important to build new branches of collaborative efforts, to give freedom to fork or “technology

freedom” (ibid.:183).

IP in the form of patents gives the monopoly holder the choice to exploit the invention himself

or permit other parties to do it. In certain circumstances a patent exploitation may amount to

anti-competitive strategies.

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Today, in the case of the developed economies, where most pharmaceutical and agricultural

corporations are concentrated, there has been a significant transformation in the way

technologies and rights over them are deployed in the global marketplace (Dutfield 2001:219-

220). It is not only IPR-protected products, technologies and services that are the major exports

of developed countries; it is also the rights themselves in the form of licenses to use patented

processes, techniques and designs, copyrights, trademarks and franchises (ibid.).

Naturally, a developing country such as Brazil that publicly funds basic research undertaken

by academic and public institutions (and wishes to achieve excellence in biotechnology), must

have a policy that creates adequate incentives for commercialization of basic research. This

policy must also address concerns regarding the proper utilization of these resources in view

of returns to taxpayers, and technology transfer is a bottleneck.

Biotechnology can be transferred in many different ways. For instance, in the academic

environment the transfer may occur informally through the dissemination of knowledge among

researchers or when a graduate student gets a job in a biotech company and transfers the

knowledge acquired. In biotechnology, technology transfer also takes place through

contractual agreements. In biotech, the main contractual mechanisms are confidentiality

agreements, material transfer agreements, deed of assignment, license agreement and strategic

alliances or joint venture.

Barton et al. (1995:16) explain that international technology transfer is generally carried out in

such forms as foreign direct investment (FDI), joint ventures, technology licensing,

franchising, technical service contracts, turn-key contracts and international subcontracting.

There are horizontal and vertical agreements in international technological licenses. Vertical

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agreements are essentially the licensing between firms at the same level in the chain of

production/distribution, whereas horizontal agreement agreements are licensing between firms

at different levels in the chain of production/distribution (ibid.). Governments are also involved

in technology transfer. Moreover, informal and free-of-charge technology transfer is possible.

The idea of developing useful products from publicly funded research relies on the fact that

patents may promote technology transfer to industry (see Section 4.4.1.1 on the Bayh-Dole Act

and the underpinning rationale to promote technology transfer for public good).

Traditionally WIPO has seen technology through the neoliberal notion that “developing

countries can better acquire technological know-how and direct investment in local technology

production by legislating strong IP rights than by implementing compulsory licensing”

(Netanel 2008:14), but the WIPO (2007) Development Agenda provides a new vision that

offers a useful guidance in regards to technology transfer that is very important for the future

of OSI and biotechnology in Brazil (and other developing countries). The Agenda emphasizes

the importance of technical assistance and capacity-building as tools for development-oriented

needs of developing countries. This assistance is important for making “national IP institutions

more efficient” and in promoting fair balance between IP protection and the public interest.

Note that this technical assistance is to improve access to biotechnology related information

because it is said that developing countries often lack the resources or expertise required

(WIPO 2007:cluster A).

WIPO’s guidance in promoting the adoption of alternative IP management strategies would be

essential in promoting a fair balance between IP protection and the public interest. Brazil and

other developing nations rely on WIPO’s advice on how IP treaties are to be implemented, in

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drafting national legislation, in generating model IP laws, in training officials and lawyers, and

in seeking to bolster the competency and efficiency of national IP offices (WIPO 2004).

The WIPO (2004) Handbook’s chapter on IP and development makes no mention of alternative

mechanisms such as open collaborative licensing. Nevertheless, the Development Agenda may

change WIPO’s traditional approach, as it is required to provide assistance to developing

countries in accordance with their specific needs rather than promoting a one-size-fits-all IP

model. The Agenda calls on WIPO to assist developing countries to take full advantage of

TRIPS exceptions and limitations and to promote development through the use of competition

law and combating anti-competitive strategies. IP licensing poses a key opportunity for

developing countries to explore alternatives to manage IP within the current system.

Section 22 of the Agenda states that “WIPO’s norm-setting activities should be supportive of

the development goals agreed within the UN system, including those contained in the

Millennium Declaration”. The Agenda seeks to intensify WIPO’s cooperation on IP-related

issues with UN agencies, according to Member States’ orientation, in order to strengthen the

coordination for maximum efficiency in undertaking development programmes. Cluster C of

the Agenda contains important provisions for technology transfer:

1) To explore IP-related policies and initiatives necessary to promote the transfer

and dissemination of technology, to the benefit of developing countries and to take

appropriate measures to enable developing countries to fully understand and benefit

from different provisions, pertaining to flexibilities provided for in international

agreements, as appropriate

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 2) To encourage Member States, especially developed countries, to urge their

research and scientific institutions to enhance cooperation and exchange with R&D

institutions in developing countries, especially LDCs

3) To explore supportive IP-related policies and measures Member States,

especially developed countries, could adopt for promoting transfer and dissemination

of technology to developing countries.

Assuming that competition is one of the core principles of OSI, the Development Agenda

provides an incentive for open approaches. The Agenda has some items regarding the potential

conflicts between IP and competition policy. For instance, item 7 reads:

Promote measures that will help countries deal with IP related anti-competitive
practices, by providing technical cooperation to developing countries, especially LDCs,
at their request, in order to better understand the interface between IPRs and
competition policies.

The Development Agenda encourages developing countries to tailor their IP regimes with

sound competition law, raising awareness of possibilities for crafting competition law and

policy to better serve developing country interests in delimiting exclusive IPRs. Although

making generalizations on the interface between technology transfer and levels of IP protection

is complicated (Dutfield 2008; Maskus 1998), adopting the Agenda’s guidelines could be an

important step to promote technology transfer. For example, a legislation change such as the

US Cooperative Research and Technology Enhancement Act of 2004 (CREATE Act) could

promote collaboration among industry collaborators, and therefore innovation, having

important implications in decreasing costs and enabling the commercialization of patented

biotech products and processes for the common good.

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The focus of this thesis is on OSI, and the argument put forth here is that the Brazilian

government should devote considerable attention and analysis to new mechanisms (i.e. public-

private partnerships [PPPs], open innovation, etc.) to develop and manage IP. These strategies

may provide access to technologies and dissemination of technology among national and

international research institutions. Open collaborative licensing and OSI may improve the

technological gap providing access to patented research techniques to build a stronger

biotechnology sector.

A proper system that supports technology transfer and competition is vital for OSI. At certain

stages of development, transfer of technology provides capacity-building for a country’s

national development (Dutfield 2008:1). Perhaps the best way to acquire technology is to invest

in the education of the population. Another way to achieve it is for a country to require foreign

technology holders to transfer technology on generous terms (ibid.), rather than providing

strong IPRs to encourage domestic innovation (ibid.). Part III of the thesis will discuss the

relationship technology transfer has with OSI in the context of legal and constitutional aspects,

as well as technology transfer and its relation to OSI as dynamic process in which learning

(assimilating knowledge) is a key component.

5.8 Conclusions

The findings of this chapter’s analysis can be summarized as four primary contributions.

First, the chapter classified and compared innovation modes that build the basis for OSI (open

innovation, cumulative innovation and user innovation). This first step demarcating the streams

of research and their differences was important for the ensuing investigation of OSI.

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Second, the chapter investigated the origins of OSI and openness through an historical analysis.

This investigation showed that there is a historical basis for OSI. In addition, the investigation

was useful to help to understand OSI, the concept of openness and its roots, and that a closed

culture of science is to some extent an anomaly in the history of science. Of course, the current

context in which science is conducted may have been one of the reasons why openness has

been modified.

Third, it contrasted OSI, open innovation and IPRs. In general terms, OSI offers two possible

options: the first favours no IP protection, supporting strong norm development to ensure a

vibrant public domain. The second option, on the other hand, promotes the acquisition of some

IP protection, but does so to facilitate collaboration rather than (or in the process of) exclusive

rights to commercialization.

While there is an understandable, perhaps inevitable, instinct to gravitate towards this middle

ground in the search for consensus, the theoretical and practical considerations discussed in

this chapter suggest that one or the other more clear-cut management strategies may, in many

cases, be more efficient and effective.

It is important to realize that an increased focus on enriching the public domain does not ignore

the importance of commercialization; it simply puts responsibility for pursuing and measuring

that outcome on other actors in the innovation system. For example, the Structural Genomics

Consortium builds the public domain for precompetitive research, in effect pushing the role of

IPRs further down the supply chain of commercializable biotechnology. Conversely, the

acquisition towards commercialization model is not meant to devalue the dissemination of

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knowledge. It is based on the good faith belief that the pursuit and use of IPRs is an effective

means to that end.

In more specific terms, the second option includes patent pools, commons and the emerging

concept of open source biotechnology. Biotechnology patents pools have been mostly used so

far by social entrepreneurs for philanthropic purposes and it remains to be seen whether these

models can work successfully outside of the humanitarian context, where there are fewer

incentives for firms to voluntarily pool IPRs with other organizations. Commons have worked

very well in the copyright context. A scientific commons could make research techniques

widely available for non-commercial research purposes, but the contractual creation of a

research commons may face limitations such as lack of good management, therefore the

underlining collaborative licensing is very important. The SNP Consortium, the International

HapMap Project, Science Commons and CIRM are examples of commons. Open source

biotechnology attempts to make technologies available through open source style licenses, and

probably the most famous example is Cambia. Open source in the health sciences could make

a huge difference to projects for developing drugs for neglected diseases, for which needs are

great but funds are scarce. Specific examples include PPPs, such as the Medicine for Malaria

Venture.

There is no definite distinction among patent pools, commons and open source biotechnology.

Often these models have similar features and therefore how one model branded “open source

biotechnology” and another branded “open scientific commons” differ is sometimes not very

clear. That is not a major problem, however, because at the core of these models is

collaboration, and this thesis identifies these approaches as OSI.

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Despite the illustrations provided, it is unlikely that any single IP management strategy would

or should be applied rigidly within or across organizations. There is no need for policy makers

to choose only one of these options because they are not mutually exclusive. Degrees of

openness can be characterized on a continuum reflecting the porosity of boundaries separating

public and private rights, and the emphasis on osmosis between them. Moreover, different

resources at different stages of development in different industries in different places involving

different collaborators and different IPRs can be managed using a mixture of approaches.

Perhaps most importantly, the appropriate blend of IP management models will depend on the

essential nature of the commercial or non-commercial value to be created and shared among

stakeholders.

One of the challenges in considering the possibilities of OSI models is the lack of consensus

around a precise definition or even conceptual framework for analysis. This thesis attempts to

clarify some of these aspects. Also, promising work is emerging from management research

on open innovation in general (Dahlander and Gann 2010) and transdisciplinary analyses of

open source biotechnology and genomics in particular (Hope 2008; Joly 2010; Van Overwalle

2009). But there are still major gulfs in the discourse and framing of concepts like openness

and accessibility (cf. Chesbrough 2005 with Kapczynski and Krikorian 2010).

Although this chapter has mostly explored historical and case accounts and empirical work, it

has also applied Hancher and Moran’s methodological device in the context of OSI

specifically. This analysis was aimed at answering the question of how OSI should be

governed, if at all. Some important concerns in regard to the governance for OSI are: a) What

is the proper role and scope of formal laws and legal measures? b) Should a desirable balance

(if any) exist between formal and informal devices? and c) Can informal methods – especially

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those that evolve organically – ever be relied upon to compensate adequately for defects or

gaps in the formal regulatory framework pertaining IPRs and OSI?

In the regulatory space mapping performed in Parts I and II of this thesis has created a powerful

analytic tool that will be used in Part III to formulate specific recommendations for OSI in

Brazil.

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 PART III

OPEN SCIENTIFIC INNOVATION AND BRAZIL

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 6. Brazilian Law and Open Scientific Innovation

6.1 Introduction

So far this thesis has claimed that OSI appears to be feasible and desirable for biotechnology.

However, the extent to which OSI can operate effectively in Brazil in the biotechnology context

will ultimately depend on how supportive the national legal and regulatory system is.

This chapter presents the case study of Brazil’s biotechnology regulatory and innovation

system. The case study analyses contemporary issues with regard to IPRs and innovation and

assesses how these issues have been addressed in the country. The main purpose of this and

the following chapters is to clarify the Brazilian situation and its interaction with OSI, and on

this basis to assess the feasibility of OSI in Brazil from a legal point of view. It will trace the

legal elements that justify the implementation of public policies that aim to promote the use of

OSI. This chapter will explore the links between a rights-based approach and OSI in order to

assess whether or not OSI offers the possibility of broader participation and innovation, and

whether it gives a social function to IP.

The case study method, together with analysis of a number of theoretical propositions, is used

to survey knowledge on innovation and the law in Brazil. It will also use Hancher and Moran’s

methodological approach where appropriate to provide a conceptual frame of analysis. This

blended methodology is the most appropriate approach for assessing OSI and its legitimacy as

a form of IP strategy.

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 6.2 Brazilian Patent Law

6.2.1 A Historical Overview

At the outset, a particular importance has to be placed on the historical facts of the regulation

of IP in Brazil. This will stimulate the debate about IP and alternative solutions such as OSI in

an instructive manner and illustrate the evolutionary aspect of the adaptation of regulation.

Brazil patent regulation sits within the context of the world development of national patent

laws that have their roots in medieval systems of sovereigns and powers that created different

types of exclusive privileges (Drahos 2005:chapter 1). Drahos explains that in the ancient and

medieval worlds, they used prerogatives and other sources of power to create monopolies for

the sale or importation of goods and regulation of trade and crafts (ibid.:1). With the emergence

of modern states, the regulation of monopolies improved and started to become differentiated

(ibid.). In order to attract new technologies and skilled labour, the grant of monopoly privilege

started to become a practice among sovereigns (ibid.).

Drahos (2005:1) suggests that the system of sovereign-based privileges from which national

patent systems evolved impressed upon those systems three fundamental characteristics. The

first is the principle of territoriality which still abides today (ibid.). The second relates to a

number of different objectives, for example states wanting to attract foreign skilled labour or

to protect their domestic industries and increase gains from trade (ibid.). The third is the thought

of public benefit (ibid.).

The first patent system, created in Venice in 1474, granted a ten-year privilege to inventors of

“new arts and machinery” (ibid.:10). According to McLeod (1988:1), Italian states were

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pioneers in the development of property rights, and these legal and administrative models were

then transferred to northern Europe and England. The first British patent law was the Statute

of Monopolies, which dates from 1623. However, some say it did not deserve the name of

patent law until its reform in 1852 (ibid.). The legal demand for written specifications emerged

only in the early eighteenth century, and such specifications were made public only towards

the end of that century (ibid.:11-12). Before then, “it was rare to demand anything of the

patentee” (ibid.:13). In sixteenth-century England, “the rights of the first inventor were

understood to derive from those of the first importer of the invention” (ibid.:13).

France adopted a patent law in 1791, the United States in 1793, and Austria in 1794 (ibid.).

Towards the end of the nineteenth century and into the twentieth, most of the patent systems

were much looser compared to current standards. Before European states became afraid of the

power of the German chemical industry, not many countries allowed patents on

pharmaceuticals and chemical substances. Moreover, the importation of foreign inventions was

allowed in Austria, France and the Netherlands (Chang 2002; Machlup and Penrose 1950;

Penrose 1951; Schiff 1971).

Not until 1907, because of a threat of trade sanctions from Germany over the free and

widespread Swiss use of German chemical and pharmaceutical processes, did Switzerland

adopt a patent law. However, this law provided for exclusions such as the refusal to grant

patents for chemical substances (as opposed to chemical processes) until 1978 (Patel

1989:980).

Brazilian patent law followed the European pattern of encouraging invention by importation

(as in England) and making it difficult for foreigners to get patents. The first Brazilian law on

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patents dates from April 28, 1809, two years after Dom Joao VI, King of the United Kingdom

of Portugal, Brazil and the Algarve, and the whole Portuguese royal family fled to Brazil

following the French invasion of Portugal (Cruz 1982:4).

In 1809 Dom Joao VI created the alvará (a form of permit inspired by the English Statute of

Monopolies 1623) that had a set of measures aimed at stimulating investment in industrial

sectors. The logic was to give incentives for the creation of new machines to boost the economy

of the new headquarters of the Portuguese Kingdom (Brazil). This is the beginning of patent

law in Brazil, and places the country as one of the first nations in the world to have legislation

on the subject (Cruz 1982).

Brazil passed a number of Acts on IP after 1809, because of new national inventions and the

relationship those inventions had with foreign capital. After gaining independence from

Portugal in 1822, the Brazilian Empire promulgated its first Constitution in 1824. Article 179,

paragraph 26, of the Constitution, stated:

Inventors shall have the property of their findings or their productions. The law will
ensure them a temporary exclusive privilege, or it will remunerate them in
compensation for the loss they may suffer.

The Brazilian Empire introduced the Law of August 28, 1830, in order to adjust the granting

of industrial privileges and rights. The first article of this law guaranteed the ownership and

exclusive use of a discovery or invention for the inventor of a useful industry. It also recognized

similar rights for those who improved discoveries and inventions. Privileges were granted for

different periods of time which depended on the nature of the discovery or invention (ranging

from 5 to 20 years) (Barbosa 1982; Cruz 1982).

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This law granted patents only to national inventors. It is interesting to note that the 1830 law

stipulated a reward for those who imported a foreign invention instead of creating a monopoly.

If there was proof that the inventor had obtained a patent abroad for the same invention, the

patent would be cancelled. The amount of the reward was never decided, however, which led

ministers to grant patents to foreigners ad referendum. Thus, despite the prohibition, in 1878 a

patent was granted to Thomas Edison for the phonograph (ibid.).

The Brazilian Ministry of Agriculture, Commerce and Public Works in 1876 proposed the

establishment of a new law in order to protect monopolies on foreign new technologies (ibid.).

According to the Ministry, Brazil was a new nation with large and various elements of wealth

that offered many opportunities to achieve self-sufficiency, and therefore for the advancement

of the national industry it was necessary to create legislation to protect monopolies of foreign

inventions (Barbosa 1982).

Law 3129 of October 14, 1882, introduced changes for foreign inventors. Article 24 provided

for the principle of priority. The introduction of such a principle had immediate effects: while

in the final eight years of the law of 1830 there were 434 granted privileges (33 belonged to

foreigners), eight years after the enactment of the law of 1882 there were 1,000 (66 per cent to

foreigners in 1889) (Barbosa 1982).

Brazil signed the Paris Convention in 1884 and after this Brazilian patent legislation did not

require any adjustments because it was in line with international standards. The next major

event in Brazilian patent law occurred in 1970, when Brazil signed the Patent Cooperation

Treaty (PCT).

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From the above summary it can be seen that the history of patent law in Brazil comes within

the context of the Western history of patent law. This is largely because Brazil was part of the

Portuguese Empire, so the European patent trends was followed in the country. The next

section will analyse modern patent regulation in Brazil, and compare it with the regulatory

arrangements and rules governing biotechnology evolution from the 1980s until the present

day.

6.2.3 The Current Patent Framework

Brazil’s IP regime is shaped by the global regulation of IP, particularly the terms of TRIPS.

Concerning patents, the key actors in Brazil are the Ministry of Science and Technology

(MCT), the Ministry of Health, the Ministry of Foreign Affairs, the Brazilian Industrial

Property Office (INPI) and Brazil’s National Health Surveillance Agency (ANVISA).

Politicians, NGOs and business actors such as leading pharmaceutical transnational

laboratories and multinational plant molecular companies, also influence the development of

the new patent agenda.

The current Brazilian IP legislation does not adopt a IP-maximalist approach (Chamas 2008;

Del Nero 2004; Octaviani 2010). This is quite true when one compares the Brazilian Industrial

Property Law (BIPL) to the patent law of other countries. In fact, Brazilian legislators chose to

adopt relatively restrictive approach to the scope of allowable patents in the field of

biotechnology (ibid.).

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If one looks into the Brazilian Constitution of 1988, one finds that Brazil does not prohibit

biotechnological patents. Article 5, XXIX, assures inventors temporary privileges for

inventions, as long as there is a commitment to social function.

On the other hand, one finds that the BIPL excludes from patentability certain innovations.

Article 18 of this law excludes from patents inventions contrary to morals, good customs,

security, order and public health. Under this same law, one further finds that patents may not

be taken out on “the whole or any part of living beings, except transgenic organisms that meet

the three requirements of patentability – something that is new, an inventive activity and an

industrial application […] and that is not a mere discovery” (BIPL § III, Art. 18).

Article 18 is subject to interpretation and Brazilian scholarship suggests its interpretation

should be informed by European Directive 98/44/EC (Barbosa 2003:600). Article 6.1 of the

Directive states that:

Inventions shall be considered not patentable where their commercial exploitation

would be contrary to ordre public or morality; however, exploitation shall not be
deemed to be so contrary merely because it is prohibited by law or regulation. 2. On
the basis of paragraph 1, the following, in particular, shall be considered not patentable:
(a) processes for cloning human beings; (b) processes for modifying the germ line
genetic identity of human beings; (c) uses of human embryos for industrial or
commercial purposes; (d) processes for modifying the genetic identity of animals which
are likely to cause them suffering without any substantial medical benefit to man or
animal, and also animals resulting from such processes.

Article 8, II and III, of the BIPL also excludes the patentability of:

Materials, substances, mixtures, elements or products of any kind, and the modification
of its physicochemical properties and procedures for obtaining or modifying, when
resulting from conversion of atomic nucleus, and - the whole or part of living beings,
except for transgenic microorganisms that meet the three requirements for patentability
- novelty, inventive step and industrial application - which are not mere discovery.

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In addition, Article 10, IX, excludes from the field of inventions:

All or part of natural living beings and biological materials found in nature, or isolated,
including the genome or germplasms of any natural living being and natural biological
processes.

Patentability requirements under the BIPL are novelty, inventiveness and industrial

application. Utility models, discoveries, scientific theories, and mathematical methods are not

patentable under Brazilian law.

Although there are important exceptions in Brazilian patent regulation, genetically modified

organisms (GMOs) are patentable as long as they meet the three patentability requirements

(Art. 18, III, BIPL). Hence, biotech inventions and research techniques are not prohibited under

the Brazilian law, and are patentable if they meet the three requirements.

Brazilian patent law also excludes from patentability:

Operational or surgical discoveries, techniques and methods, as well as therapeutic or

diagnostic methods for application in human or animal bodies, and all or part of natural
living beings and biological materials found in nature, or even isolated from it,
including the genome or germplasm of any natural living being and natural biological
processes. (Art. 10, VIII & IX)

Hence, Brazil does not allow for patenting of gene sequences. Nevertheless, the New Brazilian

Biosafety Law leaves room for interpretation and flexibility affecting biotechnology (Barbosa

2003:600). In Article 5 it provides for the utilization of stem cells for research and legalized

human embryonic stem-cell research. In view of this law multi-cell and infra-cell organisms

are patentable in Brazil.

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Nevertheless, as Barbosa (2003:603) suggests, there is a challenge for Brazilian patent analysts

in regard to biotech patenting. These types of inventions generally cannot be disclosed through

the traditional method – a microorganism is not subject to description – and therefore it is very

difficult to analyse the patent requirements (ibid.:600).

Brazil complies with international IP legislation. While the Paris Convention does not deal

with patentable subject matter issues except in the most general terms, the patentability of

biotechnological discoveries such as plants, animals and genetic sequences was controversial

during the TRIPS negotiations, where parties ultimately agreed to disagree by adopting

optional provisions and strategically vague wording (Barbosa 2003). As a result, WTO

Members may only exclude patents on inventions that are:

 Contrary to public order or morality, including to protect human life and human health,

animal or plant, or to prevent serious damage to the environment

 Methods of diagnosis, treatment and surgery, animal or human

 Animals other than microorganisms, plants that are not microorganisms, but for

varieties of plants there should be a system of protection, patents or otherwise

 Essentially biological processes for production of animals and plants, except non-

biological and microbiological processes. (TRIPS, Art. 27)

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Thus, Brazil follows TRIPS, but at the same time established an obligation for the concession

of biotech patents by prohibiting the exclusion of certain types of subject matter including

microorganisms (Barbosa 2003).

Since reforming its IP laws to comply with TRIPS, Brazil has faced many challenges.

Biotechnology is no exception as Brazil’s industrial property regime has been shaped by the

global regulation of IP, particularly by the terms of TRIPS, which primarily suits the interests

of the technology-exporter nations. Nonetheless, Brazil has been able to take advantage of

some of TRIPS’ flexibilities and has been able to partially shape its patent system to support

its interests, despite the rather negative perspective illustrated in Chapter 4.

6.2.4 Reflections on the Brazilian Patent System

The nature of the domestic patent landscape before the implementation of TRIPS in 1996

explains the origin of the traditional IPR template and the way the Brazilian Congress has

enacted TRIPS within the national legislation. Similarly, the new domestic political landscape

and shake up of interest groups explain policy making in Brasilia post-1996. If the Brazilian

politicians interviewed for this thesis had one thing in common, it was their lack of memory

and/or unawareness of the debates that led to the implementation of TRIPS in the Brazilian

national legislation. After 1996, IPR issues started to be more widely debated in Brazil, which

led to a new IPR agenda being advanced by a group of politicians from the Brazilian Social

Democratic Party and Labor Party.

Today many regard the approach taken by Brazil towards patent law and policy as being neither

maximalist nor neo-developmental. In fact, Brazil explores and broadly uses the available

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safeguards for gearing IPR management towards the fulfillment of national development

objectives. For example, Brazil tries to establish policies that consider incremental innovation

as being important for innovation as a whole. The national patent imposes no limit to patents

on radical inventions, but regulates patents on incremental innovation. By regulating

patentability for incremental inventions, the regime facilitates local industry participation in

the patent system. Many Brazilian policy makers understand this as being essential to move up

the ladder of global innovation. According to Jorge Avilla (2008:3), former President of the

INPI,

The Brazilian firms that have developed innovative capacities demonstrate the need to
retain the patentability of incremental innovations, because it is not possible for a new
actor in the scenario of innovation to immediately become a radical innovator. The
entryway to the system of innovation is incremental innovation.

6.2.4.1 Research Exemption and Compulsory Licensing

It is also very important to remember that, as discussed in Chapter 3, the roles of compulsory

license arrangements and research exemption.

Brazil, as a number of countries, has experimental use exemptions or defences in its patent law.

The Brazilian legislation allows the regulatory review exception in Article 42 of its Industrial

Property Law (BIPL). This mechanism is very important as one important mechanism for

allowing OSI models to advance. Brazilian policy makers must ensure the application of this

mechanism as an appropriate exception for research.

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Moreover, Brazil issued a compulsory license to allow the import of a generic version of a

patented anti-HIV drug and has also used the threat of compulsory licenses to reduce the price

of patented medicines.

Brazil has threatened to use compulsory licenses in two situations in the past. In the Merck case,

Brazil announced that it was going to issue a compulsory license to the patents on the HIV

antiretroviral drug efavirenz, however the Brazilian government and Merck reached an agreement

that provided for price discounts. Then, in the “Roche case”, the Brazilian government announced

it would issue a compulsory license for the manufacture of the HIV antiretroviral drug nelfinavir.

Roche decided to sell the drug in Brazil at an additional 40 per cent discount, so the Brazilian

government decided not to issue the compulsory license.

In 2001, the USTR filed a complaint about the Brazilian compulsory licensing law in the WTO

Dispute Settlement Body. USTR officials called this the “Merck case”. At stake was Article 68 of

Brazil’s patent law, which allows compulsory licenses to be issued in situations where the patent

holder does not locally manufacture the patented product (known as a “local working” provision).

Largely because of negative publicity, on June 25, 2001, the US government withdrew the

complaint. Brazil also found a related provision in US law and made a counterrequest for

consultations before the WTO (see Doc. WT/DS224/1).

The Brazilian government in 2003 issued a decree that would allow it to produce or import generic

anti-AIDS drugs without the consent of companies holding the patent on those medications. The

Brazilian Health Minister made it clear that the decree was meant to apply to antiretroviral drugs

– specifically efavirenz, nelfinavir and lopinavir. The Ministry said in a statement it had negotiated

with the name-brand companies in August 2003 seeking a reduction of more than 40 per cent but

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was offered a maximum discount of 6.7 per cent. Brazil and Merck subsequently reached an

agreement.

In 2005 Brazil started a process that culminated in the compulsory licensing of the patent of

efavirenz. The Brazil action on efavirenz followed Thailand’s similar decision. In Thailand,

Merck lowered the prices of the medicines, however in Brazil Merck did not. Since the Brazilian

government was unable to obtain similar price concessions from Merck, Brazil used this

mechanism and issued a compulsory license to produce a lower-cost, generic version of efavirenz

(Kaiser Daily 2007). The Brazilian government affirmed that this move would help secure the

viability of the National DST-AIDS Programme while being compliant with international law,

particularly TRIPS. Many factors influenced this decision, including Merck’s inflexibility in not

revising its prices for the Brazilian market; the bargaining leverage of the threat of the compulsory

licensing threat; and the pressure from Brazilian civil society, specifically human rights NGOs

(ibid.).

Evidence suggests that compulsory licenses (and the threat of use of a compulsory license) are

safeguards available that may ensure that patent rights are not overprotected and balance the

interests of inventors, users of other people’s inventions, and society as a whole. As a bargaining

mechanism, it has worked for Brazil in its negotiations with companies to lower the prices of anti-

AIDS drugs.

In fact, compulsory licensing may be a potentially useful mechanism to enhance access to

technologies and medicines, among other products, but it is not a panacea (Dutfield 2008:14;

Scherer and Watal 2002:37-38). For instance, negotiations can be complicated and take a long

time to conclude (this is very true in most cases where prior authorization from the patent owner

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is required) (ibid.). The information that the patent specification provides can be insufficient to

enable copying of the drug. A separate patent may protect the most efficient manufacturing

process, which could even be owned by a different company, or it may involve know-how that is

protected under trade secrecy law (ibid.). The majority of countries do not have chemists who can

do the copying, and profits by the licensees may not be possible since they would have to sell the

drug at a lower price than that of the patent-holding firm (ibid.). A compulsory license can be

worthless because data exclusivity does not render freedom to use the data so that approval can

be given for the generic drug to be made available to the public (ibid.). Dutfield argues that this

may be one of the reasons why data exclusivity provisions emerge so often in free trade

agreements (FTAs) (ibid.).

Mathews (2011) identifies the importance of NGOs advocating access to health in Brazil in

advocating the use of compulsory licenses to reduce the price of HIV/AIDS medicines. It is

important here to emphasize that the Brazilian Constitution does not mention access to

medicines as part of the right to health, but it is understood in Brazil that all Brazilians have

the right to access medicines because of the Constitution. The Constitution promotes the three

principles of universality, equality and integrated healthcare as the Brazilian state’s duty for

the promotion of health is a fundamental social right (Rosina et al. 2008). This constitutional

obligation has proved to be important for the mobilization of compulsory licensing provisions.

In order to secure price reductions for patented pharmaceutical products, the Brazilian

government, which has an obligation to deliver free medicines to people living with HIV in

Brazil, used compulsory licensing to negotiate substantial price reductions for HIV medication

with several pharmaceutical manufacturers. This is a potent example of how

compulsory licensing has been important to ensure access to medicines by using using the in-

built flexibilities of TRIPS (Mathews 2011). Moreover, NGOs were very important in

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advocating access to medicines in Brazil and have co-evolved with the Brazilian government’s

strong commitment to public health (ibid.).

The dynamics of Brazilian domestic policy in the area of IP are the driving force behind

Brazilian negotiators’ strategy at international level. Nevertheless, as Brazil and Latin

America’s leftist movements are starting to lose the power they have had in the last two

decades, it is likely that a lot of discussion on the nature of IP and Brazil trade policy making

will take place over the coming years.

The nature of the ideologies set forth will be contingent on the political structure of the

decision-making process and the shape and power distribution within Brazilian institutions.

NGOs’ influence in raising the political stakes of certain ideologies will be another factor.

These agents’ power will most likely contribute to the ideologies as they will support different

interests, driven by either private interests or public policy concerns. Of course, all these factors

influence each other and will affect domestic factors, Brazilian national policies, and the

Brazilian stance on trade negotiations on a bilateral, regional and multilateral level.

The mobilization of NGOs in Brazil first addressed the initial policy conflicts between patents

and public health in response to the United States’ challenges to compulsory licensing

provisions (Mathews 2011). TRIPS’ insistence on patent protection for pharmaceuticals

contributed to the emergence of social movements that adhered into NGO activity in Brazil.

NGOs relies on the Brazilian Constitution and its language on human rights to start their

“lobbying activities”. Ultimately, NGOs became prominent players and fulfilled a need for

advocacy and assistance in technical subject matters in the areas of IP, human rights and access

to medicines (Mathews 2011).

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Furthermore, powerful industries such as the pharmaceutical industry have attracted bad

publicity in Brazil. They have been seen as bullies because of their attempts to enforce IPRs in

developing-country governments that are using their domestic legal framework to produce

generic versions of drugs such as patented HIV/AIDS medicines. As a result, nowadays many

companies and policy makers want to dissociate themselves from stopping poor people from

getting HIV/AIDS medicines. The politics of AIDS, deeply driven by NGOs, has influenced

and is likely to influence further the behavior of industries and policy makers (see Mathews

2001).

The next chapter will apply Hancher and Moran’s methodology in order to map and understand

the dynamics and patterns of interaction between the actors who populate the Brazilian

landscape. The aim is to thereby gain a deeper understanding of the current governance of

biotechnological innovations in Brazil.

The investigation of patent legislation in Brazil so far has demonstrated that the country has

appropriate legislation to protect IP. Hence, one could suggest that OSI models are feasible

from a legal perspective. On the other hand, one could argue that Brazil scores low on

innovation and share of world patents (see Chapter 7) because its existing IP framework is

weak, and therefore Brazil must provide higher levels – even the world’s strongest levels – of

IP protection in order to attract investment in R&D, especially in the biotechnology industry.

This is indeed the type of rhetoric that some interest groups use in Brazil.

This thesis argues that Brazil complies with IP international regulation and already has

appropriate legislation for the protection of IPRs – and for OSI. Nevertheless, currently there

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are a number of bills ongoing in the National Congress that, if approved, will change Brazil’s

patent law dramatically.

6.3 The Constitution

Since the approval of the latest Constitution in 1988, Brazil has experienced many changes in

its legal framework as regards innovation, biotechnology and IP. Besides Brazilian patent law,

the main legal instruments are the Constitution, the Brazilian Antitrust Regulation, the

Biosafety Law, and the recent Innovation Law.

This section argues that OSI and its production model are feasible in light of several

constitutional principles. Brazil today is a country with all the elements necessary for a

democratic state and this has been consecrated by a constitutional liberalism – a liberalism that

arose in the nineteenth century. Brazil had its first written Constitution in 1824 and today, after

several others during different turmoil periods, it has a formal, written, legal, dogmatic,

democratic, rigid and analytical Constitution. The Brazilian Constitution of 1988 is a document

that reflects the country’s search for democracy (Hack de Almeida 2007:11).

According to Hack de Almeida (2007:11), the Brazilian Constitution of 1988 produced a

profound evolution in the Brazilian system of constitutional jurisdiction. The Constitution

refers to a determined social community, institutionalizing its dimension in political and ethical

terms in order to support legality. Most Brazilian constitutionalists perceive that the

Constitution is not only a document for the government, but it is truly a project to build and to

maintain a coordination and coexistence between the social and political spheres. In fact, 24

years after of its promulgation, we can consider it as one of the most advanced initial capital

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letters that Brazil has had in its constitutional experience, and it is a fine example for any

democratic nation (ibid.).

It is possible to connect OSI with many provisions of the Brazilian Constitution that relate to

information and technology policy, antitrust law, and fundamental rights. For example, the

Constitution stresses the Brazilian ideal of constructing “a free, just, and solidarity society”

(Art. 3, I) while guaranteeing national development (Art. 3, II). It promotes access information

(Art. 5, XIV), scientific development and capacity-building (Art. 218, caput). It repudiates the

control of monopolies and oligopolies (Art. 220, para. 5), fosters Brazilian technological

autonomy (Art. 219) and attempts to ensure that markets are competitive (Art. 170, IV). These

are some of the constitutional provisions that are directly or indirectly connected to OSI and

policies that could support OSI.

Concerning science and technology (S&T), the Constitution offers its main guidelines under

the title “Social Order”. Science and technology are social objects as stipulated in Articles 218

and 219 of title IV. According to de Silva (1998:207), the social objectives of the Constitution

with regard to S&T aim to guarantee the realization of social rights (health, education, labour,

welfare, etc.); however, some authors argue that, on the contrary, current Brazilian policy on

S&T has a market interest and not a social purpose at all (see also Santana 2001).

The opening clauses of the Constitution (Art. 1) make it clear that Brazilian policy makers must

chose human dignity as a guiding principle for the Brazilian legal system. Bobbio (1992)

explains that human rights got attention when we gave individuals superiority in the

relationship between state and individuals. According to Bobbio, the history of human rights

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derives from a radical reversal of perspective characteristic of the formation of the modern

state that represents politics, and from the relation state/sovereign or citizen/subject (ibid.:4).

This relation views human rights as citizen rights and citizens not as mere subjects. The debates

on IP and human rights are recent ones in Brazil and this thesis has discussed the role that

human rights have in IP policy in Brazil. Hardly anyone could argue that certain fundamental

rights are designed for the state to comply with. Naturally, the main receiver of the fundamental

rules of law is the state, and the Constitution offers a limitation to state power, representing an

assurance for individuals against arbitrariness that violates fundamental rights (ibid.).

It is clear that the Brazilian state must respect these fundamental rights and guarantees and here

it is important to emphasize that constitutional law it is not merely a framework of rules, but

also a repository of principles that has supremacy within a jurisdictional system. These

principles and legal norms must be interpreted and applied in light of these constitutional values

as they clarify the importance of some law or norm and serve to interpret biases in

methodology, such as suggesting that a specific rule is constitutional or not (ibid.).

Nery Jr., one of the most celebrated Brazilian constitutionalists, argues that because of

constitutional ignorance, Brazil went through much political instability. To explain this, he first

looked into the practices of Brazilian judges and legal specialists in the past and suggested that

it was very common to apply and interpret a law taking into account only the main piece of

legislation that governs an issue without looking into the Constitution. Although it seems

natural to say that any juridical interpretation should take into account the Constitution and

constitutional principles, in Brazil judges and legal specialists still tended to ignore this basic

premise. This is especially true when dealing with issues of IP and the interplay of technology.

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Frequently when doctrinal and jurisprudential discourses prevail, the constitutional

interpretation is ignored and many conflicts of interest which the Constitution has the potential

to solve arise (Nery Jr. 1999:27; see also Mizukami 2007:9).

Nevertheless, today Brazil is getting used to the consistency of the Constitution and using it to

interpret different laws. Open Scientific Innovation and open source licensing are new fields

that may generate tensions – especially concerning rights and often conflicting values such as

property, access to technologies and information, consumer protection, technological

autonomy, antitrust law and free competition. This thesis examines the implications of these

issues in light of Brazil’s fundamental political agreement, which is its Constitution.

The Brazilian Constitution does not prescribe for governments a model of development in its

S&T sector and biotechnological sector, but policies and government actions should be bound

by at least a set of constitutional principles (ibid.).

Next, this thesis will examine some of the most important constitutional principles that support

OSI. It is important to stress that although there is no hierarchy among constitutional norms

and principles, some possess a more prominent functional importance in the Constitution

(Barroso 1998:187). Constitutional theory dictates that in resolving questions of hierarchy, or

scope, one should be aware of Barroso’s (1998) theory, which divided the constitutional

principles into two classes.

The first class relates to areas, and the second to the fundamental or general principles. The

latter principles have wider or unrestricted applicability as these principles express a value that

guides the creation and application of any other constitutional and/or infra-constitutional

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norms. This relationship of reasoning does not preclude the direct application of any principle.

To a certain extent, it is only a matter of having a prominent role within the system. These

principles have the ability to determine what the state and individuals should or can do in

certain situations (ibid.).

6.2.1 Democratic Principle

The Brazilian Constitution states the country´s commitment to democracy in Article 1. OSI

fosters public benefit in order to shape a democratic infrastructure to sponsor accountability

and transparency, and ultimately access to knowledge and capacity to use this knowledge. As

the OECD (2003) puts it:

Among the widely accepted principles of good governance are openness, transparency
and accountability: fairness and equity in dealings with citizens, including mechanisms
for consultation and participation; efficient and effective services; clear, transparent and
applicable laws and regulations; consistency and coherence in policy formation; respect
for the rule of law/ and high standards of ethical behaviour. There principles represent
the basis upon which to build open government – one that is more accessible,
responsive and transparent in its operations.

Bobbio (1992) explains that democracy is only one of the aspects of a democratic government,

which develops a broad concept of social democracy that permeates the multiple dimensions

of human experience such as economic and technological development. Democracy is a

dynamic process inherent to any open society, and it offers people the chance to develop full

participation and freedom of criticism in the political processes in spite of any political,

economic or social status (Canotilho 2004:289). OSI in effect complements the inherent

concept of open society that Canotilho mentions and it is essential in a democratic state of law.

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Canotilho (2000) explains that a key requirement in our contemporary society is the

“democratization of democracy”. The goal is not only to include more citizens in the exercise

of voting, but also to build more spaces to include citizens in the decision-making process (see

also Falcão et al. 2007). For instance, a policy that promotes free software in Brazil has two

basic elements: expand participation and create conditions for broad participation (and in

particular through the guarantees of publicity and access to education) (Falcão et al. 2007:26).

A policy that promotes OSI would have the same two basic elements.

Thus, democracy must transcend the traditional loci of power (the legislative and executive)

and go beyond the field of civil society. Democracy is increasingly more about social relations

(e.g. administrator and manager, producer and consumer) as political relations, and the

production of technology within these new spaces for democracy (Falcão et al. 2007:28).

The democratic principle has two constitutional dimensions: the normative-substantial (what

should be achieved) and the normative-procedural (how it should be achieved). Accordingly,

as a principle of organization of power and as a principle of organization of society, the

democratic principle not only gives power to people, but also tells how this power should be

exercised (Canotilho 2000; see also Falcão et al. 2007). Hence, Brazil, as a democratic state

should encourage broader participation and OSI should be considered constitutionally in line

with these aspects.

Fabbrini (2003) made a study of Robert Dahl’s works to assist scholars of European integration

and scholars of European national democracies. For Dahl democracy was created for the

citizens. Dahl’s description of the ideal democracy included five conditions:

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  First, effective participation: in the process of making binding decisions, citizens must

have adequate and equal opportunities which are essential to form their preference in

order to place questions on the public agenda and to express reasons for one outcome

over the other

 Second, voting equality: in the decisive stage, every citizen must be assured equal

opportunity to express his or her choice that must be taken into account with equal

weighting

 Third, enlightened understanding: citizens ought to have adequate, equal and ample

opportunities for evaluating and affirming what choice would best serve their interests

 Fourth, control of the agenda: the people must have the opportunity to decide what are

the political issues that actually matters and that should be brought up for deliberation

 Fifth, inclusiveness: every citizen must have equality and legitimate stake within the

State and political process. conditions (cited in Fabbrini 2003:123)

For Dahl, these criteria should guide the definition of the primary rights that turn an individual

into a citizen. Moreover, these primary rights are not necessarily mutually compatible, and

their exercise may have non-democratic implications (ibid.).

Modern democracies must have cooperation on a large scale because the greater the number of

people in a given community, the more diverse their interests become and the more problems

there are to solve. The problem is the extent of individual bases in which this social cooperation

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can be promoted or achieved. To solve this problem, Fabbrini (2003) proposes two options

(based on Dahl’s theory). One is to conceive politics as the functional equivalent of the market,

assuming that the pursuit of selfish ends must necessarily produce a satisfactory collective

outcome. The second option is to adopt a communitarian theory of politics. By conceiving

politics as the functional equivalent of the civic republic, this theory assumes that the pursuit

of collective altruistic ends must inevitably produce a satisfactory individual outcome

(ibid.:130).

For Dahl, neither answer is convincing; interindividual cooperation cannot be achieved on the

basis of either selfishness or altruism. Fabbrini (2003) explains that notwithstanding the fact

that in modern democracies the role of public good is not very clear, there is no controversy

about the antisocial effects of interaction based solely on the pursuit of individual interests (as

happens in all zero-sum and negative-sum games). Accordingly, neither the extreme egoism of

neoclassical economic theory nor the civic virtue proposed by communitarian political theory

has the means to explain what social cooperation really is, why it occurs, and above all how

we might expand and improve it (ibid.).

In addition, Dahl’s works had increasingly stressed the role of political institutions in shaping

politics and in conditioning the outcomes of public policy. Dahl maintains that it is the task of

institutions to reduce the harmful effects of pluralism without threatening its existence.

Consequently, his alternative to both the politics of extreme egoism and the politics of civic

virtue – an alternative he calls the politics of robust civility – depends on neither the altruistic

nor the selfish intentions of political actors or citizens but rather on an institutional (and

constitutional) design that is adequate for the purpose because it is mindful of the structural

and psychological constraints that act on individuals (Fabbrini 2003:131).

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Dahl’s criteria for democracy coincide with the three elements of the democratic principle

described (conditions for exercise of citizenship, participation and expansion of advertising).

Accordingly, the extent to which OSI as an IP management practice or a public policy is

adopted shows the level of participation and democracy of any given state.

This thesis argues that technologies, like biotechnology, have become integral to the process

of government and more broadly to governance. And OSI should be understandable and open

to review in any healthy democracy. The adoption of OSI strategies that allow ample

opportunity for technology would make a major contribution to Brazilian democracy.

Furthermore, the foregoing argument shows that OSI would be a mechanism to support human

rights. The Brazilian Constitution often invokes a language of human rights and responsibilities.

This language appears suited to the current scenario of scientific innovation that often calls for new

ways to create balances between incentives and access issues (e.g. access to technologies or health).

6.2.2 Open Administration Principle or Publicity Principle

Article 37 of the Brazilian Constitution states that the public administration and its bodies (e.g.

research institutes) shall obey the principles of lawfulness, impersonality, morality, publicity

and efficiency. Article 5, XXXIII, describes access to information:

All persons have the right to receive, from the public agencies, information of private
interest to such persons, or of collective or general interest, which shall be provided
within the period established by law, subject to liability, except for the information
whose secrecy is essential to the security of society and of the State.

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Publicity naturally opposes secrecy and shapes the relationship between government and its

citizens, or between a private company and its consumers. Publicity is not limited to the

publication of administrative acts, but it is a much broader principle as it addresses social

relations within the state and within the market. It is the right to access information and it is

connected to freedom of expression (Falcão et al. 2007:25).

Interestingly, the Constitution reinforces the right to health as a right of access to information.

According to Article 220, paragraph 4:

The manifestation of thought, the creation, the expression and the information, in any
form, process or medium shall not be subject to any restriction, with due regard to the
provisions of this constitution. (...) 4 - Commercial advertising of tobacco, alcoholic
beverages, pesticides, medicines and therapies shall be subject to legal restrictions, in
accordance with item II of the preceding paragraph and shall contain, whenever
necessary, a warning concerning the damages which may be caused by their use.

Some Brazilian initiatives in the area of information technology adopt open source software to

increase freedoms and this is inherent in the principle of open administration (“open file”)

(ibid.).

Although one of the premises of the patent system is to disclose information, this thesis has

shown that there are restraints on the free flow and diffusion of scientific knowledge. The

greater problem is the capability to use this information that is normally protected by a patent

(e.g. a research technique); thus, the open principle could be one argument to support openness

(capability to use).

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The ideal of openness offers two challenges for the public administration. First, whether or not

the state has the obligation to disclose whether technology it purchases is proprietary (opened

or closed) to taxpayers. And second, when a public institute develops a technology, whether or

not it has to make it widely available. For example, when a public institute such as FIOCRUZ

acquires a patented research technique or when these same institutions develops a research

technique, does it have to make it widely available? Although there is no obligation to make a

technology widely available, public administration in Brazil has the duty to inform taxpayers

about how it is spending public money and open technologies should not be rejected to the

advantage of closed technologies (Falcão et al. 2007; Mizukami) 2009. In addition, there must

be debate about whether patented public-funded research results should be open or closed.

6.2.3 Social Function of IP

The Brazilian Constitution has two different treatments for the social function of property. On

one hand, Article 5, XXIII, establishes that it is a general fundamental right: property shall

fulfil its social function. On the other hand, Article 170, III, gives an economic treatment of

the social function of property:

The economic order, founded on the appreciation of the value of human work and on
free enterprise, is intended to ensure everyone a life with dignity, in accordance with
the dictates of social justice, with due regard for the following principles: (...) III - the
social function of property.

Those two norms established the general parameters for Brazilian legislation and the

Constitution does not impose limits to the social function to property ownership (to material

goods). On the contrary, besides the more general principles, the Constitution itself provided

for the social function of the public company in Article 173, 1, I:

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 With the exception of the cases set forth in this Constitution, the direct exploitation of
an economic activity by the State shall only be allowed whenever needed to the
imperative necessities of the national security or to a relevant collective interest, as
defined by law. 1 - The law shall establish the juridical statute of the public company,
the mixed capital company and their subsidiaries which explore economic activity of
production or trading of goods or rendering of services, with provisions for: I - their
social function and the ways of accounting by the State and society.

Therefore, we can conclude that the social function of property is not merely for goods, and

consequently it applies to the property of other technologies such as biotechnological tools and

biotechnologies.

The Brazilian Constitution requires property to have a social function, which constitutes the

proper justification of ownership. When a given property does not fulfil its social function, the

law cannot protect it. Both goods of production and consumption have a social function. As for

biotechnologies or software, there is no constitutional provision on whether they should be

opened or closed. That said, when developing or buying a technology (for a public institution),

or financing public-funded research (for a university or even a private institution), one has to

acknowledge whether these technologies have a social function to perform (Falcão et al. 2007;

Mizukami 2009).

Thus, one should consider the social function when a government buys closed source

technologies or hires engineers to develop closed technologies such as closed source software.

The same applies to biotechnological tools. It is evident that scientific knowledge is essential

today and the Brazilian Constitution states that knowledge and technology are essential to

promote the development of health, wealth and justice – that they are a condition for achieving

progress. Therefore, the social function of a technology, whether open or closed, is linked to

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the interest of stimulating technological innovation and national development (Falcão et al.

2007).

This thesis argues that the social function of biotechnology has two dimensions. The first is the

possibility that everyone can use, enjoy and have biotechnologies to meet their needs. This

social function is achieved when a technology enters the public domain (Falcão et al. 2007:39).

The second is the indirect dimension. Any business should satisfy a general interest capable of

contributing to the achievement of the fundamental objectives established in Article 3 of the

Constitution:

 To build a free, just and solidarity society

 To guarantee national development

 To eradicate poverty and substandard living conditions

 To reduce social and regional inequalities

 To promote the well being of all, without prejudice as to origin, race, sex, colour, age

and any other forms of discrimination.

Thus, when contracting services with the government, besides the specific interest of the

contracting parties, there is society’s general interest, which is stronger. This is called the

“function of interest” and it is directly connected to the democratic state of law (Falcão et al.

2007:39). OSI offers the possibility of broader participation, innovation, and gives a social

function to IP. It is commonly accepted that the social function of IP is to provide a continuous

flow of intellectual creation and to stimulate further intellectual creation.

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The Brazilian Constitution makes the social function of property a fundamental right directly

connected to a social values and economic interests. However, it is important to analyse what

this wording means in practice (how the have courts interpreted it). This provides a point of

demarcation from the other concepts discussed herein.

The Supreme Court of Brazil (STF) binds the social function of property to administrative

constraints:

CONSTITUTIONAL. ADMINISTRATIVE. CIVIL. LIMITATION

ADMINISTRATIVE. INDEMNITY. I – If a restriction on the right to construct
because of an administrative limitation causes destruction of private property, the
owner has the right for compensation. However, the right to build is relative, since it is
conditioned to the social function of property. If the constraints arising from limiting
administrative pre-existed to the acquisition of land as well as knowledge of the buyers,
those cannot, based on such restrictions, seek damages from the Public Administration.
(STF, Second Chamber, Special Appeal no. 140436/SP, Min. CARLOS VELLOSO -
25/05/1999)

The Court established that it is a state interest to seek the greatest possible effectiveness of

social interests of property while allowing conditions to the right to have property. The Federal

Constitutional Court of Germany considered similar issues in 1979 and concluded:

In carrying out the task given to it in Article 2 I GG 14, to determine the content and
limits of property, the legislator is faced with the task of performing the model whose
social normative elements originate on the one hand from the constitutional recognition
of private property through ART GG 14 I and, on the other of the social order of ART
14 II GG: The use of the property should also serve the good of the community.
(BVerfGE 37, 132 [140], 38, 348 [370])

In 2002, the STF analysed the Progressive Property Tax on Land and established the objective

of ensuring compliance with the social function of property (Extraordinary Appeal number

153771-0 – Min. Moreira Alves). In his decision, Justice Carlos Velloso argued that

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progressive property tax should be instituted to ensure the fulfillment of the social function of

property.

Velloso explained that from an urban policy perspective, a property fulfills a social function

when it meets the fundamental requirements expressed in the Land Plan Act. This, however,

does not mean that this is the only way to fulfill the social function of property. Property is

wealth and an element of urban policy, so it is not reasonable that the social function of property

should be left entirely to policy guidelines (521).

Justice Moreira Alves allowed the appeal, arguing that the social function of property is not

directly linked to quality of certain goods or faculties assigned to the owner, but it is linked to

use, the actual use that is given to that particular asset, that is, he respected the right of property,

acting as a limitation to the individualistic concept of law (538).

In his decision, Judge Francisco Rezek argued that the Constitution states that the tax on urban

property may be progressive in terms of municipal law to ensure it complies with the social

function of property. Also, the Constitution in Article 182 defines the function of urban

property (544). The conclusion of Rezek was that one must not interpret the words

“social function of property” differently to how they are written in the Constitution (548).

Alves complemented Rezek’s decision, stating that there is a social function for each of the

5,500 Brazilian municipalities and a property is a fundamental guarantee, as the Constitution

specifically states. However, if one wants to expropriate unproductive land, the law can

establish a new social function for this land other than that prescribed in the Constitution (546).

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This decision touched interesting on points relating to the social function of property, justifying

intervention in some cases. It serves to support state actions that restrict right to property. The

concept helps to define the public interest in legitimate (and illegitimate) uses of certain

prerogatives over the right of ownership.

For the dissenting Velloso, the social function of property is a deep and forceful concept. The

Constitution, as one of the principles of economic order, aims to provide that everyone enjoys

a life with dignity, according to the principles of social justice. This brings social justice to the

concept of order, for example, to redistribute income. In a country where most taxes are

regressive, to practice social justice is and can be one of the functions of the property.

In the case of IP, Brazilian jurisprudence is in its infancy. However, besides the two Superior

Tribunal rulings against “pipeline” patents that this thesis has discussed in (add section), there

is a major dispute that may strengthen the juridical power of the social function of IP. Brazilian

Attorney General Antonio Fernando Barros e Silva de Souza filed a brief with the STF on April

24, 2009 challenging the constitutionality of Articles 230 and 231 of the Intellectual Property

Act of 1996 which deals with revalidation or pipeline patents (STF no date).

According the Attorney General, knowledge which currently exists in the public domain is

public property. The pipeline provision indirectly promotes a de facto expropriation of public

property in contradiction to the Brazilian Constitution. Articles 230 and 231 of the 1996 Act

which created the pipeline mechanism violate the constitutional principles that impose the

supremacy of society’s interest and the pursuit of the country’s technological and economic

development over IP protections (Art. 5, XXIX). The argument is that the granting of pipeline

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patents also violates a right already acquired by society (Art. 5, XXXVI); due legal process

(Art. 5, LIV) and the principle of equal treatment before the law (Art. 5, caput) (ibid.).

After the proposed action, several institutions were asked to participate in the trial, including

ANVISA. On receiving the case in the STF, Justice Carmen Lucia decided not to consider the

request for an injunction and adopted an abbreviated rite of the trial process. She referred the

action to the Office of the President and Attorney General’s Office to enable them to express

their views on the subject. All information, including the opinion of the prosecutor, was sent

to the STF in March 2010. As of August 2016, STF had not made a final decision on the matter.

In conclusion, in the Brazilian context the social function of property (IP) endorses a pro-OSI

stance. The constitutional clause on the social function of property offers one possible path to

defend alternative IP management strategies. Although in the past resistance in applying this

concept to IP existed (Bastos 1998:210), recent literature is more receptive to the idea (Branco

2007; Carboni 2006; Guerrero 2006; Oliveira 2006; Souza 2006; Mizukami 2007). Courts in

Brazil have discussed the meaning and extent of this clause, and although it is open to

interpretation, Brazilian constitutional scholarship “offers a welcoming environment for the

analysis of competing property interests, individual rights and state goals” (Mizukami et al.

2008:112). This can serve as an intellectual basis for considering OSI.

German legal theory, especially works of Robert Alexy and Friedrich Müller, has been

particularly influential on Brazilian scholarship on constitutional law. This is mostly due to the

great influence of Portuguese author José Joaquim Gomes Canotilho’s (2002) constitutional

law textbook. This contributes to the pro-OSI argument as it makes it possible to defend the

use of the social function of property clause as a source for alternative IP management

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strategies. Alexy proposed that Dworkin-inspired rules/principles may offer a particularly

productive strategy for arguing for a more extensive and permissive system of IP management.

The Brazilian Constitution is also structured in such a way that it is possible to easily defend

the existence of the horizontal effect of constitutional rights (in Mizukami et al. 2008).

According to the Brazilian Constitution, a “state action” is not a requirement to find a violation

of constitutional rights actions of other citizens or of corporations. Indeed, the text of the

Constitution is very open to the concept of horizontal effects and the controversy surrounding

them is limited to how exactly these effects should be considered (Silva 2005). There is thus a

broad opportunity to argue for the constitutionally of OSI in view of the social function of

property.

6.2.4 Sovereign Principle

OSI is also about sovereignty (Article 1, I Brazilian Constitution) and independence (Article

4, I, ibid.). First, sovereignty in the Constitution is concerned with the possibility of preserving

the principle of human dignity (Art. 1, III) and minimal order to ensure that the public

administration does not harm core individual rights (Art. 5). This thesis argues that this

sovereignty is linked to OSI because open models can encourage citizen participation in national

decisions (not harming individual rights). Moreover, OSI is a fundamental principle linked to

the achievement of certain goals of the nation such as the technological autonomy requirement

(Art. 219) and the provisions concerning scientific development and capacity-building (Art. 218).

The Universal Declaration of Human Rights (1948) states that:

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 Everyone, as a member of society, has the right to social security and is entitled to
realization, through national effort and international co-operation and in accordance
with the organization and resources of each State, of the economic, social and cultural
rights indispensable for his dignity and the free development of his personality. (Art.
XXII)

It also states that:

Everyone has the right freely to participate in the cultural life of the community, to
enjoy the arts, and to share in scientific advancement and its benefits. (Art. XXVII
(1))

Citizens accomplish these rights through legal relations in terms of “can” and “must”. In

matters of “can”, the economic power shall be adjusted to the objectives of justice, or there is

a chance that they may work against the rights they should assure. Thus, the exercise of

economic power must obey equilibrium of interests that must be defined by the law (de Souza

2002:60).

The Brazilian Constitution establishes sovereignty as the first of all five fundamental

principles:

The Federative Republic of Brazil, formed by the indissoluble union of the states and
municipalities and of the Federal District, is a legal democratic state and is founded on:
I – sovereignty (…). (Art. 1, I)

Thus, sovereignty means that all citizens can participate in all national decisions – citizens will

evaluate all relevant issues and deliberation from groups or countries will not be imposed upon

national citizens (Falcão et al. 2007; Mizukami et al. 2008; Timm 2000). Article 170 also

establishes that the economic content and the economic order have to conform to the principle

of national sovereignty:

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 The economic order, founded on the appreciation of the value of human work and on
free enterprise, is intended to ensure everyone a life with dignity, in accordance with
the dictates of social justice, with due regard for the following principles: I - national
sovereignty (…)

Brazilian legislators chose sovereignty as the first principle to be observed in the economic

order. Such a principle cannot be dissociated from economic development and economic

activity. Furthermore, the Constitution provided for how Brazilian international relations

should be governed:

The international relations of the Federative Republic of Brazil are governed by the
following principles: I - national independence; II - prevalence of human rights; III -
self-determination of the peoples; IV - non-intervention; V - equality among the States;
VI - defence of peace; VII - peaceful settlement of conflicts; VIII - repudiation of
terrorism and racism; IX - cooperation among peoples for the progress of mankind; X
- granting of political asylum. Sole paragraph - The Federative Republic of Brazil shall
seek the economic, political, social and cultural integration of the peoples of Latin
America, viewing the formation of a Latin-American community of nations. (Art. 4, I)

A country’s economic dependency is attached to technological innovation to new achievements

in different fields (e.g. biotechnology) (Timm 2000). In today’s global economy, national

development requires democratic political development, economic development, and scientific

and technological development (Falcão et al. 2007; Mizukami et al. 2008).

In the terms of Article 218, paragraph 2, and Article 219, the Brazilian Constitution establishes

different obligations to stimulate scientific research:

The State shall promote and foster scientific development, research and technological
expertise (…) 2 - Technological research shall be directed mainly to the solution of
Brazilian problems and to the development of the national and regional productive
system.

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According to Mello (2002), Brazil’s constitutional commitment to scientific and technological

development is linked to specific constitutional provisions that promote technological

autonomy:

 To promote the national system of productive development

 To benefit technological capabilities in Brazil

 To support the training of human resources in the areas of S&T

 To encourage companies to invest in R&D of appropriate technology beneficial to the

country and to provide for training of human resources.

Chapter IV of Title VIII of the Brazilian Constitution provides for two different ways to

promote and encourage scientific development, research and technological training. First, there

is encouragement for government direct actions through public policies, such as dedicating a

portion of its budget revenues to promote education and scientific and technological research

(Art. 218, para. 5), and to give priority to basic research (Art. 218, para. 2). The state may also

promote the domestic market as a contractor through active participation in private business.

Article 219 states:

The domestic market is part of the national patrimony and shall be supported with a
view to permitting cultural and socio-economic development, the well-being of the
population and the technological autonomy of the country, as set forth in a federal law.

Globalization required a rethinking of the old dilemma between scientific self-sufficiency and

internationalization; therefore, Brazilian government agencies in the area of R&D should

compete for research support and operate under collaboration and peer oversight (Schwartzman

1995).

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 6.3 Brazilian Competition Law and OSI

In the context of the legal aspects and constitutional aspects of OSI, this thesis will now analyse

the relationship that OSI has with technology transfer, regulation and competition in Brazil.

Anti-competitive practices are sources of various discussions and are more evident in issues of

licensing of technology - especially in the case of restrictions For horizontal restraints,

agreements between companies to develop new technologies expand the application of the rule

of reason and create problems such as defining what is legal what is and not legal. In addition,

predatory practices, sham litigation and anti-competitive settlements heat the debate on vertical

restraints (Schuartz 2009).

Article 40 of TRIPS states that:

Some licensing practices or conditions pertaining to intellectual property rights which

restrain competition may have adverse effects on trade and may impede the transfer
and dissemination of technology.

In addition, Article 40.2 holds that:

Nothing in the TRIPS Agreement shall prevent members from specifying in their
legislation licensing practices or conditions that may in particular cases constitute an
abuse of intellectual property rights having an adverse effect on competition in the
relevant market.

Like other developing nations, Brazil faced the dilemma of whether it should open up its

markets in order to attract more investment and technology or reduce regulatory barriers due

to the emergence of anti-competitive behaviour by companies (Omer 2001:312; Sell 2004).

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When the Brazilian Patent Office was created in 1971, the regulation for the import of

technologies required an analysis and registration by the Patent Office of all acts and

technology transfer agreements, which included the licensing of patents and trademarks and

technical assistance agreements. In addition, the Brazilian government in 1975 enacted

Regulatory Act 15, which gave the Patent Office the new role of implementing government

policy in the area of technology. The established that the Patent Office should start to regulate

technology transactions prior authorization of operations, including the imposition of limits of

validity and control of certain contractual clauses (Barbosa 2005:15).

As this thesis has shown, in Brazil the regulatory framework has changed from the enactment

of the BIPL and protection of competition during the 1990s. The historical context for this was

economic transformation and a new model of regulation superseded the regulation of patent

licensing agreements which the Patent Office was responsible for. The new model put in

practice indirect regulation, giving Brazil’s Council for Economic Defence (CADE), the

competition watchdog, the responsibility to regulate the licensing of patents. Consequently, the

Patent Office lost its regulatory status and was reduced to an endorser.

In the Brazilian Constitution free competition is an informing principle of the economic order

(Art. 170, IV). The Consitution legislators followed some international documents that contain

anti-monopoly provisions (Timm 2000). Brazil opposes monopoly in its Constitution:

The law shall repress the abuse of economic power that aims at the domination of
markets, the elimination of competition and the arbitrary increase of profits. (Art. 174,
para. 4)

The legislators also established free enterprise as a constitutional value (Timm 2000).

Throughout the last two decades, Brazil has changed its approach to technology transfer

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agreements and moved towards antitrust regulation. In 1991, the enactment of a new Antitrust

Law (Law 8158) was a significant event. Timm explains that the Brazilian legal system adopted

the developed-world approach for the regulation of technology transfer. In fact, Brazilian IP

law and competition law in Brazil suffered influence from countries with more intense

regulatory activity such as the United States and Germany (ibid.).

The INPI Normative Act 120 (1993), the BIPL (1996) and the Antitrust Law evidence this shift

(Berkmeier 1996:441; Timm 2000). Intellectual property rights posed a special problem to

antitrust law and monopolies are not always the best option to provide incentive, innovation,

progress and efficiency (Timm 2000).

Nowadays, vertical arrangements are criticized because they enable market power for

exclusionary purposes (Berkmeier 1996:441; Timm 2000). OSI is a strategy that has the

potential to avoid a dominant position and unlawful economic violations as it promotes free

enterprise. It is also in line with Article 20 of the Antitrust Law.

Notwithstanding malicious intent, any act in any way intended or otherwise able to
produce the effects listed below, even if any such effects are not achieved, shall be
deemed a infringement of the economic order: I - to limit, restrain or in any way injure
open competition or free enterprise; II - to control a relevant market of a certain product
or service; III - to increase profits on a discretionary basis; and IV - to abuse one’s
market control.

Open scientific models that use open collaborative licensing or other licenses must comply

with Brazilian law. For instance, open source licensing is a model to transfer technology so it

must comply with two basic provisions. First, they must go through the INPI registration

process. According to Brazilian legislation, the INPI must approve technology transfers of all

types (patent use, trademark licenses, technology services and franchising) to qualify for

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remittance of royalties and fees and to ensure tax deductibles (Arts 61, 62, 63 and 121 of the

BIPL govern the registration process for technology transfer). These contracts must contain

detailed information on the property involved, the object of its use, how it will be transferred,

and the conditions attached to the transfer (ibid.).

Second, open source licensing is logically linked with the principles of contract law. Parties

that enter into this sort of agreement must take into account the provisions of Article 20, Section

I and especially Article 54 of the Law 8884 of 1994.

Any acts that may limit or otherwise restrain open competition, or that result in the
control of relevant markets for certain products or services, shall be submitted to
Brazil's Council for Economic Defence (CADE) for review. 1. CADE may authorize
any acts referred to in the main section of this article, provided that they meet the
following requirements: I - they shall be cumulatively or alternatively intended to: (a)
increase productivity; (b) improve the quality of a product or service; or (c) cause an
increased efficiency, as well as foster the technological or economic development; II -
the resulting benefits shall be rat-ably allocated among their participants, on the one
part, and consumers or end-users, on the other; III - they shall not drive competition out
of a substantial portion of the relevant market for a product or service; and IV - only
the acts strictly required to attain an envisaged objective shall be performed for that
purpose.

Timm (2000) explains that the most problematic clauses are in respect to anti-competitive

effects. They are grant-back clauses, post-expiry provisions, no-challenge clauses, tying

arrangements, competing technology provisions, price-fixing arrangements, volume

restrictions, field-of-use restrictions, package license, non-competition clauses, export

restrictions, cross-licensing and patents pools (ibid.).

When building any licenses, one must carefully avoid horizontal or vertical technology transfer

agreements that contain clauses restricting competition. Otherwise, one must notify CADE and

pass through the antitrust balance test of Article 54 of Law 8884 (ibid.).

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The next chapter will show that from 1990, after the economic crises that had badly affected

Brazil, the country implemented significant institutional changes towards the liberalization of

markets. Regarding IP and competition law, these changes and the actors involved in the

changes increased the power given to CADE. In the new scenario, antitrust laws were modified

in order to curb market power abuses and promote competition. CADE started to be responsible

for the regulation of technology transfer operations.

Hancher and Moran’s methodology is important for connecting Brazilian competition laws to

the more detailed discussion in Chapter 7. For example, even before TRIPS, Brazil changed its

competition law. In 1994 the economic and political process towards liberalization led Brazil

to change its competitive legislation with the introduction of a new law on protection of

competition. Also, it transferred to CADE competitive control of technology transfer

agreements. This section, together with next chapter, uses Hancher and Moran’s methodology

to show how different actors influenced changes in Brazilian competition law.

6.4 Law-making in Brazil and Hancher and Moran’s Approach

The previous chapters have shown that new ideas, economic and technological changes, shifts

in the power of interest groups and incentives affecting legislators and regulators have

influenced the shaping of IP rules globally. Regarding the case of Brazil, the research on

interest groups and influence in regulation is relatively thin.

Schmitter (1971) studied the interest group activity in Brazil and identified the importance of

political culture and corporatist elements in the Brazilian decision-making process. Schneider

(2004) provided a case study on the specific interests of Brazilian business associations, and

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Oliveira (2004) analysed in his doctoral thesis how lobbying operates in Brazil, identifying

four types of lobbying: governmental lobbying; private sector lobbying; professional bodies

lobbying and consultant lobbying.

This thesis holds that Hancher and Moran’s approach can be applied to the Brazilian context

as well. Although recent literature and some anecdotal evidence question the extent to which

pressures from industry captured regulators, the case of Brazil represents a good example of a

country in which regulatory capture has happened. Importantly, this analysis is one of the novel

contributions of this thesis to scholarship in the field.

Prior to the 1990s the country did not grant patents on pharmaceuticals, but the US government

and PhRMA were successful in influencing the reshaping of the Brazilian patent system. The

United States targeted Brazil and actually imposed certain trade penalties due to its patent

system through the use of Special 301 trade sanctions. PhRMA also took actions such as filing

of petitions with the USTR to seek institutional reforms to achieve greater patent protection for

pharmaceuticals in Brazil. Brazilian leaders were convinced of the seriousness with which the

United States viewed the issue of pharmaceutical patents and pushed Brazil toward the

approval of the New Industrial property Law in 1996 (Harrison 2004:110). In addition, as

discussed below, US legislation such as the Bayh-Dole Act influenced Brazilian legal

scholarship and legislation (e.g. the New Brazilian Innovation Law 2004).

The Brazilian Industrial Property Office (INPI), which was established through the 1996 patent

law, carries out capacity-building and promotion of IPRs, generally favouring high standards

of protection. For its patent examiners, INPI holds training courses, and Brazilian law firms

that represent foreign pharmaceutical interests have been involved in this type of training

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(Drahos 2010:251). As Drahos points out, “this seems like letting tax accountants representing

the rich train tax officials” (ibid.), and clearly shows how patent examiners could have been

“captured”. Also, continuous external pressure from the United States to reduce backlogs

pushes individual examiners in the direction of granting patents (ibid.).

However, while the Brazilian government introduced IP reforms, actors such as Brazilian Fine

Chemicals, Biotechnology and Specialty Industries Association (ABIFINA), the Association

of National Pharmaceutical Laboratories (ALANAC) and the Association of Pharmaceutical

Industry Research (INTERFARMA) issued strong criticisms and resisted the 1996 patent law

(Harrison 2004:110). Moreover, they regularly present opinions contrary to those of the

transnational sector.

In the context of patent regulation, this thesis argues that all areas of decision (patent offices,

courts, legislative and international treaty-making) are to some extent susceptible to power and

influence of corporations, with international treaty-making and national legislative bodies

being more susceptible than the others. Historically the pharmaceutical industry has had strong

lobbying power through its intervention into international and national lawmaking and the

Special 301 submission process.

However, the wider debate on the issue continues. Thus, the question must be posed as to

whether judicial independence, legislative independence and impartiality can triumph over

power and influence. Unfortunately, there is no clear answer to this question as the areas

subjected to power and influence have differences – internal structures and decision processes

vary significantly among different levels of courts and between courts, patent offices,

international treaty-making and national the legislative bodies.

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In the case of Brazil, empirical evidence attests that the National Congress has interest groups’

representatives and lobbyists that represent their interests permanently installed in Brasília. The

pharmaceutical industry has professional lobbyists that systematically monitor and influence

the activities of Congress and the executive branch regarding legislative agendas and

procedures. Congressmen’s assistants also act as inside lobbyists. They are very important for

the legislative process, and interest groups’ lobbyists, who are aware of this, influence them

vigorously. Many assistants become sensitive to (or eventually agents for) certain interest

groups. Campaign contributions are an integral part of the lobbying process, and it is common

practice nowadays in Brazil for the industry to finance political campaigns and therefore have

the support of Congressmen to advocate their agendas.

It may, therefore, be concluded that the Brazilian National Congress is very susceptible to

interest groups. Nevertheless, the lobbying system of today seems to be more balanced and less

impartial because NGOs and other organizations have the potential to break through power and

influence. This in essence happens because many NGOs are as organized as corporations and

have learned how to influence decision-making. Greenpeace is a good example of an NGO that

has tremendous organizational resources and lobbying capacities within the Brazilian Congress

(and in the international treaty-making arena and inside TNCs).

Judicial independence is a broad theme, however. For the sake of the argument in this chapter,

it is important to analyse briefly whether interest groups may override judicial independence

either through court decisions or patent office administrative decisions. In the case of Brazil,

interviews suggest that patent examiners, patent office officials and judges could have been

influenced when making their decisions.

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Although the Brazilian Constitution of 1988 granted functional independence to judges and the

judicial independence standard of the civilized world advocates that patent examiners should

be independent, there are many factors that can influence these individuals. They can be

influenced for example by a desire for personal benefit, including pecuniary gain, career

advancement, social standing, and recognition, political or ideological preferences. In addition,

the regular appearance of scandals in the press relating to corruption, including judicial

scandals, contributed to the perception that Brazilian judges and government officials are

unaccountable and could be influenced. It is well known that in Brazil judges and patent

examiners begin their careers in low-status positions and move up to more desirable positions.

Such situations raise at least the possibility that they will subordinate policy goals to personal

(or interest groups’) goals or perhaps craft the former so that they will secure the latter.

It is difficult, however, to evaluate the impact on actual decisional independence, though there

are indications that to some extent a patent examiner or a judge is more or less independent.

Hence, it is possible to hypothesize that interest groups may override their independence;

however, this thesis found specific evidence to prove, nor does it claims that this is in fact

happening in the Brazilian scenario.

It is a mistake to assume that regulatory capture in Brazil is a static and uniform. Empirical

evidence from interviews with diplomats, politicians and Brazilian government officials

confirms that the regulatory capture perspective combined with the regulatory space approach

explains that historically the capture of IPRs has happened in Brazil.

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 6.4.1 The Brazilian New Biosafety Law

The Brazilian New Biosafety Law is an example of where Hancher and Moran’s elements of

regulatory space are visible. According to Taglialegna (2005), the formulation and

consideration process for this legislation evidenced that several groups such as biotechnology

companies, agricultural, business, consumer groups, scientists and environmentalist where

actively acting in the law-making process.

In fact, interviews with experts in the area suggest the lobbying happened at different levels

during the negotiation of the law. There was governmental lobbying, private sector lobbying,

lobbying from professional bodies, lobbying from NGOs and the Catholic Church. Many

private sector companies had consultants working with them in order to influence legislators.

For example, Monsanto and other biotech companies influenced the decision-making process

through the use of the Agricultural Business Bench, a group of Brazilian politicians that get

campaign funds from agricultural private business, and private consultants. On the other hand,

some NGOs such as Greenpeace influenced the decision-making process though Labour Party

politicians.

The different groups used different strategies such as building alliances, using personal

contacts and indirect lobbying (grassroots lobbying). Ultimately the legislation favoured those

who had better resources (the biotechnology companies), although consumers and

environmental protection interest groups managed to influence some minor points of the

legislation such as the requirement to label genetically modified products.

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 6.4.2 Brazil and the Dilemma of Complying with Global IPRs

Brazil is a developing country with a public health system that promotes the human rights of

universal access to health services (Rosina, Wang and Campos 2010:168-169). This has

resulted in many challenges, which have been exacerbated by the patent regime revisions and

new laws enacted in order to accommodate the changing needs of the country.

The 1988 Constitution affirms that health is a right for everyone and a state obligation:

Health is the right of all and the responsibility of the State, to be guaranteed by means
of social and economic policies aimed at reducing the risk of illness and other hazards,
and at the universal and equal access to actions and services for its promotion,
protection and recovery. (Article 196)

The Constitution forms the basis for the implementation of the National Health System through

Laws 8.080/90 and 8.142/90. Among the health system’s roles is to provide comprehensive

therapeutic assistance to the whole population including pharmaceuticals (Law 8.080/90). This

assistance is also a political commitment by virtue of Law 3.916/96. Legislation prioritizes

access to essential medicines and Law 9.313/96 strengthens existing legislation concerning

access to medicines (Rosina, Wang and Campos 2010:168-169).

For instance, Law 9.313/96 is essential to a better structuring of the National AIDS Programme

(recognized as an international model for other countries) (ibid.). The consequences of the

Universal Access Law can be translated into figures: between 1997 and 2004, there was a

mortality reduction of 40 per cent, morbidity was reduced by 70 per cent, and hospital

internment was reduced by 80 per cent. This new law generated savings of U$2.3 billion (Nunn

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et al. 2007). Initially, the price reductions happened in great part because of local production

and international generic industry competition (ibid.). In addition, Ordinance 3.916/98 created

the National Policy on Medicines (Rosina, Wang and Campos 2010:169). This policy

guaranteed access to medicines, affordable prices, safety, efficiency and quality (ibid.).

According to a study from Brown University and the Harvard School of Public Health, Brazil’s

accomplishments in treating AIDS are unprecedented and have influenced global AIDS and

health policy (Nunn et al. 2010).

Nevertheless, since the approval of the 1996 BIPL, Brazil has faced many challenges. In fact,

before that law public laboratories could produce generic versions of branded drugs. Today

less than one-fifth of medicines consumed in Brazil are generics produced in the country

(Rosina, Wang and Campos 2010:197).

Chapter 4 analysed the different reasons why the current regulatory IP system is skewed in

favour of powerful corporation’s interests and Section 4.2.1 discussed the capturing of IPR

regulation, showing how the United States and PhRMA successfully influenced the reshaping

of the Brazilian patent system. In this context, the Brazilian current patent regulation is subject

to two critiques.

First, although Brazil could have delayed the incorporation of the TRIPS dispositive provision

that requires the patenting of pharmaceuticals products, it immediately approved Law 9.279/96,

giving up a grace period of seven years. Article 65.4 of TRIPS provides that a developing

country that does not provide product patent protection in a particular area of technology when

TRIPS came into force (on 1 January 1995) had up to 10 years to introduce the protection.

Some developing countries delayed patent protection for pharmaceutical products (and

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agricultural chemicals) until 1 January 2005. India, for example, used this provision and TRIPS

only fully entered into force there in 2001. As pharmaceuticals were not patentable there until

2006, when India was required to grant patents on medicines.

Although Brazil had a developed drug industry – both public and private – due to large

transnational corporations and US pressure (as well as trade sanctions on other sectors of the

Brazilian economy by the United States), it did not take advantage of this flexibility and

approved the BIPL, which started to grant patents for pharmaceutical products and processes.

India, on the other hand, fully incorporated this flexibility in its legislation and used it

efficiently. It developed a large industry composed mainly of national companies. One may

question how India could resist for so long but not Brazil?

This author is not aware of any study specifically addressing this question, but feels that to

answer it one has to think in terms of internal and external factors. In the 1980s Brazil, like

South Korea, was targeted by the United States, which actually imposed certain trade penalties

on Brazil due to its patent system (see Section 4.2.1). Moreover, in the 1990s the Cardoso

government was pro-free market (see Section 7.3.3) and was perhaps seeking approval from

the United States. On the other hand, although India started to open up its market in the 1990s

as well, it was a much poorer country than Brazil. India, apart from its capacity in chemistry

and pharmaceuticals, was otherwise rather backward industrially and did not impose an

economic threat to the United States; nor was it much of a market for US goods. India was

really “locked in” to a weak patent system and a more self-reliance-type development model.

Second, the creation of a pipeline mechanism for patents was a very controversial issue in

Brazil. The pipeline mechanism is an institution created by Brazilian patent law that allowed

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the filing of patents in technological fields that, prior to 1996, had not yet been granted in

Brazil.

One of the key points about pipeline protection is that it allowed for the patenting of inventions

in Brazil more than one year after the priority date as provided under the Paris Convention. In

other words, they were not novel. Requests for patents via the pipeline mechanism are only

subject to a formal analysis and they follow the terms of the patent granted in foreign countries.

They are not submitted to a technical evaluation of the product’s ability to meet patentability

requirements – novelty, inventiveness and industrial application – by the Brazilian Patent

Office and the INPI.

In total, 1182 patents were filed under the pipeline mechanism, many of which are for essential

medicines used in the treatment of HIV/AIDS and leukaemia, for example. Many of the

products for which patents had been granted through this mechanism were already in the public

domain prior to 1996. Section 6.3.3 will discuss the constitutionality of the pipeline

mechanisms and Section 4.4.2 cited two recent decisions against the pipeline mechanisms

(INPI v. Pfizer in Special Appeal No. 731.101and INPI v. Novartis in Special Appeal No.

1.092.139). In that sense that Brazil was seeking approval from the United States; Cardoso’s

government’s concession of pipeline patent protection was arguably a result of lobbying and

pressure from the US industry.

The above critiques support Chapter 3’s exploration of Hancher and Moran’s analysis of how

the regulatory arrangements and rules governing biotechnology and IPRs evolved, were

negotiated, renegotiated and reshaped from the 1980s until the present day. Brazil, like other

countries, saw its regulatory system develop rapidly. In the case of Brazil the realignment did

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not emerge in a vacuum and that regulatory developments at the global level have been driven

by the implicit influence of copyright, patents business groups and developed economies.

Hancher and Moran's approach is a useful mechanism for analysing the evolution of regulatory

arrangements in Brazil. There are current debates in Brazil, summarized in Table 6.1 below,

around patent law reform, the prior consent of ANVISA, compulsory licensing and parallel

importation, participation of third parties in patent application, patentability scope and

patentability requirements and data exclusivity.

There are a number of bills ongoing in the National Congress that, if approved, will provide

Brazil with a patent law much more favorable to the protection of public health. At the same

time there are bills that promote the adoption of TRIPS-plus and may be against innovation

and the country’s interest

3: Law Changes that Affect Innovation Proposed in the Brazilian Congress

Bill Subject Goal

Bill 139/1999 Compulsory license To allow authorities to license
companies or individuals who do not
Bill 3.562/2000 hold the patent to make, use, sell or
import a patented product without the
Bill 303/2003 consent of the patent holder.

Bill 5.176/2009

Bill 2.846/2011

Bill 3.995/2008 Polymorphic forms To allow the granting of patent

protection for different polymorphic
forms of the same substance.

Bill 3.944/2012 Patent term extension To extend the term of patent protection
beyond the 20 years established by the

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Bill 5.402/2013 TRIPS Agreement.

Bill 5.402/2013 Data exclusivity To allow the granting of exclusive

rights over data used for obtaining
regulatory authorization to market
certain products

Bill 139/1999 Parallel importation To allow the importation of a product

(Exhaustion of rights) lawfully marketed in another country
without the authorization of the patent
holder.

Bill 3.709/2008 Participation of the health To ask for to the participation of

sector in the analysis of professionals from the health sector in
Bill 7.965/2010 pharmaceutical patent the analysis of pharmaceutical patent
applications (ANVISA’s applications.
Bill 3.943/2012 prior consent)

Bill 5.402/2013

Bill 3.995/2008 Interpretation of the To allow countries to interpret the

patentability requirements patentability requirements of the TRIPS
Bill 5.402/2013 according to criteria set Agreement (novelty, inventive step and
nationally industrial applicability) as they feel
more adequate.

Bill 22/2003 Exceptions to To allow countries to consider as non-

patentability. patentable certain inventions
Bill 2.511/2007

Bill 3.945/2012

Bill 5.402/2013 Public non-commercial To allow the exploitation of a patented

use product, without the consent of the
patent holder, for the purpose of public
non-commercial use.

Bill 5.402/2013 Opposition to patent To allow third parties to challenge a

applications patent application at the patent office
before or after it is granted.

Bill No. Life Forms Patentability To allow life forms to be considered an

4961/2005 invention or utility model, and therefore
they could be patented.

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In fact, the Brazilian political situation shows that the country is not immune to the lobbying

of TNCs. For example, state representatives from different parties are currently advocating a

bill (Bill No. 4961/2005) that aims to allow life forms to be considered an invention or utility

model, and therefore patentable. The proposal had already been approved by the Sustainable

Development Environmental Committee of the Brazilian National Congress and the Economic

Development Commission for Industry and Trade also gave a favorable opinion on the bill.

The lobbying is aiming to allow the patenting of materials of biological origin as long as they

meet the criteria of novelty, inventive step and industrial application provided in the Brazilian

law. This bill, if passed, will extend the patentability of plants, animals and all forms of life,

including human genes.

While TNCs and some members of the Brazilian Congress support this bill, activist groups and

NGOs are lobbying against it. In the case of Bill No. 4961/2005, the Working Group on

Intellectual Property (GTPI) of the Brazilian Network for the Integration of Peoples (REBRIP)

is leading the opposition. GTPI-REBRIP is very active in the IPR scene and brings together

several civil society organizations, social movements and experts advocating for a more

balanced IPR system and better access to medicine in Brazil.

Finally, is important to underline that, when interviewed, Brazilian IP lawyers stated that two

main actors have influenced the IP space in Brazil. First, the Workers Party, which has been in

government for the past 14 years, has had an anti-IP agenda. Second, certain actors in

collaboration with the government have influenced the Brazilian Patent Office to keep certain

technologies unprotected in Brazil. Some interviewees made implicit that the backlog and long

delays in the examination process of international patents in Brazil is due to a lobbying from

Brazilian pharmaceutical companies that profit by selling some products patented elsewhere

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but not in Brazil. Many national companies sell to the government copies of products and

technologies that are patented worldwide and are not protected in Brazil (e.g. medicines).

6.4.3 Brazilian Innovation Law

Section 4.4.1.1 discussed the US Bayh-Dole Act and suggested that there is an unambiguous

relationship between innovation policy in the United States and the enactment of Bayh-Dole.

For some analysts the Act is regarded as a catalyst for economic growth, but others argue that

the strategy of Bayh-Dole has not been successful. Many in Brazil say that the country’s

Innovation Law is the equivalent of Bayh-Dole.

Field research revealed that for Brazilian policy makers and IP managers the Innovation

Law represents a milestone in regulating the relationships between universities and private

companies, encouraging them to invest in innovation. There are many positive advances in this

law (e.g. Art. 24 provides for the establishment of investments funds) but in terms of this thesis,

the most important feature is the relationship between innovation and IPRs.

The Innovation Law requires universities to have a commercialization and an IP strategy (Art.

16). Most importantly, it requires a complete vision that preserves access to, and affordable use

of, university-generated technologies in the face of commercial pressures. To understand the

nature of this law, it is important to explain that, according to Article 12, the default system is

ownership – it promotes the acquisition of IP in order to commercialize it. There is a broad

understanding that universities and research institutions must use intangible assets to ensure

business to boost innovation (Boettiger and Bennett 2006:320; Sampat et al. 2008:3).

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From conversations with Brazilian technology management officials at Pontifical Catholic

University of Rio Grande do Sul (PUCRS), FIOCRUZ, São Paulo Research Foundation

(FAPESP), University of São Paulo (USP), University of Brasilia (UNB), and small- and

medium-sized biotech enterprises, it emerged that patenting and licensing, including from

publicly financed research, would spur science-based economic growth and national

competitiveness. Officials often used Bayh-Dole and the American university technology

transfer business model as examples to encourage, capture, and commercialize the discoveries,

inventions, and technologies that emerge from federally funded research.

Bayh-Dole has been regarded as a model of how to achieve social and economic goals by many

developed and developing countries (Boettiger and Bennett 2006:320; Sampat et al. 2008).

Nevertheless, as Section 4.4.1.1 documented, there are important concerns. In the case of Brazil

and other developing countries, one should be cautious since such legislation has the potential

to reduce access to the outputs of publicly funded research while harming future innovation.

Many of the officials that advocate the adoption of similar initiatives in other countries

overstate the impact of Bayh-Dole in the United States (Sampat et al. 2008: 2078). They often

use as an argument the Economist’s (2002) claim that the Act was “possibly the most inspired

piece of legislation to be enacted in America over the past half-century” (Sampat et al.

2008:2073). They also use data (originally used by US proponents of the Act) on the low

licensing rates for the 28,000 patents owned by the US government before Bayh-Dole to imply

that the pre-Bayh-Dole legal regime was not conducive to commercialization (Patronal

2007:12; Sampat et al. 2008:2077).

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However, Eisenberg (1996:3) has argued that the figures are misleading (see also Sampat et al.

2008:2078). Eisenberg (1996) documented information that suggests that these figures are

samples largely comprised of patents (funded by the Department of Defence) “to which firms

had already declined the option of acquiring exclusive title” (ibid.). The relevance of these

figures is questionable for the debate about public sector research institutions since the vast

majority of the patents in question were based on government-funded research conducted by

firms, not universities or government labs (Sampat 2006; Sampat et al. 2008:2078).

Also, another important argument is “that the narrow focus on licensing of patented inventions

ignores the fact that most of the economic contributions of public sector research institutions

have historically occurred without patents” (Sampat et al. 2008:2078; see also Cohen et al.

2002; Mowery et al. 2004). Moreover, Sampat et al. (2008:2079) showed that after the

subtraction of costs of patent management, licensing revenues – net revenues earned by US

universities from patent licensing – were “on average, quite modest” (data from 1998 to 2002).

According to the president of the Association of University Technology Managers (Sampat et

al. 2008: 2079; see also Nelsen 1998:3):

The direct economic impact of technology licensing on the universities themselves has
been relatively small (a surprise to many who believed that royalties could compensate
for declining federal support of research) … Most university licensing offices barely
break even.

Although Brazilian legislation enables government authorities to authorize third-party private

uses of patented inventions (compulsory licensing according to Art. 31 of TRIPS), the

Innovation Law does not have a “march in” provision like Bayh Dole (see Section 4.4.1.1).

March in provisions may be powerful rights, and Brazilian legislators should consider carefully

the inclusion of such rights, balancing it with a regime of price control. In Brazil, the Board of

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Market Regulation of Medicines (CMED) regulates the market and establishes criteria for

defining and setting medicine prices. Also, Brazilian innovation law should consider other

issues discussed earlier in this thesis (e.g. research exemption to permit the ongoing use of

technologies developed with public funds for non-commercial research; b) providing broad

access to publicly funded upstream inventions and research tools; and c) access to proprietary

technologies for humanitarian purposes).

It is clear that there is a dangerous misperception of the US model of technology transfer

(exemplified by Bayh-Dole), and that it is not a panacea (Boettiger and Bennett 2006: 320;

Sampat et al. 2008). An innovation law or national strategy that creates incentives to patent

and exclusively license technology may create barriers to access, lead to delays in publication

of research, cause conflicts between public and commercial interests, and shift research

incentives from basic to applied research. Thus, it is crucial to explain how public sector and

other institutions can use IP to ensure that research benefits humanity (e.g. an open source drug

discovery initiative for neglected diseases). Brazilian public research institutes and universities

should form a more realistic perspective of the possible economic returns from patenting and

licensing activities – prominent examples include OSI strategies that are assessed in this thesis.

OSI R&D offers much more transparency and is morally the best choice.

The Brazilian Innovation Law, despite some controversies, could serve as a step towards

adding value so society can benefit. For this, Brazil will need a properly balanced legal and

institutional framework in place. Brazil should be watching how cooperation among

government departments, companies, and academic institutions functions. In this way,

opportunities for conflicts of interest to some extent could be avoided. It is important to monitor

these relations so there is less opportunity for redirection of research, lack of openness in

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relation to the sharing of scientific discoveries, greater emphasis being placed on applied

research rather than basic research, and encouragement of the patenting of fundamental

research.

In February 2016 Brazilian President Dilma Rousseff sanctioned a law that complements the

Innovation Law. The new Act, called the Legal Framework for Science, Technology and

Innovation, provides for incentives to scientific development, research, scientific and

technological capability.

The Act governs the relationship between public and private entities establishing rules of

transparency and legal certainty to reduce bureaucracy and give more speed to the process of

collaboration between public and private entities. The new legislation has some novelties such

as exemption from a bidding process for the public administration in the procurement of

services or innovative products from micro, small and medium enterprises. It also provides for

new situations of bid waiver for the procurement of goods and services for R&D. In addition

organizations dedicated to science, technology and innovation may use a differentiated system

of public procurement and mayors and governors may establish a simplified regime, with its

own rules for acquisitions in these areas. The law has another improvement which is to enable

researchers with exclusive dedication in public institutions to perform remunerated activities

in S&T in private companies. This new law may be a good step to improve the collaborations

between public universities and private companies and enable Brazilian scientists to seize

opportunities.

This has taken the idea of capture as a starting point and has framed the main issues raised in

Brazilian law in terms of influences that interact within the regulatory space – the concept

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suggested by Hancher and Moran. This analysis has shown that the process of debate and

enactment of laws around innovation in Brazil (e.g. the Biosafety Law and Innovation Law)

exemplified certain forms of regulatory capture that may be used to advance private goals.

Nevertheless, this analysis reveals that certain forms of regulatory capture may be used to

advance public goals as well.

6.5 Conclusions

While a proper framework and the right IPRs and policies play an important role in innovation

systems, they cannot by themselves catalyse innovation, and poor policies and practices can

impede it. After having provided the background for the case study of this thesis in Chapters

3–5, this chapter has provided background to relevant Brazilian legislation. It has described the

Brazilian legal framework that governs IPRs and innovation and demonstrated the position of

Brazil. Particular emphasis has been placed on the law and principles that are connected with

OSI policies.

This chapter has revealed that although Brazil has possibly made some wrong decisions in

regard to IPR regulation and innovation, the current Brazilian legislation is in line with OSI.

OSI is not only legal, but it also contributes to the implementation of many of Brazil’s

constitutional principles, technology transfer, competition and free competition in Brazil.

This chapter has also connected the theoretical and methodological approaches of the thesis to

the specific case of Brazil, and shown that the “wrong” and “right” decisions demonstrate how

domestic political change brought about a fundamental transformation in the way IPRs were

perceived and integrated in Brazilian legislation. Political shake-ups and the rise of new groups

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changed Brazilian policy making. Brazilian policy makers were not immune to the growing

network of international organizations, government agencies, civil society groups, attorneys,

scholars and journalists whose work focuses on issues of IP, development, access and human

rights.

This chapter has further demonstrated that the idea of capture as a starting point – the concept

suggested by Hancher and Moran – is useful to frame the main issues of actors that interact

within the regulatory space. The analysis has debated the commonly accepted wisdom that

certain forms of regulatory capture may be used to advance public, rather than private goals.

The next chapters will further apply the methodology to show how the regulatory arrangements

and rules governing biotechnology and IPRs evolved and were negotiated, renegotiated and

reshaped in Brazil.

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 7. Brazil’s Development and Innovation in Biotechnology

7.1 Introduction

An attempt to stimulate comprehensive debate about the relationship between innovation, in

the case of this thesis OSI, and a country, in the case of this thesis, Brazil, and patents requires

an evaluation of the existing structural and political features that affect the industry. This

chapter discusses different periods in history of Brazil to reveal a level of disarray in past

policies for biotech innovation. Yet, the claim is that Brazil is in a good position to adopt OSI.

First, this chapter pays attention to the broader economic literature that analyses Brazil’s

development in order to link it to biotechnology. Discussing biotechnology in connection with

Brazilian past political developments is one of the contributions of this thesis. Second, this

chapter seeks to show that Brazil faces many challenges, especially in its biotech sector, but

that the country also offers opportunities. Third, where possible, the chapter will improve

arguments in favour of Hancher and Moran’s methodology as it will provide a historical

analysis of the changes in Brazil, and to what extent they happened because of the influence of

different groups.

7.2 Disappointing Performance in Biotechnology

Brazil faces many challenges in order to produce innovative biotechnology, and according to

former Brazilian president Luis Inácio Lula da Silva (2007:3):

… Our objective is to take up a leadership position in the biotechnology field similar

to that already assumed by the biofuel area. This has become a partnership of

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 indisputable success between the scientific community and the efficiency of the
Brazilian entrepreneurial society. Our greatest challenge, my friends, is to repeat this
successful collaboration in other areas of the economy and production. We must begin
to produce affordable drugs and vaccines, biodegradable plastic, develop more effective
and less polluting industrial enzymes, more nutritious food, medicines and cosmetics
from our bio-diverse environment and techniques of environment recovery. In addition,
in the future, we must focus on biotechnology by investing in DNA sequencing
research, neuroscience, stem cell research, nanobiotechnology and biopharmaceutical.

Despite Lula’s enthusiasm, the scenario is not very promising. In 2006, Brazil’s R&D intensity

was at 1.02 per cent of GDP (Brazilian Industrial Research on Technological Innovation

[PINTEC] 2005). By the standards of the OECD, this figure is very low. In addition, the

development of public and business R&D was similarly low, with business expenditure on

R&D at 0.49 per cent of GDP (PINTEC 2005). Compared to Brazilian development, the

evidence clearly shows that other countries had been much more successful. If we compare

Brazil’s development in biotech with developed economies, such as the United States and

Europe, its track record is appalling (ibid.). Even compared with other developing countries

from East Asia, for instance, it is not very impressive (ibid.).

Current OECD (2015) statistics reveal that Brazil has fewer biotechnology patent applications

than small countries such as New Zealand and Austria and other emerging developing countries

like India, China and Russia.

4: Countries’ Share of Biotechnology Patents, 2010–13

Country Percentage

United States 37.03

Japan 11.48
Germany 7.92

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 Korea 5.98
France 5.23
United Kingdom 4.11
China 3.01
Canada 2.71
Chinese Taipei 2.34
Netherlands 2.09
Switzerland 1.93
Italy 1.69
Denmark 1.58
Israel 1.41
Belgium 1.40
Australia 1.31
Spain 1.21
Sweden 1.18
Austria 0.93
India 0.85
Singapore 0.64
Finland 0.52
Russian Federation 0.39
Norway 0.39
New Zealand 0.30
Poland 0.29
Ireland 0.28
Brazil 0.18

Source: OECD (2015).

Current statistics from WIPO also show that Brazil’s performance in the international patent

scenario is poor.

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5: Number of Patent Applications Filed under the PCT

Country 2011 2012 2013

United States 49,242.40 52,332.40 57,265.90

Japan 41,733.70 43,619.00 41,739.20
China 17,330.70 19,085.80 22,184.00
Germany 18,603.50 17,887.10 17,206.00
Korea 10,817.40 11,334.50 11,941.80
France 7,751.80 7,730.70 7,725.80
United Kingdom 5,798.10 5,761.10 6,194.10
Netherlands 3,521.70 3,508.90 3,455.90
Italy 3,277.70 3,315.50 3,360.30
Canada 2,938.00 3,110.80 3,167.50
Sweden 2,843.30 3,138.70 3,007.70
Switzerland 2,502.10 2,618.30 2,388.10
India 1,994.00 1,967.60 1,969.90
Israel 1,791.30 2,016.50 1,891.60
Australia 1,793.80 1,745.70 1,788.50
Spain 1,856.50 1,745.80 1,737.80
Finland 1,553.20 1,652.40 1,497.00
Austria 1,444.80 1,402.20 1,462.90
Denmark 1,255.30 1,156.30 1,194.20
Belgium 1,261.10 1,200.30 1,193.40
Russia 1,128.70 1,160.80 1,112.60
Norway 696.6 711.2 704.5
Singapore 637.9 719.6 774.9
Brazil 672.6 734.8 674.3
New Zealand 330.3 335.5 360.2
South Africa 345.2 382.9 282.1

Source: WIPO (2013).

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If patent statistics are any guide, Brazil’s innovation record in biotechnology has been

disappointing. This disappointing performance can be explained, at least in part, through an

analysis of the historical developments of science in Brazil.

7.3 Science and Development in Brazil

This thesis establishes a connection between Brazil’s biotechnology innovation and the

interaction of the development of Brazil and the development of science. It argues that

biotechnology, as an economic activity, depends on the right policies and the relationship

between actors such as governments, companies and research institutions. In the following

sections this thesis sheds light on policies for innovation in Brazil.

The goal is to present evidence of how coordinated actions are necessary for the development

of biotechnology. This thesis understands that government has a role in encouraging

innovation, which is not limited to providing conditions for new technologies to flourish; it

should also create infrastructure and ensure a proper regulatory framework and leadership so

innovation may prosper.

Modern science started in Brazil in 1916 under the influence of the Brazilian Academy of

Sciences and progressed rapidly in the 1940s and 1950s. In the first half of the last century,

Brazilian researchers such Bonilha de Toledo, Carlos Chagas, Vital Brasil, Oswaldo Cruz,

Adolfo Lutz, Emilio Ribas, Raquel Pestana, Rocha Lima, Samuel Pessoa and Carlos da Silva

Lacaz made important discoveries, especially for combating pandemics and diseases affecting

the Brazilian population in the twentieth century. In fact, some of their work was rated highly

both in Brazil and around the world. Today, partly as a result of those scientists, there are

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considerable public research facilities in Brazil (e.g. FIOCRUZ and the Butantan Institute)

(Vargas 2002:9).

The Brazilian scholarship on innovation and economy suggests that between the 1930s and

1980s industrialization drove technology development (Viotti 2008). The linear model of

innovation was perceived as the right method in the industrial innovation process. In fact,

public resources were very important at that time to develop a national academic system able

to train scientists for basic research (Arbix 2010).

Viotti (2001:143) explains the interactions of science and development, and suggests that

Brazil and other developing countries had no chance of taking part in the post-war

industrialization period, and could not use scientific and technological innovation to boost

development. Coutinho and Ferraz (1994) studied the weakness of the Brazilian innovation

system and suggested that two basic elements were problematic for building capacity in science

and biotechnology: little involvement in R&D by companies; and corporate interests in public

research institutions (Dahman and Frischtak 1993; Ferraz et al. 1995).

According to Schwartzman (2001), Brazilian scientific and technological research was

concentrated in universities and public research institutes. Considering domestic industry’s few

achievements, it was no surprise to find that biotechnology inventive activity has followed the

same pattern.

Brazilian institutional conditions therefore affected different arenas and, in particular, the

economy and biotechnology R&D. In the following sections, this thesis will analyse recent

Brazilian scientific development, paying special attention to the broader economic literature

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analysing that development. This will serve to explain, in part, Brazil’s poor development in

the biotech sector so far. It addition, it will highlight the different interests that influenced the

economic development of Brazil.

7.3.1 Brazilian Development from 1980 to 1989: The Lost Decade

Until the mid-1980s, Brazil had different institutions which made up the National Scientific

and Technological Development System (SNDCT). Nevertheless, during the 1980s with the

advent of various state reforms, Brazil did not have an organic system for S&T for a

considerable period of time (Guimarães 1997:55).

According to Guimarães (1997:54), Brazil adopted an inadequate science, technology and

innovation model during the 1980s. Indeed, behind the Brazilian socioeconomic structure,

there were two opposing ideological perspectives: neoliberalism versus a national development

agenda.

Brazilian economy theorists have studied Brazil’s development since the political changes of

the 1980s and argue that trade policies were key reasons for Brazil’s poor performance and

structural challenges (Baer 1996; Benjamin 1998; Castro and Carvalho 2002; Magalhães 1997;

Pio 2001). This thesis argues that this poor performance can be linked to Brazil’s economic

policies and institutional structure.

Issues of trade liberalization had several implications for S&T development in Brazil. Viotti

(2005) analysed the productivity of Brazilian workers in the last four decades and compared it

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with its competitors. During the 1960s and 1970s, the average Brazilian worker productivity

grew steadily. However, from 1980 to 2005 productivity hardly grew at all (Viotti 2005:11).

In the 1980s, Brazil’s innovation was lagging mainly because of the first Brazilian industrial

crisis, which occurred after the second oil crisis (1979) and the great international financial

crisis (1980). In addition, subsequent economic crises led to many state structural reforms, and

S&T suffered constant transformations, which led to deactivation of important scientific

activities (Viotti 2005).

From the 1970s to the mid-1980s, there was a shifting in world economic dynamics, especially

if one compares Brazil’s performance to the rising Asian economies, the “Asian Tigers”. Table

6 shows some early comparative data of Brazilian GDP against that of the Asian Tigers.

6: GDP Statistics (1970=100)

Country/ Year Brazil Hong Singapore Taiwan South

Kong Korea

1970 100 100 100 100 100

1980 215 221 217 236 250

1990 276 461 466 520 586

1994 305 574 619 670 744

Source: Magalhães (1997:86); Campos in Folha de São Paulo 17/09/95 (1-14).

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The above table shows considerable gaps between Brazil and those countries that had

established active policies for economic and technological development. The conclusion must

be that the development model adopted by Brazil in the 1980s led to poor technological

development, not only in comparison to developed countries, but also to other developing

economies.

Until the end of the 1980s, the Brazilian economy suffered, mainly due to excessive protection,

low productivity, lack of high technology and low competitiveness (Tauile 2001:222).

Government investment in state companies, and the resulting state inefficiency, started to show

deficiencies by the end of the 1970s (ibid.). As a preliminary explanation, from 1950 to 1980,

the Brazilian policy regarding industry protectionism was based on a set of non-tariff barriers

(NTBs) (Pio 200:199). Basically, this system required a prior government license for any

import of goods. The bundle of requirements to obtain such a license was a severe barrier to

importation freedom. Until the government of Fernando Collor de Mello, which began in 1989,

this was the default policy (ibid.).

The 1980s is known as the lost decade in Brazil when the country experienced the

consequences of the economic strategies of previous decades that focused on economic

concentration to achieve economic development (Salomao 2001:129). In the 1970s and 1980s,

deterioration of public finances occurred as a result of the growth of the state productive sector

(mainly agricultural), the increase in external interest rates, new loans of resource deposited at

the Central Bank, the National Treasury absorbing state debts, and devaluation (Matos and

Oliveira 1999:7). Benjamin (1998:27-28) explains that the older growth model, though

successful in some aspects, hid some of Brazil’s internal and external fragilities. Thus, when

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the pre-1980s rapid growth stopped, such fragilities started to dominate the political scene and

obstructed the possibilities for the country to enter a new stage of development (ibid.).

This occurred due to various causes, such as the loss of industrial strength, land crises, people

moving to the cities in greater numbers than the urban economy could cope with, the stopping

of external financing, the country’s being obliged to export commodities, and the principal

internal growth stimulator (the state) starting to fall into deficit (Benjamin 1998:27-28).

Trade liberalization began during the government of President José Sarney in 1985. Brazil was

among the last countries in the Latin American block to start liberalization (Pio 2001:181-211)

due to a divergence between two technical groups: the tariff experts group and the industrial

policy group (specialists from the MCT) (Bielschowski 1986; Pio 2001:181-211).

Aside from their differences regarding the country’s international competitiveness capacity,

both groups agreed that the country’s technological modernization was essential. The tariff

experts group believed that Brazil’s technological capacity was well developed. On the other

hand, the industrial policy group had reasons to believe that Brazilian industry had

technological gaps and hence could not compete with foreigners. Thus, the latter group

advocated continuing state protection for strategic sectors, and the former group defended

customs tariffs as a means of industry protection. The government at the time was incapable of

arbitrating this conflict, so in May 1988 it launched two simultaneous policies: Tariff Reform

and the New Industrial Policy (Pio 2001:181-211).

These two conflicting policies were the result of earlier development policies. One of the best

examples of this is the Ministry of Industry and Commerce (MIC)’s proposed industrial policy

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in 1985 (Pio 2001:184-186). This new policy called for a new phase of industrialization with

social objectives, based on quality, and supported by an increased efficiency in production.

Interestingly, this policy required the private sector, in conjunction with the state, to be the

main promoters of industrialization, which would happen through public financial resources

and “special” competition conditions (MIC 1985:13; Pio 2001:184).

This proposal, known as the Gusmão proposal after the head of the MIC, had three key

elements that were of special importance: state role, market role, and institutional framework.

Most importantly, national industry was to be favoured through selective state intervention,

which would be supported through increased technological capacity-building for national

companies. According to the proposal, the state, not the market, would drive the process of

technological modernization (ibid.). The market was not even considered as a second

mechanism for providing incentives to make the private sector invest in modernization. The

proposal did not have any competition policy, nor any focus on trade liberalization. The

opening of the economy for foreign trade was dependent on the balance of Brazil’s external

debt. Nevertheless, the proposal permitted a case-by-case negotiation of tariffs with

commercial partners (ibid.).

This proposal proved to be problematic for three main reasons: a) Brazilian external debt was

not resolved; b) negotiation of 13,000 products on the Brazilian tariff list would not lead to

trade liberalization (despite huge transactions costs); and c) the concentration of decision

making in the hands of the MIC. This proposal was rejected and led to the relieving of Minister

Gusmão in February of 1985. Nevertheless, it left a legacy for the officials of the Brazilian

government: they should be aware of the web of influences (Pio 2001:185).

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To understand better the process of tariff reform that occurred between 1986 and 1989 in

Brazil, one has to look into the mainstream economic ideology of the government at that time

(Pio 2001:186). Most of the members of the economic team of President José Sarney were

industrialists influenced by the United Nations Latin American Economic Commission

(CEPAL), and had ideas based on the New Theory of International Trade (Helpman and

Krugman 1985; Pio 2001:189).

Accordingly, they argued that the classical international trade theories, which defend free trade

for gaining efficiency, should be complemented with findings of other economic theories.

Tavares, the Chief of the Commission for Customs Policies (CPA) at the time, used ideas from

Baumol’s (1982) theory of contestable markets to rethink the classical theory of trade and

interpret Brazil’s dilemmas (Tavares 1982:2; see also Pio 2001:189).

Tavares (1982) stipulated the objectives of the National Industrial Policy, which were to

establish conditions for international efficiency for all sectors of the economy. For this,

artificial barriers and the contestability of markets – especially government interventions that

create barriers to the entrance of new products in the market and a monitoring on the evolution

of natural barriers, generated by the technological development – would play a crucial role.

Protection would be justifiable in cases that would increase national income. Protection would

also benefit the country because it would guarantee the survival of local producers (in sectors

that would be facing difficulty because of foreign competition) (ibid.).

The question was how to promote technological development (Pio 2001:192; Tavares 1988:11-

12) and whether it should be done through government incentives for the private sector or

through market pressure and competition.

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Tavares (1982) believed that most Brazilian producers were able to face competition and thus

the country should open its doors to trade. This perception was not a consensus at the time. For

instance, Barros Cassal Castro, an economist from the Federal University of Rio de Janeiro,

opposed trade liberalization because he believed that the Brazilian technological industry was

not ready to face free trade (Pio 2001:193, citing Gazeta Mercantil 27/04/88). Most members

of the team in charge of the development of an industrial policy for Brazil believed that trade

liberalization would be problematic because the local industry was not at the same

technological level as foreign industries and investment was necessary for technological

development (ibid.).

Erber (1988) wrote an article that showed the thinking of the group in charge of Brazilian

industrial policy reform (see also Pio 2001:201, 203-211). The New Industrial Policy group

concluded that the effects of the technology revolution (microelectronics, biotechnology and

materials) modified economic benefits and withdrew some of the advantages previously

conferred to developing countries, and introduced new activities which would change

completely social and economic activities (Erber 1988; Pio 2001:203).

In his article, Erber developed the concepts of technological paradigms and industrial

complexes in order to support a state-interventionist national development strategy. Erber

argued that, because of market failures, the state should actively promote economic

development. New industries, such as microelectronics and biotechnology, were emerging;

therefore, the technological gap between developed economies and developing economies was

becoming even greater (Erber 1988:25; Pio 2001:207).

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Brazil did not have access to this new, high-tech, paradigm. According to Erber (1988:25), the

development of technological and scientific capacities to stimulate production, reception and

diffusion of technological progress should be the engine for the elaboration of a National

Industrial Policy. Having in mind Schumpeter, Erber suggested that technological development

was endogenous to an industrial dynamic, usually generated internally because of competition

pressures, market, state action and other political factors. Essentially, Erber proposed state

actions capable of promoting private investment for technological development. He

demonstrated that the New Industrial Policy of the government of President José Sarney (1985–

1990) had to focus on state action against market mechanisms in order to promote development

(Erber 1988:25; Pio 2001:204, 207).

Thus, the dilemma of protection versus liberalization explains why Brazil, in contrast to other

countries, did not open its doors to trade in the 1980s. In fact, during the government of Sarney,

this was more evident as there were two contradictory groups. On one side, the tariff group

defended the reduction of tax incentives and the establishment of tariffs as the main engine to

promote industry protection. On the other side, the industrial policy group defended non-tariff

mechanisms and tax incentives, to promote R&D for the national industry, and to promote new

technology industries’ development (EM 17/88; Pio 2001:208).

Sarney’s government created the MCT in 1985. The hope was to increase the total expenditure

of R&D to 1 per cent of the Brazilian GDP. However, macroeconomic instability proved to be

detrimental and R&D expenditures remained flat during the 1980s (Dahlman and Frischtak

1993:435).

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 7.3.2 The 1990s and Liberalization

Brazil had its first democratic presidential election through direct voting in 1989. Fernando

Collor de Mello (1990–92) won the election, mainly because his political

marketing represented a rupture with the past, especially in regard to Brazil’s institutional

structure (Castro and Carvalho 2002; Pio 2001:228). Collor was the first president to adopt

severe measures for trade liberalization and to link the country’s industrial policy to

international trade policy (ibid.).

The 1988 Brazilian Constitution adopted a capitalist organizational system. In addition, it gave

better guarantees to protect economic freedoms and free competition, making it possible for

the state to discipline the economic power of markets and sectors that showed problems

associated with monopolism (Marques 2001:78).

Collor’s government implemented the so-called Brasil Novo (New Brazil) programme. This

programme was extremely wide in scope, interventionist, and contained diverse measures such

as economic stabilization and regulation (Castro and Carvalho 2002; Pio 2001:228).

To better understand the thinking that prevailed during Collor’s regime, it is important to

explain his presidential campaign. At the time, a group from the Brazilian Party of Social

Democracy (PSDB) assisted Collor’s economic team to develop what was called an “industrial

policy platform”. This was heavily linked to Brazil’s international trade policy. On his very

first day as president, Collor announced a Provisory Measure, which restructured the Brazilian

policy for international trade. This measure, which later became law, is considered a landmark

in the process of trade liberalization, since it eliminated many administrative barriers for

foreign trade (Fritsch et al. 1990:2-3; Pio 2001:234-244).

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Although the PSDB group influenced the initiatives of Collor’s government during the election

period and at the beginning of his presidency, it lost strength after the first year. The reason for

this was that many of the group’s ideas contradicted those of an opposing group, the National

Bank of Development (BNDES) experts (ibid.). Thus, since the BNDES experts’ line of

thinking also had a great influence on the government’s decisions, there were two contradictory

groups behind Brazil’s development policies (ibid.).

For example, the PSDB group defended a radical reform of industry and trade policy. The logic

behind the group’s proposals was to perform a radical institutional reform in order to weaken

the role of the private sector in developing and implementing industrial and commercial

policies. This group believed that competition should be elevated so that market incentives

would increase economic productivity. The main idea was to eliminate the modus operandi

current at the time, which was based on state intervention to eliminate competition – this was

a direct result of pressures from economic groups in the decision-making process (ibid.).

On the other hand, the BNDES group preferred that the private sector should have a

fundamental role in the government decision-making process, because the state should be just

an administrator of protection instruments and incentives. This group claimed that trade

liberalization should not be the only way to promote technological development (in line with

the PSDB group). The BNDES proposal, in the view of the PSDB group, represented a

“disguised” continuation of the old “pick a winner” model of industrial policy, which had been

adopted during previous administrations (ibid.).

In 1990, the PSDB group, which had been in charge of the development and implementation

of trade policies, was replaced by a group of economists from the BNDES (Pio 2001:230),

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reflecting that the Collor government favoured the BNDES line of thinking (Pio 2001:228-

231).

Science policy was then attached to the model elaborated for technological development (Lucas

1989:10; Pio 2001:244). Brazil’s technological development was supposed to be achieved

through three phases (Pio 2001:244). First, the government would invest in acquiring

technology and capacity-building. Second, the government would invest in “improvements and

secondary innovations” – the evolution of technological operations and developing solutions

for technological problems. The investments were to be concentrated in basic technological

research and hiring of consultancy services. The third phase targeted technological innovation:

the government would dedicate investments to scientific research in order to develop new

products and processes. The strategy identified biotechnology, information technology,

telecommunications and new materials as areas that should receive special attention (ibid.).

Collor had many conflicts with the National Congress regarding economic matters. This,

essentially, explains why the process of trade liberalization was fast-forwarded and why

policies of industrial development that affected S&T never worked effectively (Pio 2001:230-

231; Castro and Carvalho 2002:117-118).

In line with neoliberal dogma, Collor privatized state companies, sold federally owned real

estate, and made many administrative reforms. Collor also affected S&T since the autonomy

that public foundations and public companies had before his term ended. Therefore, institutions

under the MCT experienced various changes regarding organization and management. At the

time, there was drastic administrative reform and Collor abolished a number of Ministries,

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including Science and Technology. To replace the MCT, Collor formed the Special Secretary

for Science and Technology (Pio 2001:230-231; Castro and Carvalho 2002:117-118).

Furthermore, Collor proved to be autocratic. He ignored negotiations and put his government’s

interests above the National Congress. After less than two years, he was accused of corruption

and subjected to an impeachment process. In September 1992 he resigned. However, his brief

spell in office was sufficient to rupture the vestiges of past development policies (Castro and

Carvalho 2002:121).

7.3.3 Itamar Franco and Fernando Henrique Cardoso (1992– 2002)

After Collor’s resignation, Itamar Franco, the vice-president, assumed the presidency during

political, economic and social turmoil. During the two years of his government, Itamar

attempted an expansive institutional reform to fix some structural distortions of the Collor

period, especially concerning the ministerial structure. For instance, the Special Secretary of

Science and Technology became a Ministry again. In the economic area, the responsibilities

for the development and implementation of international trade and industrial policy were

divided between the Ministry of Industry, Commerce and Tourism and the Ministry of Finance

(Pio 2001:231-236).

In 1993, Fernando Henrique Cardoso, a member of the PSDB, took over the Ministry of

Finance and brought with him figures that dictated the PSDB line of thinking. This helped to

elaborate Collor’s first measures for the industrial and international trade policies. The PSDB

economists were responsible for the Plano Real, the Brazilian economic stabilization plan, and

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influenced the policies for industry and international trade (Castro and Carvalho:122; Pio

2001:231-236).

In 1994, in great part because of the success of the Plano Real and the economic stability

achieved, Cardoso won the presidential elections. In January 1995 he assumed the presidency.

According to Castro and Carvalho (2002:123), Collor did not try to negotiate many of the

reforms he implemented through political processes, and did not take into account the birth of

new institutional conditions of checks and balances, nor developed mechanisms to implement

economic policies to substitute the macroeconomic populism. Collor’s government also failed

in controlling inflation and in formulating a foreign policy to insert Brazil into the international

context to confirm a sustainable national growth. Cardoso proposed to do exactly what Collor

did not do (ibid.:121).

Cardoso’s plan (Plano Diretor 1995:22) showed some basic processes of reform, such as

delimitation of state function, personnel reduction, and privatization (ibid.). The new

government made explicit the pragmatic character of Brazil’s new policies. There was a clear

adoption of horizontal policies, in contrast to specific policies for certain sectors of the

economy. In these horizontal policies, trade liberalization policies played an important role and

showed that private investments were important for increasing efficiency and productivity

(Castro and Carvalho 2002:122; Pio 2001:231-236;).

Regarding the organizational and institutional plan for S&T, the rationale was to transfer

scientific services to public foundations (non-governmental). Cardoso introduced new methods

of management for research institutes and transformed them into social organisms ruled by

management contracts (Presidential Decree 2001). Deregulation was directly linked to S&T in

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order to insert the country into the international scenario. For example, in 2001, the former

Centre for Strategic Studies (CEE) changed its name to CENTRO and acquired the status of a

non-profit organization, with the purpose of tracking international trends in world science and

planning investments in the biotechnological and pharmaceutical sectors (Castro and Carvalho

2002:122; Pio 2001:231-236).

Since 1979, the Brazilian government had tried to control inflation through many stabilization

plans, but these were unsuccessful. Thus, Cardoso’s Plano Real was a landmark of his

administration. In addition, Cardoso’s government carried out privatization, deregulation and

constitutional reforms. Various amendments to the Constitution benefited state monopolies

such as natural gas, petroleum, and telecommunications, and eliminated discrimination against

foreign capital. Cardoso redefined the concept of national enterprise (Castro and Carvalho

2002:122; Pio 2001:231-236).

Cardoso’s reforms included future planning, which changed the relation between state,

economy and foreign capital, aiming to build an economic order characterized by liberalization

and integration with the global economy. Consistent with changes in the process of formulation

and implementation of policies, monetary stabilization became a long-lasting feature of the

Brazilian economic system (Castro and Carvalho 2002:123).

Moreover, the establishment of a two-level decision structure reformed the decision-making

process. At first, decisions would happen through broader negotiations, while, in a second

stage, decisions would be isolated from bureaucracy. For example, some economic policies

were isolated from political negotiations (Castro and Carvalho 2002:123; Figueiredo and

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Limongi 2000). Thus, Cardoso was able to make use of macroeconomic policy. In this respect

(ibid.), his strategies were:

 To neutralise the veto power of conservationist political powers to take advantage of

his popularity arising from his stabilisation plans and consequent decrease of inflation

rates

 To control inflation through a flexible exchange rate policy in relation to the US dollar

and trade liberalisation (with negotiation flexibilities that permitted protection of some

special interests such as the car manufacturer industry)

 To exchange rampaging inflation for rampaging interest rates, even though it had

astronomical effects on the public debt. (Castro and Carvalho 2002:124)

Cardoso abandoned the macroeconomic populism of previous decades and developed a

macroeconomic pragmatism, where the emphasis of economic policy was on controlling

inflation. He took advantage of Collor’s rupture with the past, but wealth redistribution,

employment generation and accelerated growth were not his main concerns (ibid.).

During Cardoso’s government, the MCT held the National Conference on Science, Technology

and Innovation in September 2001. The results of this conference were published in the White

Book, which proposed the establishment of a policy for science, technology and innovation on

two levels: 1) definition of objectives to be pursued; and 2) identification of strategies to drive

those objectives (MCT 2002:33).

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So far this chapter has documented strong evidence revealing that, in the past, Brazil

experienced various setbacks in its economy and science. Until recent years, there were no

systematic indicators for innovation in the Brazilian industries and evidence for innovation was

lacking (Viotti 2005:3). The PINTEC Indicators, created in 2002, to some extent filled this

void (PINTEC IBGEE 2002). In addition, PINTEC adopted a similar methodology to the

European Union – Community Innovation Survey 3 (CIS 3) and thus it was then possible to

make international comparisons (Viotti 2005:9).

The PINTEC Indicators showed that only 31 per cent of Brazilian companies introduced

innovations between 1998 and 2000. The Brazilian industry innovation rate was relatively low,

when compared to most European countries (PINTEC IBGEE 2002). In fact, as this chapter

has revealed, Brazil’s innovation record in biotechnology has not been impressive.

Specifically, this chapter suggests that the history of S&T, and policy making in Brazil, has

been very contradictory, reflecting a developmental model which Brazil adopted in the last

decades of the twentieth century. It is evident that succeeding changes in the government

structure affected science, technology, innovation and biotechnology. The obvious question to

ask next is: What happened in Brazil from 2002 until 2010?

7.3.4 2002 until 2010

In 2004 President Luis Ignacio Lula da Silva sanctioned the Brazilian Innovation and launched

the Industrial, Technological and Foreign Trade (PITCE) programme. The Innovation Law and

this new programme, which introduced some development actions for innovation and exports

(following the trend in OECD countries’ policies), were two instrumental achievements for

innovation policy in Brazil.

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In addition, in 2007 Lula’s government launched the Action Plan – Science, Technology and

Innovation (PACTI) and the Productive Development Policy (PDP). These two policies further

strengthened the conditions for innovation in Brazil (MCT 2006; MCTI 2011). During this

period the strengthening of funding institutions such as BNDES, the Brazilian Innovation

Agency (FINEP) and the National Council for Scientific and Technological Development

(CNPq) to support research and state research foundations is also visible (Araújo 2012:23).

Compared to previous decades Brazil has made better investments in S&T in the last decade,

both in the public and private sectors. The latest investments account for approximately 1.2 per

cent of GDP (MCT 2005). According to the 2005 S&T indicators, published by the MCT

(2005), the total amount invested in S&T rose from R$23.97 billion (1.00 R$ = 0.554326 USD

in May 2010). In relation to GDP, the percentage is 1.24. Of the total applied, R$13.7 billion

is from the public sphere – federal (R$9.57 billion) and state (R$4.15 billion) (MCT 2005:5).

The rest, equivalent to R$10.24 billion, is invested by the private sector. From these data, it

appears that the government is responsible for applying 0.71 per cent of GDP to S&T; 57.3 per

cent of investments are from the government and 42.7 per cent from private companies (MCT

2000:5). Statistics from 2010 reveal that the public expenditures in S&T in Brazil had increased

in that year in relation to the previous years.

7: Brazilian public expenditure on S&T 2000–2010 (in millions of Reais)

Year GDP Federal level State level Total

2000 1,179.482,00 5,795,40 2,854,30 8,649,70

2001 1,302.136,00 6,266,00 3,287,10 9,553,10

2002 1,477.822,00 6,522,10 3,473,30 9,995,40

2003 1,699.948.00 7,392,50 3,705,70 11,098,20

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 2004 1,941.498,00 8,688,20 3,900,50 12,588,60

2005 2,147.239,00 9,570,1 4,027,30 13,597,4

2006 2,661,344,00 11,476,6 4,282,10 15,758,6

2007 2.661.344,0 14,083,5 5,687,4 19,770,9

2008 3,239,404 15,974,5 7,138,0 23,112,5

2009 3,239,404,0 18,475,20 8,424,8 26,900,00

2010 3,770,084 22,577,0 10,201,8 32,778,70

Source: MCT (2012).

The current indicators are clearly positive in comparison to before. S&T expenditures are

growing at a rate similar to the growth of Brazilian GDP. From 2000 to 2005 such expenditures

were an average of 1.3 per cent of GDP and in 2010 it reached 1.62 per cent.

According to the MCT (2005:5), if one compares Brazil with other Latin American countries,

Brazil has made significant investment and currently has a sophisticated technology base and

a considerable stock of skilled human resources.

7.3.4.1 Human Resources

In Brazil there are only 1.48 researchers per 1,000 people in employment in 2006 and only 10.7

per cent of all university graduates have degrees in science and engineering. More generally,

7.8 per cent of the population aged 25 to 64 had attained tertiary education in 2004, and 18.4

per cent of total employment was in S&T occupations (OECD 2008:164).

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8: Science and Innovation Profile of Brazil

Brazil Average

GERD (gross expenditure on 21,90 48.60

R&D as percentage of GDP

BERD (business R&D 13.41 42.86

intensity) as percentage of
GDP

Triadic Patents per million 0.27 36.6

population*

Scientific articles per million 4.60 46.94

population

Percentage of firms with new- 8.83 44.02

to-market product innovations
(as a percentage of all firms)

Percentage of firms
undertaking non-technological 60.17 50.98
innovation (as a % of all firms)

Percentage of firms
collaborating (as a percentage 13.09 57.02
of all firms)

Patents with foreign co- 50.73 13.35

inventors

Researchers per thousand total 8.94 44.26

employment
Science & Engineering degrees
as percentage of all new 27.51 59.80
degrees

* Triadic Patents are a series of corresponding patents filed at the European Patent Office (EPO), the United
States Patent and Trademark Office (USPTO) and the Japan Patent Office (JPO), for the same invention, by the
same applicant or inventor.

Source: OECD (2008:164).

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Despite these figures, the Brazilian government’s investment in higher education has led to a

surplus of PhDs graduating from the universities. Many talented young Brazilian scientists are

forced to emigrate to find employment. One study revealed that around 1,000 scientists may

have migrated from Brazil to different countries between 1993 and 1999 (Guimarães R. 2002).

The last decade’s public investments in human resources and the Brazilian public research

infrastructure provided opportunities to strengthen scientific capacity. Brazil’s specialization

index in health biotechnology rose from 0.57 in 1990 to 0.95 in 2002, suggesting an increase

in research intensity in health biotechnology compared with other research fields (Ferrer et al.

2004:DC12; Science-Matrix 2004).

7.3.4.2 Biotechnology Development Policy

Aware of its position as the most biodiverse nation in the world, on 4 July 2006 the Brazilian

government released a White Paper called National Strategy for Biotechnology (SDP/MDIC

2006). This strategy was the fruit of a long discussion between government, academia and the

business sector that started in 2003.

In 2007, based on the White Paper, the federal government formally launched its

Biotechnology Development Policy (Governo Federal 2007). When announcing the new

policy, then President da Silva (2007:3) showed his enthusiasm:

By holding twenty per cent of all global biodiversity and vast forests, Brazil stands out
as an important country in this new development vector. The goal of the Biotechnology
Policy is to fully exploit this potential so that in the next ten to fifteen years, Brazil will
rank among the five greatest research, services and biotechnological production centres
in the world.

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From this speech, it is evident that the Brazilian government then viewed biotechnology as a

critical element in its global competitiveness strategy. The policy identifies the areas of human

health, agriculture and industry as Brazil’s biotechnology priorities. It also recommends several

measures such as capacity-building in human resources, creation, change and improvement of

regulatory frameworks, and states the urgency of viable investments for the implementation of

strategic recommendations (Governo Federal 2007).

The overall objective of the policy is to create a suitable environment for the development of

innovative products and processes, encouraging productive efficiency, innovation and exports

of products resulting from biotechnology. For this, private companies are very important; thus

they must have the support of a national innovation system to jump-start development in this

strategic sector (Governo Federal 2007). The federal government committed R$6 billion in

public funds to support biotechnology R&D over ten years and aimed to have private

companies contributing an additional R$4 billion (Governo Federal 2007).

7.3.5 Dilma Rousseff’s Government

This thesis has showed that the Brazilian government started, in the 2000s, to play a more

proactive role towards innovation. It started to seek better integration between public

infrastructure (education and research institutions), funding agencies and industry. President

Dilma Rousseff’s policy on biotechnology had followed the same pattern.

In the area of science one of the biggest achievements for Rousseff’s governments has been

the sanction of the Legal Framework for Science, Technology and Innovation a legal

framework for science, technology and innovation.

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In 2012 Rouseff’s government reinforced the federal government role in biotechnology and

innovation when it launched the National Strategy for Science, Technology and Innovation.

This policy included pharmaceuticals and biotech among its priority programmes for research

investment. The Ministry of Science, Technology and Innovation (MCTI) in its policy paper

emphasized that the biotechnological industry stands out as a priority for Brazil because of the

economic relevance and its importance in the field of new technologies (MCTI 2011:57).

Nevertheless, some argue that in regard to biotechnology policies, the government of Rouseff

has come up short. Some claim that the government wasted the chance to define an industrial

policy for biotechnology. Giacomazzi, the Coordinator for the Committee of the Productive

Chain of Biotechnology (COMBIO), argued that the lack of leadership in driving investment

in infrastructure and public policies to encourage the basis of the development of biotechnology

harmed the field in Brazil (FIESP 2013). His analysis is that the government should have taken

stronger actions to empower public investments directed to enterprises and research (ibid.).

In fact, Rousseff changed the leadership of the MCTI. The last Minister, Celso Pansera, before

getting sacked after Rouseff’s impeachment was pressured to step down because his political

party broke its alliance with the government.

In the midst of many corruption scandals, the political situation in Brazil is currently very

delicate as Rousseff and the interim President, Michel Temer, are engaged in a political battle

before the National Senate decides on the impeachment process and the future of the country.

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 7.4 Conclusion: Reflections Supporting OSI

This chapter has referred to different periods in history of Brazil in an attempt to show the

disarray in S&T policies and link this to the country’s poor past performance in biotechnology.

This thesis argues that the long-term structural and political reforms that the Brazilian

governments carried out – especially the more liberal ones in the 1980s and 1990s (the ones

that based their policies on the neoclassical approach) – were not effective. The strategy that

competition through the market would be enough to force innovation in Brazil did not work.

On the other hand, this thesis has shown that in the past decades the Brazilian government has

presented many policies, programmes and strategies for innovation. One element that appears

increasingly in these programmes is the development of the innovative capacity in the biotech

sector. This thesis argues that in Brazil the experiences that introduced effective state policies

in the area of innovation are the ones that brought the most significant results.

Nevertheless, the debate about the future of S&T policy in Brazil remains extremely relevant.

Despite recent significant production in the area, S&T management does not hold a precise

place in the budget of Brazilian government and private companies and in the agenda of the

National Congress. Yet, this thesis claims that Brazil is in a good position to adopt OSI. Hence,

it is important to give more analytical support so the argument will not come across as merely

rhetorical or ideological.

First, the Brazilian state is the main focus of analysis of these chapters because almost all the

funding for S&T is governmental. In this sense, because the relationship between the

government and scientific activity has gone through different changes in Brazil, one must

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question what are the real effects of these new arrangements in the dynamics of production of

scientific and technical knowledge in biotechnology.

This analysis is based on a broader economic literature review that reviews policies of S&T

from a historical perspective and presents the structure of the Brazilian scientific and

technological base. The trends and dilemmas in S&T policy in Brazil have been identified.

This analysis of the economics and politics of S&T puts Brazil in an intermediate position in

the international scenario of a globalized economy. Throughout the twentieth century S&T

planning affected the more recent developments in biotechnology in Brazil.

For instance, it is often said that Brazilian research institutions were importers of knowledge;

that they seek to meet the growing technological demands through greater dependence on

outside sources. This scenario has been caused mainly because the industrialization process

falls within the limits of capitalist production model that created in the past a situation of

dependence in international institutions and a lack of research. It is very relevant to point out

that on a global scale, the paradigm of planning of capitalist development was reflected in

public policies for S&T in Brazil. Neoliberalism imposes changes on the organization of the

state and its relationship with society. In such a scenario various activities once viewed as state

responsibilities, such as scientific research and technology, are transferred to the private sector

or third sector.

At the same time, the development of economic globalization increased drastically the

competition scenario that firms faced. This requires new models for the production of scientific

knowledge, which is now seen as strategic opportunity for technological innovation (new

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products and processes productive) and, consequently, a source of competitive gains for

business and economic development engine.

In the different periods analysed, there was a gap between the “explicit policies” of the

Brazilian state (their interventions on the activities of S&T) and the “implicit policies” that

were part of state actions. Many implicit policies have prevented the real scientific and

technological development that advanced capitalist countries depended on.

In undertaking a critical analysis of political and institutional arrangements of scientific activity

in Brazil, one must also question whether only economic development should determine the

current configuration of relations between actors and scientific structures. This critique is

important for the development of science in Brazil since only analysing a macroeconomic

scenario imposes the risk of ignoring social aspects that influence the practice of scientists.

The actors and interests involved in the relationship between the management of S&T and the

scientific community and society must be represented in the decisions relating to the promotion

of research. However, what Brazil shows is a contradiction because on one hand the Brazilian

government explicitly seeks to encourage interactions between researchers and companies in

pursuit of innovation, and on the other hand scientific organizations heavily manage the

decision making in S&T development and management. Often the principles of decision

making are based on the logic inherent to one community (e.g. technical merit and excellence),

leaving aside the direct relevance of other interests and economic and social impacts. Often the

contradiction between innovation and academic excellence (scientific autonomy) is reflected

in the articulation of the variables that make up scientific indicators, such as patents.

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The increasing internationalization of economic scenarios of science, and the management of

science led countries like Brazil to borrow models implemented in developed countries. The

idea is that a better insertion in the scientific world creates opportunities for technological

innovation and economic competitiveness. However, these mechanisms ignore some

characteristics and needs in the context of Brazil. A more recent example of these changes in

Brazil’s case is the Innovation Law (Law No. 10,973 of 02/12/2004) establishing new

guidelines for the performance of state scientific and technological research in the country.

Once again, it reaffirms that technological innovation is the focus of efforts for the promotion

of industrial development.

The importance of technology transfer has been highlighted throughout this thesis. However,

in relation to OSI and biotechnology, technology transfer is not only about borrowing a

technology because it is a dynamic process in which learning (assimilating knowledge) is a key

component.

For Brazil and other countries of the Global South, in the last century the prospect of simply

borrowing new machines and tools from industrialized countries of the North was the default

policy for S&T because it seemed quicker and easier than investing in process of invention,

which is slow, expensive and uncertain. In fact, economic historians such Gerschenkron

(1962), Pollard (1981:142) and Allen (2009:154-155) argue that if countries less industrialized

such as Brazil would embrace and import new technologies, they could rapidly catch up to the

earlier industrializers.

Nevertheless, in the stages of development of a field of S&T such as biotechnology the use of

foreign technologies is often not simply one of replication (Kim 1997). This involves a lot of

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interactions with others, including the original source of innovation and complex learning

activities. This is much broader than freedom to operate, and is desirable when local firms and

individuals are learning how to copy and are upgrading their capacity but are not yet in a

position to produce many of their own innovations. For example, East Asian developing

countries have pursued a “technological diversification” innovation strategy to move from fast

followers to technological leaders. This approach builds on the strength of their process and

prototype development capabilities, adaptive engineering, and detailed design (Lall 2000). But

when their capacity enhances and they have more IP of their own to protect, more exclusivity

is desirable so that they are able to capture the value of their innovations.

The challenge for Brazil is to embrace innovation strategies such as “technological

diversification” and adapt them to its conditions. A combination of such an approach with OSI

would acknowledge the political, institutional and cultural aspects of Brazilian innovation

processes and it could be well suited for the development of biotechnology. A combination of

these strategies: (a) emphasizes the importance of interactions between actors and

organizations; (b) takes into account many actors with different functions; (c) moves beyond

the “state or market” dichotomy, making room for more “bottom-up” and associative networks;

and (d) stresses interactions between users and producers, allocating a significant role to

frequently neglected actors, such as workers or consumers.

Although Brazil suffered various recessions and biotechnology was undermined across

historical periods, the discourse of Brazilian biotechnology policies from the turn of the century

reflects to some extent an inspiration for collaborative partnerships in scientific R&D to

promote benefits for business and for society. This discourse truly has the potential to

contribute greatly to Brazil’s development and its wider insertion into the international

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biotechnology scenario. Prima facie, although OSI is not mentioned in the National

Biotechnology Strategy, open and collaborative methods of production will have a key role to

play in the future development of biotechnology in Brazil.

Hancher and Moran’s approach has proved to be very relevant in this chapter because it provide

new insights such as that certain forms of regulatory capture may be used to advance public,

rather than private, goals. Many of the actors interviewed during this thesis viewed the

increasing intersections between biotechnology and OSI beneficial. Some, however, were

suspicious of it. This opposition is partly caused by a resistance to change among actors who

are habituated to the current system. The lobbying power of some actors, coupled with their

legal and technical expertise, can influence policies and institutional capacity-building in

Brazil. Private biotech companies, NGOs, public research institutions, the industry, individuals

and associations must share a consultative involvement in the policy-making process to

improve innovation policies and the patent regime, ensuring that innovation occurs in a

sustainable manner.

For the successful adoption of effective policies, the Brazilian local industry and actors need

to be active in advocating their interest. As this thesis has suggested, regulatory capture is

important and should not be underestimated. The conflicting interests of different interest

groups require maintaining balance between Brazil’s local needs and international

commitments. Undoubtedly, effective national policy rules and instruments on innovation will

help Brazil to improve its framework and will in theory be beneficial to the progress in

biotechnology.

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 8. Open Scientific Innovation in Brazil: Challenges and Opportunities

8.1 Introduction

One of the arguments of this thesis is that the future of biotechnology in Brazil depends on

public research via the innovation process and a network of collaborative relationships between

university, start-up companies and multinational biotech companies. For this, government

involvement is required in order to develop and sustain innovation strategies. This chapter

examines in depth the current Brazilian innovation scenario in biotech and applies the

analytical framework of Hancher and Moran to support this argument.

8.2 Is There a Space for OSI in Brazil?

This following analysis evaluates whether OSI is not only desirable but also feasible for Brazil.

It is also important to show that Brazil has the capacity to build on its strengths in order to

construct an OSI strategy for biotechnology. The aim is to prove that there are many reasons

to believe that OSI can work within Brazil. One important question is whether in Brazil there

is a space for biotechnology outside Big Pharma and multinational biotech agriculture

companies.

Commentators argue that there is (e.g. Derengowsky-Fonseca et al. 2001). This chapter seeks

to show that OSI would enable partnerships between industry, universities and the public sector

to improve Brazil’s biotechnology capacity.

When comparing international trends and Brazilian trends for innovation, science and IPRs, it

is clear that Brazil faces many challenges. Fieldwork interviews with different actors in the

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Brazilian biotech sector and other similar studies have shown there is a lack of synchronization

between the different aspects of the development of biotechnology in the country.

Lemos (2000) provided information about the relationship between the strategy of local

development and the restrictions on the development of biotechnology in Brazil. According to

the study, there are a number of different problems in the Brazilian biotechnology sector,

especially in the field of human health, including:

1. Credit restriction (lack of mechanisms for provision of seed money to stimulate the

development of small and medium enterprises)

2. Market weakness in biotechnology

3. Disconnected companies exploiting niche markets (a situation which in practice

constitutes a bottleneck for the promotion of the market).

For instance, when a company reaches a higher level of sophistication in biotechnology, it does

not necessarily make other companies and the market stronger; that is, by creating spillover

effects. Clearly, a firm’s development depends on an insertion into a more complex network

from another region or even another country. Further, this development may depend on a

greater scientific and technological development effort and on a technological field choice.

Finally, it is not clear if there is a virtuous relationship between development of end markets

and technological and scientific progress (Lemos 2000).

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Public institutions have an important task, not as a supplier of final product, but as a central

element in defining a network in biotechnology (Derengowsky-Fonseca et al. 2001). Thus, one

can conclude that the role of public institutions in biotechnology is extremely important. The

answer for biotechnology may lie in public institutions to promote open scientific strategies in

the biotech sector.

Brazil has a population of over 200 million people, many of whom live in poverty. Different

problems affect Brazilians, and in the field of human development and technological

innovation, like most of the world’s population, there are two main issues. First, technological

innovation makes available products that directly affect health, nutrition and quality of life. In

addition, technological innovations indirectly affect human development because of their

social impacts on economic growth (UNDP 2001:28).

The INSEAD-WIPO (2012)’s Global Innovation Index (GII) 2012 noted that that Brazil has

suffered the largest drop in innovation among the BRICS countries. Brazil was ranked 58th on

the GII and had a distribution of strengths and weaknesses in institutions, infrastructure, and

both market and business sophistication (ibid.:32). It came far behind in human capital and

research and last among the BRICS in knowledge and technology outputs. It achieved second

place among BRICS countries on creative outputs (ibid.).

Machado et al. (2005) attempted to identify the Brazilian position in the innovation scenario.

For their study, the authors used two indicators: a) Technology Achievement Index (TAI); and

b) Human Development Index (HDI). This study showed that scientific and technological

activities happen in economically developed and wealthy regions of the country. In

consequence, richer regions have higher HDIs and TAIs. These findings led to the conclusion

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that this concentration of human development and technological development creates poverty

areas within Brazil.

In the last three decades, Brazilian science has not been able to assure the health and well-being

of the entire population. Two factors have influenced this matter: on one hand, Brazilian

scientific production has not been able to achieve a critical mass sufficient to influence the

social reality in a visible way; on the other hand, there may be also a disconnection between

the scientific activities and the social needs of the poorest. In addition, perhaps there is a

combination of both elements: lack of critical mass and partial disconnection (Machado et al.

2005).

In fact, in Brazil high incidences of neglected tropical diseases such as leishmaniasis,

chistosomiasis, and Chagas disease coexist alongside conditions that also plague the developed

world, such as diabetes. Brazil ranks eighth in the world for the rate of diabetes in the

population (WHO and International Diabetes Foundation 2004: WHO Diabetes Action Now

2004). In sum, there is little doubt that Brazil has a significant public health burden, and is

dependent on international trade to meet its needs. Statistics from UNCTAD show Brazil’s

imports of medicinal and pharmaceutical products increasing from nearly $170 million in 1981

to just under $2 billion in 2002 (Ferrer et al. 2004; UNCTAD 2003).

OSI is very important since now there are problems not only of lack of research on neglected

diseases but also other diseases that represent large markets (ibid.). For instance, some diseases

which are not neglected afflict many poorer countries and while basic research may be done,

sometimes no further research takes place to adapt medicines for different realities (e.g. an

AIDS drug may well work in the United States but it might not work in Africa because of

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different conditions such as storage, refrigeration). It is also possible that drugs are developed

to attack particular HIV strains that may be more prevalent in the developed world.

Nevertheless, Brazil offers opportunities. In the case of biotechnology, in recent years within

Brazil a wide network of research has been developed, which has been led by the public sector

but also has the participation of private companies. In genome research, for example, various

steps were performed with the help of the private sector. A few domestic generics

manufacturers, including Aché Laboratories (São Paulo), Eurofarma (São Paulo) and EMS-

Sigma (Hortolandia), dominate Brazil’s domestic health biotechnology sector (see Appendix

III). In addition, Brazil has a young and growing domestic biotech sector that is mostly

populated by small- to medium-sized enterprises focusing on agricultural applications, though

some small firms are also concentrating on innovative health biotech (Rezaie et al. 2008:629).

8.3 Mapping Key Actors for OSI in Brazil

So far this thesis has applied Hancher and Moran’s device in the context of biotechnology,

IPRs and OSI. The methodology has revealed how regulatory arrangements have been driven

by the implicit influence of copyright, patents business groups and developed economies.

Today, however, NGOs and other interest groups play an important role in the IP debate. Next,

this chapter maps the actors that are important for OSI in Brazil.

Chapter 7 explained that in the area of biotechnology and IPRs, the key actors in Brazil are the

MCT, the Ministry of Health, the Ministry of Foreign Affairs, INPI and ANVISA. Politicians,

NGOs and business actors, such as leading pharmaceutical transnational laboratories and

multinational plant molecular companies, also influence the development of the patent agenda.

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Nevertheless, it is important for the thesis to further map actors that may have important roles

in OSI in Brazil.

8.3.1 Public Research Organizations

Apart from the publicly funded federal universities such as USP, UNICAMP, Federal

University of Rio de Janeiro, UFRGS and many others that perform valuable research in

biotechnology, the main sources of innovation are the public research organizations (see

Appendix II). In Brazil there are three main public organizations that perform research in

biotechnology and deserve consideration: EMBRAPA, FIOCRUZ and the Butantan Institute.

EMBRAPA (2010) the Brazilian Agricultural Research Corporation, is one of the largest

national agricultural research organizations in the world and, since its foundation in 1973, it

has generated more than 9,000 technologies for Brazilian agriculture, reduced production costs,

and helped Brazil to increase the production of food. In general terms, the main sources of

innovation in Brazil are improved seeds related to GMOs, or resulting from the use of

techniques of recombinant DNA and the use of genetic markers and techniques for molecular

amplification to accelerate the process of improvement.

However, EMBRAPA is also responsible for conserving natural resources and the environment

and diminishing external dependence on technologies, basic products and genetic materials. In

addition, EMBRABA established an Agroenergy unit, which aims to develop technology

research through innovation and transfer of technology to assure sustainability and

competitiveness in the energy sector (ibid.).

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EMBRAPA has a network of 38 Research Centres, 3 Service Centres and 13 Central Divisions,

being present in almost all Brazilian states. It has 8,275 employees, of whom 2,113 are

researchers, 25 per cent with master’s degrees and 74 per cent with doctoral degrees.

EMBRAPA coordinates the National Agricultural Research System, which includes most

public and private entities involved in agricultural research in the country. EMBRAPA (2010)

also maintains projects in international cooperation in order to perfect knowledge of technical

and scientific activities or to share knowledge and technology with other countries (ibid.). In

the development of recombinant DNA techniques, EMBRAPA has played a key role in

negotiations with corporations from the seed sector (MCT and UNICAMP 2001:5).

EMBRAPA’s bargaining power suggests how it could promote scientific collaboration within

Brazil in order to build up a better biotechnology sector.

The Butantan Institute in São Paulo and FIOCRUZ in Rio de Janeiro are the public institutes

that play a major role in the development and provision of health biotechnology products in

Brazil. They are the two government-owned vaccine manufacturers and primary suppliers for

the Brazilian Program for National Immunization (PNI).

The Butantan Institute is a biomedical research centre affiliated to the Department of Health of

the State of São Paulo. The Institute maintains close links with public universities, especially

with the USP and at least two major groups of companies in the pharmaceutical sector, aiming

at the development of new biotechnology products. It develops basic and applied biomedical

research (Butantan 2010).

The Butantan Institute is the largest producer of immunobiologicals and biopharmaceuticals

worldwide. The Institute is responsible for over 80 per cent of the production of domestic

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human vaccine antigens. This achievement reduces Brazil’s dependence on imports of these

products. For instance, the Institute has built a production facility for influenza vaccine. In

2001, it produced ca. 110 million doses of vaccines and 300,000 vials of hyperimmune sera.

From 2003 to 2006, it produced 588.6 million doses of different vaccines using technology

developed in-house and filled 73 million doses of inactivated trivalent influenza vaccine, using

hemagglutinin surface glycoprotein antigen from different viral strains acquired from outside.

In its portfolio of products, Butantan Institute has several vaccines such as a modified

diphtheria-pertussis-tetanus (DPT) vaccine, recombinant hepatitis B virus surface antigen

(HBsAg) vaccine, inactivated rabies vaccine, as well as several types of hyperimmune sera and

antitoxins (Rezaie et al. 2008:630).

FIOCRUZ (2010) is a scientific institution for R&D in biomedical sciences and is considered

one of the world’s main public health institutions. FIOCRUZ, mainly through its production

units and research labs Bio-Manguinhos and Far-Manguinhos, has played a leading role in

activities related to public health in Brazil. As happens in other vaccine laboratories in Brazil,

their production activities are primarily oriented to the local market through Ministry of Health

programmes (ibid.). Innovative activities within Bio-Manguinhos have had a major impact on

local and global health needs. Bio-Manguinhos’ R&D activities are linked to two general lines

(ibid.): diagnostic substances in vitro and in vivo and organic products (except diagnostic

substances).

In the case of research on diagnosis, activities that use biotechnology methods are undertaken

in the following lines (ibid.): recombinant DNA, reactive to leishmaniasis using recombinant

antigen, reactive to leptospirosis using recombinant antigen, rapid test for HIV-1/2 using

recombinant antigen, reactive for hepatitis using recombinant antigen, reagents for viral

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diarrhoea (Aden and Rota virus) using recombinant, expressing recombinant vaccine for

leishmaniasis in Bacillus Calmette–Guérin vaccine, and DNA vaccine against

enterotoxigenic Escherichia coli and against dengue.

Bio-Manguinhos develops and produces reagents and supplies vaccines to public health

institutions. It produces vaccines for yellow fever, meningitis A and C, measles, polio,

influenza Haemophillus, dual-viral (measles and rubella) and e-triple viral (measles, mumps

and rubella). It also produces tests for leishmaniasis, leptospirosis, leprosy, measles, rubella,

AIDS, viral hepatitis, diarrhoea and raves (ibid.).

In the area of molecular biology, the institute is developing flavo virus vaccines. The

characterization of this antigen is part of the complex development of vaccines. One example

is the vaccine for dengue, for which there are four sera types, requiring non-traditional

procedures (using viral particles from the cloned material to produce regeneration). The same

procedure is used in the production of vaccines against yellow fever and the study of molecular

basis and evaluation of immunogenicity of recombinant yellow fever and dengue. The

economic advantages are translated directly into increased productivity and lower cost of

production. The production of vaccine against yellow fever is a pioneering project by the WHO

and the development of monoclonal antibodies aims to improve diagnosis of dengue. Research

on second-generation vaccines for meningitis C and D is also under way (ibid.).

These three organizations, like many other Brazilian research institutes and federal universities,

recognize the importance of IPRs and have a policy of acquisition of IP towards

commercialization. EMBRAPA, Butantan Institute and FIOCRUZ are making every effort to

develop IP policies and protect the knowledge generated in order to get products to market.

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This policy is to a large extent fruit of the new innovation law and relies on the idea that patents

will ensure business to boost innovation.

Although such a policy is reasonable, these institutions so far do not consider OSI a more

realistic perspective for possible economic returns from patenting and licensing activities. They

should. Here it is instructive to make a comparison with Canada, a country that experiences

influence from the United States, and to some extent has followed the American TTO model.

In 1980 only the University of Toronto was a member of the Association of Technology

Managers (AUTM); as of 2007, this number has increased to 37.

IPRs underlie the development of new technologies, particularly in the biotechnology sector

where innovation is highly dependent on work by others. Both public and private sector

research results in patents and public sector institutions that rely on licensing their IPRs to

private firms through the use of TTOs. The vast majority of these offices were established with

a “diamonds in the sky” attitude (the idea that such offices would be a substantial revenue

stream for universities). The result of this attitude will mostly be failure. Of course, there is the

counterargument that suggests that in the case of elite institutions, licensing does generate

funds that would otherwise be unavailable (see de Chaderevian 2011). However, with the

exception of a handful of universities in North America, revenue streams are but a mere trickle

of what was hoped (Siegel and Wright 2007:12).

For example, Statistics Canada (2005) surveyed 87 universities and 34 hospitals (80 per cent

response rate) conducting research in Canada. The total amount of sponsored research funds

invested in research at the 121 institutions was C$4.28 billion. The report identifies that there

were then about 3,000 pieces of IP held that have resulted in 876 spin-off companies. The

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survey found that the 2003 revenue received by the 121 organizations from commercialized IP

was C$55.5 million. This is a gross return of 1.3 per cent on the C$4.28 billion invested in

research. Total operational for managing and transferring IP were $36.4 million. The net return

on the investment was a scant 0.44 per cent.

9: Expenses of IP Management (Canadian dollars)

Expenses 1998 2001 2003

Salaries and $7.5M $11.9M $16.9M

benefits
Patent and legal $5.1M $9.5M $10.4M

Litigation Na Na $1.4M

Other Na $7.1M $7.7M

Total $12.6M $25.7M $36.4M

Source: Statistics Canada (1999, 2003, 2005)

Most TTOs that implemented the model of acquisition of IPRs towards commercialization at

best either break even or lose money for the institutions involved. Smyth’s (2011:1-2) analysis

of Canadian data from 1998 to 2008 shows that while the total investment in university research

has increased sevenfold, the proportion of patents actively licensed by universities is declining,

and the number of spin-offs has fallen to half what it was a decade ago. IP management costs

of TTOs are nearly equal to the licensing revenues they generate and, more concerningly, costs

are trending upward – particularly in respect of litigation – while revenues are relatively flat.

These data likely understate the problem, as they fail to account for the probable increases in

costs of enforcement over the entire life cycle of organizations’ IP portfolios. Also, they do not

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account for other rights holders’ potential anti-competitive uses of IP portfolios, or the

transaction, licensing and other costs that are likely to increase in the future, as the IP landscape

becomes more crowded, in part because of these institutions’ own policies and practices.

This disappointing picture may be partly attributable to the metrics being used for evaluation.

But also, the model fails to recognize that innovation is messy, circular and dispersed (see von

Hippel 2005). Innovation occurs in networks, not lines (see OECD 2010). The actual or

perceived shortcomings of the acquisition model might also reflect the possibility that

innovation coming from research institutions may simply lack sufficient economic value to

make commercialization worthwhile. The lack of success might therefore be attributable to

unattractive innovation rather than inappropriate IP management. Nevertheless, this strategy

seems especially ill suited for mobilizing innovation with high social, but not necessarily

commercial, potential. Not all current efforts at IP management in biotech research are without

merit and never achieve positive outcomes, however.

8.3.2 The Private Sector

Most private Brazilian agricultural biotechnology companies are developing new technologies

for biofuels whereas in the health sector a number of private biotech firms are providing health

products for the Brazilian population, mostly focusing on innovative diagnostics or drug

products that are affordable and easy to use (Rezaie et al. 2008:630).

The majority of private activity is concentrated on human health (39.7 per cent). Animal health,

a strong sector, and reagents correspond to 14.3 per cent and 13.1 per cent of the total,

respectively. Biotechnology companies that focus on agriculture make up 9.7 per cent whereas

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environment and bioenergy, which can converge in some activities, add up to make 14.8 per

cent of the total number of companies 16 (Brazil Biotech Map 2011:13). However, with the

exception of service companies, who often engage in negotiation with foreign clients, few

companies export products outside of Brazil (Rezaie et al. 2008:633-641).

Appendix III includes a sample of a selected group of firms and government-affiliated institutes

covering a wide range of activities related to the development and production of health

products. However, viewed in a pragmatic way, the overall contribution of private companies

is very low compared with the needs of the country’s vast population for sustainable and

affordable health products (ibid.:649).

Brazilian biotech BIOCANCER is developing an autologous dendritic cell vaccine against

metastatic melanoma, an intralymphonodal vaccine based on multipeptides associated with

granulocyte macrophage colony stimulating factor (GM-CSF) in individuals with melanoma,

and a vaccine based on dendritic cells pulsed with specific peptides in hormone-resistant

patients with prostate carcinoma (Rezaie et al. 2008:629).

In the area of reagents and diagnostics, Katal Biotecnológica and Labtest Diagnóstica provide

diagnostic kits suited for small laboratories and rural settings in Brazil, a market mostly

neglected by large companies. Katal is developing a TB test using PCR technology that it plans

to market for an average of $25 each and has developed an innovative visual prostate specific

antigen (PSA) test which is currently supplied to the public health system and used for prostate

cancer screening (about 25 million Brazilian men over the age of 45 are potentially at risk). In

collaboration with USP, Katal also developed a Chagas disease test (Rezaie et al. 2008:629).

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Appendix III reveals that Brazil is home to a growing number of private biotech firms that may

benefit from adopting an OSI strategy as part of their business model. For example, FK

Biotecnologia, a biotech firm established in 1999, performs R&D, production and

commercialization of immunodiagnostic products and anticancer vaccines. FK Biotecnologia

has taken a whole-cell autologous vaccine for prostate cancer into human trials, obtaining

promising results in phase 1/2 testing. The firm balances its operations in two major domains

to fundraise and to increase its innovation capacity. On the one hand, it focuses on

immunodiagnostics that are based on readily available knowledge with low IP protection.

Immunodiagnostics work requires a relatively low capital infrastructure, and it is possible to

develop immunodiagnostic products that can reach the market in a reasonably short time. FK

Biotecnologia’s product line in immunodiagnostics has more than 70 items at present. On the

other hand, its cancer vaccines development requires science-intensive research, a relatively

capital-intensive research infrastructure, and needs a longer development and

commercialization time (ibid.).

Patent protection, although important for the diagnostics business, is less important if compared

to the business of cancer vaccines, where they remain essential to attract investment. Thus, FK

Biotecnologia could opt to commercialize its diagnostics kits through open collaborative

licensing agreements. By widely disseminating its technology, FK Biotecnologia would

increase the user base for its products. Consequently, when it develops a cancer vaccine, it has

dramatically increased the size of its market. This coupling of services and proprietary products

on with open-sourced platform technologies is the key to a viable commercial model.

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The mapping of the actors in Brazilian biotech scenario is of crucial importance for

understanding the regulatory space in Brazil. FIOCRUZ and EMBRAPA are two of the world’s

biggest state research institutes. This thesis surveyed some other key public and private

institutions engaged in research. Most of these entities acknowledged that a well-designed

innovation system is vital for economic development and the provision of new technologies in

Brazil.

Arguably, these entities currently play an important role as actors in the development of

alternative solutions to promote innovation. The actors mapped in this section and the

relationships they establish with one another (and other actors as well) will dictate how the

regulation of OSI occurs in the future in Brazil.

It is therefore of crucial importance that these entities understand OSI as one of the important

components of a successful national innovation system. In the context of this wider debate, this

thesis suggests that Brazil must tailor its particular approach to its specific context. The key

actors in Brazilian innovation system can strengthen the approach via their power to influence

comprehensive and coherent set of policy initiatives that advocate OSI. In order to help

generate an approach that is potentially applicable to Brazil, the next section presents an

analysis of some successful collaboration efforts in the Brazilian scenario.

8.4 Partnerships for Innovation: OSI Precedents

This thesis has evidenced changes occurring in the way businesses operate in biotechnology.

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As the current scenario brings new challenges for business and countries (in the case of this

thesis, Brazil and developing countries), this raises a need for the local biotech industries to

reappraise their traditional business strategy. Thus, this section throws a spotlight on some

successful business strategies of collaboration in Brazil. These cases determine how a

particular strategic choice, that is, collaboration, could be realized effectively in Brazil. This

ultimately supports the argument that OSI is feasible and desirable in Brazil.

Brazil has enjoyed some achievements through collaboration in S&T. For example, in the

1990s the Federal University of Minas Gerais (Belo Horizonte) and the Brazilian

biopharmaceutical firm Biobrás (São Paulo) developed and patented a process for recombinant

human insulin. Biobrás became one of only four companies in the world producing

recombinant human insulin at the time (Ferrer et al. 2004:DC8).

Brazil has a number of historical precedents for open source-style innovation in the life

sciences. The Xylella fastidiosa sequencing project is an excellent example of collaborative

research in Brazil (Ferrer et al. 2004). The project set up a virtual institute in which scientists

from 34 biology laboratories and one bioinformatics centre located across the country remained

at their home institutions but collaborated closely (ibid.). In 2000, this Brazilian consortium,

the Organization for Nucleotide Sequencing and Analysis (ONSA), surprised the international

scientific community by making Brazil the first country to decode the genome of the plant

pathogen Xylella fastidiosa, a bacterium that attacks citrus fruits (ibid.) and made it publicly

available. This achievement established Brazil as a leader in gene sequencing (ibid.).

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The ONSA network’s genome programme resembles the mode of production based to some

extent on the wealth of networks (see Section 5.4.3). The Brazilian experience is different from

the traditional models for jump-starting genomics research, which normally entails a single

national genomics research facility (ibid.). Smaller laboratories coordinated ONSA efforts in a

decentralized production model. This facilitated contributions through a distributed network of

researchers to a central data repository through the Internet; it also lowered cost and shortened

start-up time (Macilwaine and Neto 2000:440; Octaviani 2010:134).

This impressive example of national collaboration encouraged health-related genomics

projects (Ferrer et al. 2004:DC8), such as the jointly funded FAPESP and Ludwig Institute

cancer genome project and the Brazilian National Genome Project (NGP) (ibid.). Using the

research model for the Xylella fastidiosa project, the NGP consists of 100 scientists from 25

laboratories in Brazil (ibid.). Its first achievement was the completion of the genome sequence

of Chromobacterium violaceum, which is of potential interest in developing therapies against

certain cancers, tuberculosis and Chagas disease (ibid.).

Butantan Institute also seeks collaboration. For example, with the US National Institutes of

Health (NIH) and with financial support from the Bill and Melinda Gates Foundation, the

Institute developed a pentavalent rotavirus vaccine, which is expected to be on the market in

the near future. Butantan is working on the development of other new technologies, such as a

rabies-leishmaniasis vaccine (for the vaccination of dogs) being developed in collaboration

with the University of Washington (Seattle); a dengue tetravalent vaccine with technology from

the NIH; a hookworm vaccine in collaboration with George Washington University

(Washington, DC) and the Sabin Vaccine Institute (Washington, DC); a vaccine against the

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human papilloma virus in collaboration with the University of Colorado; and a DPT-HBsAg-

Hib combination vaccine exclusively for the export market (Rezaie et al. 2008:630).

Moreover, FIOCRUZ has established a policy of rapprochement with other similar research

institutions in Brazil and from overseas. In 2000 FIOCRUZ signed 56 international agreements

(16 in the Americas, 7 in Asia, 23 in Europe, 1 in Oceania and 7 with international institutions

such as WHO, UNESCO and UNAIDS). Butantan’s and FIOCRUZ’s agreements enable

technical and financial development for their institution (Rezaie et al. 2008) and will become

more important to fundraising. Although these arrangements rely on IPRs and do not have their

basis exactly on open innovation, they resemble OSI and suggest the potential for

collaboration.

Since Brazilian health biotech firms do not hold the necessary R&D capabilities required for

the development of complex innovative products, effective partnerships with Brazilian

universities and public institutes are crucial to the innovation strategy of most firms (Rezaie et

al. 2008:634). Appendix IV presents some key alliances and collaborations between Brazilian

companies, and between Brazilian companies and national institutes, as well as Brazilian

companies’ collaborations and partnerships with foreign entities. Most collaborative efforts

have the objectives of accessing services such as target identification and validation, or of

conducting other preliminary studies on lead molecules (Rezaie et al. 2008:634). Brazilian

entrepreneurial partnerships with foreign entities are often limited to marketing or service

provision relationships, with relatively few on co-development. Moreover, partnerships among

domestic firms (particularly for product co-development) are not very common (ibid.).

According to Rezaie et al.:

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 Inter-firm co-development interactions remain limited, and when they are present, they
often involve joint ventures, in an attempt to share development costs and minimize
risks associated with innovative activities. (ibid.)

For these authors, the lack of significant collaborations between local firms has cultural origins.

First, Brazilian researchers indicated that there is a perception among many Brazilian scientists

and entrepreneurs that “everything that is good is from outside Brazil”. Second, there is also a

perception that because the innovative biotechnology sector is fairly young, most domestic

firms do not possess wide-ranging technological capabilities to offer other firms (ibid.).

Even if collaboration is not optimal, the sector is still characterized by a collaborative culture

and the current scenario of cooperation has the potential to grow as Brazilian research gets

attention internationally (e.g. ONSA and FK Biotecnologia). This fact provides a unique

opportunity for OSI. By further exercising collaboration and improving partnerships and

alliances through a national open source biotechnology strategy, Brazil can improve OSI within

the country.

For example, key areas in pharmaceutical collaboration (e.g. the high costs and high-risk

aspects of drug development processes such as toxicology and clinical trials) present an

opportunity where an open source precompetitive collaboration could work (see Hope

2008:254). Hope suggests that:

One service oriented biotechnology strategy would be to carry out the type of
precompetitive research and development focusing on a premium on behalf of end users
of the biotechnology in exchange for a fee. (ibid.:256)

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Accordingly, governments have always being major sources of funding for biomedical research

and most biotechnology industries are already heavily subsidized. Thus public funding, public

research institutes, and PPPs are very important for the feasibility of OSI as they may work as

the main drivers to provide incentives for commercial involvement in open source

biotechnology R&D (ibid.). For Brazil, the whole array of opportunities that health

biotechnology offers is closely linked to the ability to store information and to promote its

exchange. According to Derengowsky-Fonseca et al. (2007), this process goes far beyond the

marketing of the genome sequences. There are, therefore, indications that Brazil needs a

framework to manage information and promote interaction with the research departments of

companies for the use of biotechnology and bioinformatics in R&D (ibid.).

The above examples provide empirical evidence that the industrial and academic environments

in Brazil can accommodate collaboration initiatives. For instance, Brazil could enable unique

partnerships between industry and the public sector to overcome the limitations imposed by

the design of biotechnology companies, shortening the early stages of product development,

reducing the cost of discovery, and specially targeting neglected diseases.

Nevertheless, the suggestion is that in order to have more successful collaborations, it is

necessary to develop an in-depth and widespread understanding of OSI models in the country.

Private companies, government research institutions and universities need to have mutual

understanding and mutual respect of well-defined collaborations. Once these conditions are in

place, arguably many other collaboration initiatives would flourish.

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 8.5 Conclusions

This chapter has provided evidence to support the claim that there are Brazilian institutions

which have the capacity to adopt and benefit from OSI. Moreover, for those institutions, the

wider economy and the public might well be more advantageous to practise free-revealing

and/or OSI-inspired IP management strategies rather than more proprietary knowledge and IP

management strategies.

For Brazil to develop its biotechnology sector in combination with an OSI approach it needs

to engage public initiatives and increase the scale of innovation networks. Thus policy makers,

scientists, academics and civil society should be aware of these challenges and of new

alternative systems of innovation.

Connecting this chapter with the thesis as a whole, one must be aware that creating and

implementing an effective strategy for biotechnology requires not only the right natural and

social sciences research priorities, but also appropriate regulatory and governance choices,

legal frameworks, competition policies, venture capital and business practices, education

systems and much more. In this combination of policies, IP is one factor among many that

influence direct investment, technology transfer and biotechnology innovation systems. For

Brazilian organizations, proper management of IP can play a crucial role in encouraging

collaboration and partnership between research institutions, business, government and civil

society.

This thesis argues that Brazilian biotechnology needs to connect to OSI: sharing, collaborating

and leveraging the IP system to better mobilize knowledge. For example, the OECD’s (2006)

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guidelines for licensing genetic inventions and its new “Innovation Strategy” depend less on

protecting intellectual assets than facilitating “knowledge networks and markets” (OECD

2010). Such networks and markets involve deep interdependencies within the triple helix of

innovation: university, industry and government (Etzkowitz 2008).

Although free-revealing to build a public domain is one OSI option for Brazilian policy makers,

it is not the only one. The pursuit of protection is to some extent viable for OSI. However, to

benefit from IP protection given the social, cultural, economic and technological realities of

the twenty-first century, Brazilian policy makers need to better understand strategies for

managing IP, including OSI.

This analysis supports the view that the future of biotechnology in Brazil depends on public

research via the innovation process, a network of collaborative relationships between

university, start-up companies and the multinational biotech companies, and that government

involvement is required. Thus, this thesis argues that the triple helix of innovation is very

important to develop a solid foundation for policy initiatives that will support biotechnology

clusters based on collaborations.

Finally, in mapping the Brazilian actors in the biotech sector, this chapter has shown that there

is a fusion of private and public actors. This is in line with Hancher and Moran’s (1998:151)

argument that today there is a fusion of private and public ownership in advanced capitalist

economies. So, in line with the methodology of this thesis, this fusion may be better framed in

terms of influences that interact within a space.

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This chapter has performed a framing analysis and it is clear that in the Brazilian biotechnology

sector private and public actors interact. While the wider public has a stake in it, the fact is that

other groups (e.g. NGOs. social movements and consumer groups) have had little involvement

in the biotech space so far. This does not suggest, however, that certain forms of regulatory

capture may be used to advance public, rather than private, goals. There is a growing lobbying

power among actors such as NGOs that may influence the biotech space in Brazil more in the

near future.

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9. Possible Actions to Be Taken: Implementing Open Scientific Innovation
in Brazil

9.1 Introduction

This case study of Brazil is of crucial importance, both for guidance for the Brazilian (and other

countries’) national innovation system and for the local biotech industry in Brazil and in other

developing countries. A final remaining question for this thesis is what should be the actions

that Brazil should adopt to support the implementation of OSI. This raises practical issues about

OSI. Hence, the logical final step for this thesis is to relate OSI to the Brazilian context with a

discussion on suitable initiatives and licensing options, the gaps in OSI that need to be bridged,

and the additional conditions for sustaining OSI in the country.

9.2 A Network for OSI

This thesis proposes the establishment of a Network for Open Scientific Innovation within

Brazil. The Network would be a body which promotes collaboration and new models of R&D.

As pharmaceutical industry observers have noted, to successfully translate “upstream research

into potential drugs will require experimentation with new models of R&D” (Rai and

Reichman 2009:248-249, citing Data Monitor 2007).

The goal of the Network, which could be a body overseen by the MCT, would be to engage in

collaboration and experimentation with experts from various disciplines, industry and

government research institutes. Chapter 5 described some OSI efforts, existing and proposed.

Sections 7.4 and 7.5 examined some precedents for a network arising from collaboration

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between Brazilian companies and government-funded institutes. In fact, OSI initiatives studied

in Chapter 5 provide good models for the Network. They all share one philosophy: OSI.

The Network could act in two ways. First, it would promote OSI. In collaboration with

organizations such as FIOCRUZ and EMBRAPA, the Network would establish a website,

similar to Synaptic Leap, in order to promote collaboration with universities, independent

researchers and private companies. There is also other model web-based software for

collaboration, such as SciClips (http://www.sciclips.com) and Collaborative Drug Discovery

(http://www.collaborativedrug.com). These all foster collaboration through different services

based around scientific software, data management, as well as discovery and development of

computational compound profiles. For example, if one logs into SciClips, one might find that

the Imperial College of Science, Technology and Medicine in the United Kingdom is searching

for collaboration in a project on the interaction between proteins and different inorganic

surfaces. Collaborative Drug Discovery’s web-based software can organize preclinical

research data to help scientists advance new drug candidates more effectively. Moreover, such

collaboration through a Network could promote collaborations between small biotechnology

firms and large pharmaceutical companies. Such collaborations could fill a gap in the area of

small molecules where there is not much productivity (Rai and Reichman 2009:249).

Universities, governments and companies in Brazil are making considerable investments in

establishing TTOs and liaison offices. The resulting qualified personnel and institutional

relationships are likely to be integral to any IP management strategy, whether based on

acquisitiveness and commercialization or any of the other options presented in this thesis.

They are often in the best position to see opportunities to develop networks, despite being

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hampered by policies, metrics and funding models that prevent them from taking full advantage

of their knowledge. To improve the existing, dominant model, policy makers could consider

two possibilities. One is to reformulate TTOs’ mandates to be more consistent with institutional

missions and employ evaluation metrics that account for academic, societal, economic,

political and financial impacts more holistically. The University of British Columbia’s industry

liaison office has led this effort by developing new metrics (Bubela and Caulfield 2010:447,

452) but has only had funding to assess its work once. Another possibility is to increase the

efficiency of operations by using new tools for licensing the IP portfolios that TTOs are

encouraged to acquire. For instance, the OECD Working Party on Biotechnology (2010)

describes how model agreements might help to simplify licensing transactions by eliminating

the need to negotiate all but the most contentious issues. It cites the success of the “Lambert

Toolkit”, a set of model agreements developed in the United Kingdom by representatives from

academia, government and large and small companies in order to reduce the financial and

human resources required to negotiate IP agreements. The University of Glasgow has similarly

simplified its technology transfer processes through a dedicated online portal that clearly lists

“Easy Access IP” available for free as well as “Commercial Deals” for licensing and co-

development.

Second, the Network would monitor science. Through a team of experts, it would develop and

analyse models and licenses for compliance with OSI. It would also monitor the growing OSI

movement, keeping track of organizations within Brazil working on aspects ranging from

publication, to data sharing, to research on neglected diseases. The Network’s success would

depend on commitment and strategic modelling. It would have to widen the circle of those who

are aware of OSI and make it a persuasive alternative.

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 9.3 Licensing

This thesis does not claim that patents should be abolished. In fact, in many cases patents are

necessary for an OSI strategy to work. The free-revealing approach is one option that sidesteps

the IP system, but in the current patent system, open source licensing over straightforward free-

revealing may be a preferable option because patent ownership gives the ability to set terms of

use and exclude anyone who will not abide by the norms.

EMBRAPA has the largest agricultural biotechnology patent portfolio in Latin America.

FIOCRUZ also seeks patent protection for its innovation. The idea of patenting is consistent

with OSI and open source licensing and collaborative licensing may enable a balance between

protection and public interest.

These organizations could follow the examples of the BCCA (Section 5.3.1 and Appendix I)

and the CGIAR. These two research institutions seek patents not only to earn licensing

revenues and to attract research funding, but also to ensure continuing access and freedom to

operate for themselves and their constituencies (defensive reasons).

Open collaborative licensing, as this thesis has shown, can allow more than one researcher to

investigate, allowing producers to manufacture and sell a version of a product free of IP

constraints. These contractual freedom-to-operate approaches are also interesting in the sense

that universities and research institutes do not have to spend resources monitoring enforcement

and consumers would get cheaper drugs or bio-products because generic companies can do

better than at-cost proprietary pricing.

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However, in order to translate any of these OSI licensing options, one has to factor in Brazilian

antitrust legislation. In addition, any contract of transfer of technology has to be registered at

the INPI.

This thesis does not argue that one licensing option is more suitable than any other for OSI.

Instead of assuming that standard template licensing language should be adopted, a more

realistic strategy for Brazil is to find the common principles among the best examples of

existing “humanitarian” technology transfer contracts. Rather than promoting a standard

licence, every patent licence should contain similar ideas. Regardless of the success of a

particular OSI licensing “brand”, everyone can move towards regular practices.

One idea is for the Network to create a registry. This registry would contain licenses with OSI

characteristics such as research exemptions/safe harbours for neglected diseases. In addition,

these licenses could be linked to patents. Thus, Brazil can gradually create standard terms that

explain what it is to share under certain conditions.

In order to start a registry, one option is to examine the actual contracts, find all the public

patent licenses, scrape out the patent information associated with them, put it in a format that

the layman can read and then mark this up with metadata so it is searchable and can be

integrated with other efforts such as Science Commons. Essentially the intention is to promote

the work that has already been done, and after the community “buy in” the Network could

gently suggest that standardization of licensing might be appropriate in some areas.

The transparency of such a registry would create pressure to share. After analysing the existing

contracts, the idea would be to market the common principles they embody to TTOs and

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companies. Rather than imposing one type of license, one strategy would be to argument that

research exemption clauses improve patents. For instance, if a technology is open for trials on

a neglected disease, this may generate better clinical data (e.g. toxicology on compound). It is

fine if there is a commercial contract, but it needs to be explicit (e.g. on the web) and signable

without a negotiation. If companies want to adopt this kind of licensing, and get the public

relations benefit of being able to say they are sharing, then they can make a downloadable

contract, and the community review will keep it transparent.

9.4 Transparency and Risk Management

Transparency is very important to sustain OSI. The Cambia Patent Lens study case

demonstrates how a small non-profit institution can make a difference and create transparency

in the patent system (see Appendix I). Such a system is very important to reach levels of

transparency for patent and invention information.

This thesis suggests that Brazil should use the Patent Lens model in order to create a structure

to advance societal benefit by encouraging public disclosure of inventions and clear definition

of each invention, in exchange for a strictly limited monopoly. Such systems provide that an

invention may be used wherever and whenever the patent monopoly is not in force. A model

such as the Patent Lens informatics tools can assist the user to determine the boundaries of IP

constraints on deliverable innovations, and usable building blocks for future innovations. This

is an important way to create an integrated open access resource that allows community-

developed analytical tools, patent landscapes and decision support software to be created and

shared (see Appendix I).

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In addition, in order to sustain OSI Brazil must consider a risk management approach.

According to Drahos (2007b:5), the patent system as it is now has the potential to be a risk

factor, rather than a tool of risk management for handling large-scale changes and crises (ibid.).

To address concerns about the adverse effect of patent laws on innovation, Drahos suggests the

adoption of a risk management system through separation of powers in order overcome the risk

factor that the currents system has (ibid.).

Patent offices have grown so much that they have created a centralization of power (ibid.). In

order to achieve reform, the first step “is to break up these concentrations of power, to flip the

system from insider governance to a networked governance that draws expertise and values

from many communities of innovators” (Drahos 2007b:6). Drahos explains that patent offices

normally have policy committees or advisory committees, which have heavy representation

from business and the patent attorney profession (ibid.). These members of committees tend to

be experts in strategic patenting behaviour and not innovation. This generates an unbalanced

system because there is not a broader representation from communities where real innovation

takes place. One balanced system would integrate new insiders from these communities (ibid.).

A good approach would be to start in places such as key committees that guide patent office

systems (ibid.).

Drahos (2007b) proposes the employment of an external audit of granted patents. The idea is

that each year a committee of independent experts would target some key areas of patenting

(e.g pharmaceuticals, software, biotechnology, nanotechnology) and audit the quality of a

sample of patents in that area (ibid.:7). This committee would describe in detail its findings to

a body independent of the patent office, such as a legislative committee (ibid.).

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This system could be combined with other strands of governance. In this way it could form a

powerful tool of networked governance. In practice, research institutions and companies that

find patent thickets can provide information to the external patent audit committee. This

committee would have the potential to be a “guardian of the guardians” – an independent source

of technical information for legislative bodies (ibid.).

The disclosure of information requirement, essential in any patent law, in theory should create

certainty for downstream innovators. Nevertheless, in practice, precisely the reverse happens.

What we see is FUD (fear, uncertainty and doubt) because large-scale patenting creates large-

scale rule complexity. To remove the complexity of patent law, Drahos (2007b:8) believes that

“simple, bright-line rules would work”.

Drahos (2007b) recommends that regulatory agencies “establish patent transparency registers

in areas of technology where there were serious risk management issues and transparency

concerning the patent situation was a matter of public interest” (ibid.:8). One possible register,

for example, would target research techniques in biotechnology for particular classes of drugs,

specific plants or genes. There should be a requirement for companies to use the registers in

order to make a full disclosure of the patents surrounding the targeted technology. Regulatory

agencies (e.g. ANVISA) would create such registers because enforcement issues. In addition,

this registry should be only created in areas “where it was important to reduce the social costs

of the uncertainty and complexity being orchestrated by patent owners” (ibid.).

Since the patent social contract requires the disclosure of the invention to the public, “by

implication it also requires that the public be able to find the patent in the first place” ((Drahos

2007b:8). One may think that, at least in theory, it should be possible to have a technology

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platform that searches all the world’s patents, allowing users to organize that information in

various ways (around ownership, technologies, countries, etc.). Google’s algorithms suggest

that we can achieve global levels of transparency for patent and invention information (ibid.).

In this context, as Chapter 3 suggested, one possible solution for risk management would be

for Brazilian policy makers to allow within the patent system a coordinated and rational

development of a patent prospect of research techniques. This could enhance the

complementarity between the existing IP rules and OSI. For this, Brazilian policy makers

would have to empower federal organizations (e.g. ANVISA) to coordinate R&D to improve

access to research techniques and collaboration (these agencies would effectively be a one-stop

shop for patent licensing).

9.5 Financing

Although translating OSI into practice in the Brazilian context is not likely to be

straightforward, this thesis argues that it can be done, and that the relationship between funding

and OSI goes to the heart of the feasibility of OSI implementation.

In fact, one of the main gaps for a national OSI initiative is financing. Governments are the

major sources of funding for biomedical and agricultural biotechnology in Brazil. Therefore,

public subsidies would be very important to finance OSI. In the end, for some projects public

funding, private philanthropies, and non-profit foundations (e.g. Bill and Melinda Gates

Foundation) will have to back OSI, because market forces alone will not suffice. Section 5.4

analysed how open source licensing can be profitable. Nevertheless, one has to find alternative

solutions. The ensuing discussion proposes some alternatives to sustain OSI in Brazil.

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At present, key policies of certain organizations are not neutral towards IP management

strategies. For example, most granting agencies’ implicit or explicit criteria for evaluating and

funding research proposals normatively establish the acquisition and commercialization of IP

as a prescriptive requirement, particularly as an expected economic benefit of the ended

project. They tend not to encourage outside-the-box thinking or experimentation. While

institutional cultures can be difficult to change, serious consideration should be given to the

appropriateness of such policies in light of policy makers’ objectives for financial and non-

financial returns on investments and the instrumental purposes of managing IP. The function

of IP should be to create knowledge networks and markets that facilitate access to and use of

knowledge, provide incentives to invest in knowledge creation and dissemination, ensure

equitable distribution of commercial and social benefits, and take account of the broader needs

of stakeholder communities.

Policy makers have a key role to play in articulating the overarching principles that drive an

organization’s IP policy. While the details can and should be left to those actually designing

and implementing a particular IP management scheme, statements of principle, effective

funding mechanisms and training programmes provide starting points for discussions and

negotiations between actors.

In Brazil, FINEP ought to play an important role in financing projects that support OSI. FINEP

is a publicly owned company subordinated to the MCT which sponsors research. FINEP has

enabled different S&T partnerships between business and universities that have proved to be

economically successful. Examples are the development of the Tucano aircraft by EMBRAER

(Brazilian Aeronautics Company), various EMBRAPA R&D projects in biotechnology, and

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Petrobras (the Brazilian Oil Company) projects in technology for deepwater oil exploitation

(FINEP 2005).

One of the arguments is that federal funding and public research organizations (that are publicly

funded) should facilitate OSI. In fact, Brazil already has key organizations that could play a

vital role in this step. Brazil could enable unique partnerships between industry and the public

sector to overcome the limitations imposed by the design of biotechnology companies,

shortening the early stages of product development, reducing the cost of discovery, and

specially targeting neglected diseases.

9.5.1 PPPs

Section 5.1 suggested that PPPs such as the Medicine for Malaria Venture (www.mmv.org)

confirm that OSI as a development methodology for new drugs is feasible. This thesis argues

that PPPs will be pivotal in fulfilling OSI in Brazil.

A national plan for OSI innovation promoting PPPs focusing in some key research areas, such

as neglected diseases, is one alternative. Section 1.2.1 cited the Global Plan of Action (GPA)

presented to the World Health Assembly on issues of public health, innovation and IPRs. The

GPA makes commitments and identifies some paths that could help to frame a plan to sustain

OSI financially.

The explanatory notes of the GPA establish the time frame for implementing the specific

actions (from 2008 until 2015). On 21 January 2009, WHO released Document EB124/16

entitled “Proposed Time Frames and Estimating Funding Needs”. The document estimated that

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the total cost to implement the GPA (by element, excluding R&D) is US$2.064 billion.

National level costs constitute 60 per cent of this figure. This document gave detailed estimates

of most of the discrete elements contained in the GPA. For example, US$1,980,870 had been

estimated to implement element 2.3(c) of the GPA (this element encouraged “further

exploratory discussions on the utility of possible instruments or mechanisms for essential

health and biomedical R&D, including inter alia, an essential health and biomedical R&D

treaty”).

For element 4.3 (a), which calls for an examination of the “feasibility of voluntary patent pools

of upstream and downstream technologies to promote innovation of and access to health

products and medical devices”, the document estimates US$1 million. On R&D, the funding

document stated that the:

Total costs of undertaking the research and development, innovation and technology
transfer, including education of workers and building of infrastructure, might be as US$
147 000 million [$147 billion US dollars]. The grand total for implementing the global
strategy and plan costed here for all Member States from 2009 to 2015 is of the order
of US$ 149 000 million, averaging US$ 21 000 million per year.

Currently, about US$160 billion per year is spent globally on health R&D, of which only about 3

per cent is directed at diseases that disproportionally affect developing countries. The cost of

US$147 billion over seven years for the Global Strategy and GPA will mean that, over the same

period, 12 per cent of the expected global total of R&D spending will now be used against these

diseases.

Thus far, the Brazilian government has contributed US$500,000 for the implementation of the

GPA and asked for a regional implementation (a regional perspective for the Global Strategy and

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GPA) (Note No. 31 – 21/01/2009 Brazilian Ministry of Foreign

Affairs). Also, Bolivia and Barbados proposed prize systems to promote alternative models to

promote innovation for diseases that mainly affect developing countries. New funding

mechanisms that decouple R&D incentives from prices will be a key component of meaningful

reform. The governments of Bolivia and Barbados have proposed the creation of a Chagas Impact

Prize Fund (Aisola 2008:1). This current draft is a first step, but much work remains if this plan

is to be implemented (ibid.).

9.5.2 Compensation Systems

This thesis argues that OSI in Brazil could be complemented by a compensation system.

Recently, leading thinkers have proposed intriguing new solutions for managing information

flows and access to knowledge in the digital age. William Fisher (2004) has explored

alternative business models for the distribution of music, movies, and other kinds of digital

entertainment. In the most interesting scenario, he envisions an alternative compensation

system. Under this arrangement, major portions of the copyright and encryption-reinforcement

models would no longer be applied. Instead, creators would receive payments for their works

based on how many times their creations were downloaded, and how intensely they were used

(how many times they were viewed or listened to) (ibid.).

This would be a government-administered reward system. In brief, the system would work

such that a creator who wished to collect revenue when his or her song or film was listened to

or watched would register it with the Copyright Office. With registration there would be a

unique file name, which would be used to track transmissions of digital copies of the work

(ibid.).

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This thesis suggests the adoption of a similar system to sustain OSI. In recent years, there has

been a proliferation of prizes to stimulate innovation in fields as diverse as movie preferences,

space travel, mining, energy and the environment, and medical science (Love 2007:24). To

address the problems of the patent system, notably for drugs, James Love and Tim Hubbard

have proposed a prize system as a way of stimulating innovation while lowering the cost of

drugs (Hubbard 2003; Love 2006, 2007; Love and Hubbard 2006, 2009; Stiglitz 2006). Such

a system would separate the market for innovation from the market for medicines.

Love and Hubbard (2009:2) offer four options:

1. To keep the current IP system, but to replace the exclusive rights to make or sell a

product, following approval by the relevant administrative body (e.g. in the United

States the FDA and in Brazil ANVISA), with cash prizes that are linked to the impact

of the product on health care outcomes

2. In conjunction with the first option, to allocate a portion of the prize money to non-

affiliated and non-remunerated parties whose open and freely-licensed research, data,

materials, know-how or technologies were important in developing a final product

3. Based on option two, to set aside some of the money for investments and prizes that

would be made in the translational or early phases of development, to be managed by

competitive intermediaries, who will be resourced on the basis of their measurable and

objective contributions to products that actually succeed

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 4. To eliminate patent thickets by removing the exclusive right to use inventions in

upstream research in favour of a system that gives the freedom to use inventions so

long as the patent owners receive remuneration.

Option 4 is similar to the proposal of the Danish Board of Technology (2005), which suggested

the establishment of a remuneration-based patent system in which a patent holder cannot

prohibit the exploitation of his or her patent. The idea is to create a supplementary system to

the present exclusive-rights based system in order to facilitate access to licenses, to lead to

more efficient exploitation of patented knowledge, to strengthen patent enforcement, and to

encourage small- and medium-sized enterprises to acquire patents.

Stiglitz (2006:1279) explains how a medical prize fund which would give two types of rewards

could work. Cures or vaccines for diseases like malaria would receive larger rewards, and drugs

that are similar to existing ones, with perhaps slightly different side effects, would get smaller

rewards (ibid.). Generic companies would be able to access IP. Thus we would have wide

distribution at the lowest possible price because “the power of competitive markets” (ibid.).

A supplementary system of royalties or liability rules (Rai and Reichman 2009:271) may also

contribute to sustaining OSI. Under this system, any firm that provides instrumental

information to a researcher would get compensation under “take and pay rules” or “liability

rules” (Calabresi and Melamed 1972; Merges 1996; Rai and Reichman 2009:271). One

example is the International Treaty on Plant Genetic Resources for Food and Agriculture

(ITPGRFA) that imposes a compensatory liability regime on those who make commercial

application derived from public-domain seed (ibid.).

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Internationally, another option is to create a treaty for essential medical R&D that would

require nations to give a minimum amount to support R&D for diseases that are currently

neglected (Love and Hubbard 2004). An international treaty would provide a contribution norm

ensuring a certain amount of money to be spent on R&D (ibid.:150). Since money would not

come from regular drug sales, new mechanisms such as general taxation would be necessary

for money collection (ibid.).

To avoid excessive bureaucracy, a possible alternative is to build a competitive financing

scheme that would work through R&D investment intermediaries. The model for pension funds

may serve as an example on how to license and regulate these R&D funds (Love and Hubbard

2004:150). Such a fund would manage R&D assets on behalf of consumers. Minimum

contributions to R&D funds from individuals or employers should be set. The fund would also

generate competition among intermediators in order to attract funds to invest in R&D on the

basis of their power for drug development and upon their priorities. Love and Hubbard propose

that different business models for financing R&D could be tested, “with intermediators

experimenting with prize systems, direct investments in profit or nonprofit entities, open

collaborative public good models, or other approaches” (ibid.).

R&D tax credits are another alternative to sustain OSI. UK companies have been able to claim

additional tax credits on money invested in R&D on vaccines and drugs for malaria, TB and

HIV/AIDS (Parliamentary Office of Science and Technology 2005:4).

Finally, Hancher and Moran’s framework, which has been applied throughout this thesis, is

important to the main arguments presented in this chapter because certain forms of regulatory

capture may be used to advance OSI goals. The understanding of the different actors who

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populate OSI can help in the promotion of the discussion on suitable initiatives for sustaining

OSI in Brazil. For example, NGOs and other interest groups can be engaged in supporting

models such as OSI. In the context of this chapter, the mapping of the regulatory space has

proved to be an invaluable tool to formulate specific recommendations for OSI in Brazil.

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 PART IV

CONCLUSIONS AND IMPLICATIONS

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 10. Conclusions and Implications

10.1 Conclusions

Initially, this thesis posed one central question: Is OSI feasible and desirable in the Brazilian

context? This chapter presents the final answers to that question based upon the foregoing

analysis and the empirical evidence presented.

10.1.1 Biotechnology, Patents and Research Techniques

This thesis made no attempt to evaluate the overall impacts of patents on biotechnology, but

has instead tried to come up with some reliable conclusions about the likely implications of the

current IP-dependent business models prevailing within the industry.

Chapter 2 provided some definitions of biotechnology that served as interpretative guideline

for this thesis, and noted the public and commercial importance and promises of biotechnology

and new developments such as synthetic biology. This chapter provided the background for

this thesis and established that research techniques are a central definitive trait of biotechnology

which fosters a rapid development of subsequent derivative technologies.

The definitions showed that all the disciplines within the scope of this thesis rely on research

techniques to innovate. Clearly not all aspects of biotechnology are generative of further

research, as some are end products in themselves, however research techniques are needed to

enable researchers to invent those very end products. This chapter made a very important

argument in the context of this thesis: that it is possible to hypothesize that the current IP-

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dependent business models prevailing within the biotechnology industry are not optimal

because they do not generate speedy innovation or innovation in neglected areas.

In recent years, IPRs have become central in wider attempts to support innovation and

economic development. The TRIPS experiences of developing countries showed that strong

patent rights do not necessarily bring economic development. In an effort to validate a critique

of the current IP-dependent business models prevailing within the industry, Chapters 3 and 4

evaluated a number of currents within patent theory.

These chapters studied different trends in an attempt to stimulate a comprehensive debate about

the justifications for a patent system and the counterarguments against it. Although the

empirical evidence is often not conclusive, the chapters demonstrated the incentive effect of

patents and highlighted the shortcomings of the current system, especially in relation to

publicly funded research, pro-poor innovation such as in the area of neglected diseases, and

academic research.

Chapters 3 and 4 emphasized the pros and cons of the patent system and the reality of

ownership and management of IP. One important conclusion was that the dominant culture of

acquiring IP in order to commercialize it is responsible for the suboptimal features of current

patent system.

Other important findings of Chapters 3 and 4 are:

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 Even if the current legal regime works reasonably well and the threats of anticommons

and patent thickets are lower and more limited than many have predicted, it would be

clearly wrong to infer that biotech patenting has no adverse effects on innovation.

 There are potential bottlenecks to research techniques and likely it will be necessary to

address the threats posed by patents on critical research techniques. This is especially true

for developing countries where the patent system is serving primarily to protect foreign

IP that could otherwise be copied.

 There is some evidence that the present patent management strategies can retard

innovation in certain areas, therefore alternative OSI models have the potential to help

the biotech sector as a whole in the long term.

 Although certain reforms would be helpful in enhancing the complementarity between

the existing IP rules and OSI, radical changes to the present IP system are not necessary

as OSI is compatible with current patent regulatory and management practices.

 The concept of research exemption (or experimental use exemption) and compulsory

licensing permit the ongoing use of technologies for non-commercial research. While

these safeguards have features of OSI (they are potentially useful mechanisms to enhance

access to e.g. research techniques and medicines), they do not sidestep experimentation

with other OSI strategies.

 The use of safeguards such as research exemption tied to a commitment that any

inventions generated by the research would not be patented could be a way to empower

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 a patent system that allows for coordinated, rational development of patents for research

techniques.

Furthermore, Chapter 4 summarized that legal scholarship in essence advocates one of three

approaches to improve patent policy: (1) a traditional law-and-economics approach,

emphasizing bright-line rules and market roles; (2) an agency-based approach, relying on

experts to intervene when necessary to overcome market failures or to protect scientific norms;

or (3) a judicial activist model, relying on so-called patent policy levers latent in existing legal

doctrines.

Finally, Chapters 3 and 4 made a strong case that in the case of research techniques in

biotechnology the central question of this thesis is answerable in the affirmative, though

absolute proof would require a study of every single field of research.

10.1.2 The “Regulatory Space” Metaphor

The analysis of Chapters 2–4 was also very important for testing the research methodology of

this thesis, Hancher and Moran’s “regulatory space” approach. It was also crucial as a means

to inform the discussion in the subsequent chapters by framing the debate about OSI in the

regulatory space approach. In fact, the approach of mapping the regulatory space enabled a

deeper understanding of the complexities of biotechnology and IPR governance. Hancher and

Moran’s approach proved to be very valuable for analysing how a regulatory mandate for the

protection of IPRs on a global scale (TRIPS) was initiated, debated and developed by key

actors.

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Overall, the most important revelation from the regulatory space analysis was that the

regulatory changes studied were initiated, and developed rapidly, in advance of international

developments in regulatory oversight. The regulatory developments at the global level and at

national levels have been driven by the implicit influence of copyright, patents business groups

and developed economies.

However, the analysis also revealed the emergence of a defiance led by NGOs. This defiance

offers considerable support to developing countries to balance the weight of political backing

of developed economies for the establishment of global IPRs. Hence, this thesis suggests that

contrary to some recognized theories, certain forms of regulatory capture may be used to

advance public, rather than private, goals.

The case of the influence of NGOs is a good example, where, in the process of diplomacy

regarding IPRs, human rights and access to medicines issues, a confluence of factors may

create circumstances under which private entities with strong regulatory capture may change

their private agendas in order to change their public image. Private companies may then use

OSI strategies to improve the perception the public has on their business.

In relation to the central research question of whether OSI is feasible and desirable in Brazil,

the regulatory space analysis suggested that alternative proposals such as those relating to OSI

may be opposed by big business if they consider them a threat to their profitability. It therefore

behoves promoters of OSI to demonstrate that its wider application can stimulate rather than

inhibit innovation in ways that can actually enhance business growth. OSI has the potential to

create a regulatory space that engages private expertise to advance public goals.

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 10.1.3 OSI

Part II of this thesis focused on OSI. First Chapter 5 classified and compared innovation modes

that form the basis of OSI (open innovation, cumulative innovation and user innovation). This

step was important to show the different streams of research and their differences. Chapter 5

also investigated the roots of OSI in order to find out whether or not a closed culture of science

is to some extent an anomaly in the history of science. This was important to show that OSI

has some historical basis. The chapter later explored OSI as an IP management strategy in order

to help answer the central question.

In relation to investigating OSI’s origins, Chapter 5 made some important findings. First, OSI

is the default policy with respect to plant improvement, including until recently scientific

breeding. Second, knowledge is not always common or commonly distributed in a community;

therefore there are problematic and antithetical aspects to the “sharing” of information to all

classes of people. Third, the history of science suggests that secrecy has been resorted at times,

but at the same time knowledge was frequently shared. Fourth, despite the elitism of the Royal

Society, its ideals of the “modest witness” pioneered some of the ideals behind OSI. Fifth, OSI

and Open Society are complementary to each other as both put emphasis on disclosure and

epistemological openness. An important conclusion of this chapter was that scientists are often

intrinsically motivated and performed research long before IPRs existed. The spirit of science

is “communitarian”, and although some may question whether science is always done this way,

this remains for many scientists the only way that science should be done.

Chapter 5 defined OSI as any viable model for providing open access to capabilities for

innovation in science (e.g. scientific commons and open source models). It also explained that

(a): open innovation in science refers to an emphasis on disclosure and epistemological

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openness, which is a way of ensuring that excessively broad IPRs do not choke the flow of

scientific exchange; or a way to prevent “excessively broad IP rights” from emerging in the

first place; (b) OSI is about maintaining and enhancing one’s ability to innovate through

distributed research by allowing access to the tools and skills necessary to participate in that

innovation and distributed economy.

In order to define OSI, Chapter 5 divided it into two different approaches: a) free-revealing to

build the public domain; and b) open collaborative licensing. It suggested that these two

approaches are alternatives to the traditional culture of IP acquisition towards

commercialization.

Chapter 5 explained that in the context of free-revealing, OSI means choosing to forego any IP

protection by freely revealing knowledge and technology directly into the public domain. This

approach eliminates the costs of acquisition-oriented IP management strategies. The chapter

also suggested that this approach offers an alternative as the costs of acquiring and enforcing

rights, especially patents, can be entirely eliminated by free-revealing a technology in the

public domain.

Another important finding of this chapter was that there is possibility for confusion in

differentiating OSI from other putatively “open” models of IP management. For example, open

source software, Creative Commons and open source biotechnology depend, fundamentally,

on acquiring IP protection. The novelty of such systems is that IP is then licensed to require

rather than restrict access to the protected content or technology. Chapter 5 concluded that the

free-revealing approach is distinct because it sidesteps the IP system altogether. It not only

involves foregoing IPRs; it also develops strong community norms that ensure what is publicly

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revealed is not appropriated by others. Nevertheless, free-revealing can in some cases leave

open the possibility that others will attempt to acquire IPRs over public domain knowledge or

technologies. Therefore, some organizations seek patents for defensive reasons in order to

guarantee freedom to operate for themselves and their constituencies.

Chapter 5 argued that OSI models do not have to disregard property laws and that, on the

contrary, in the case of open collaborative licensing they may in fact utilize a form of property

to govern a “protected commons”. The chapter concluded that measures to promote OSI need

not conflict with the acquisition of patents, and that in such cases OSI is about collective action

strategies, such as open source, patent pools, PPPs and institutional consortia, that are designed

to license research techniques broadly and non-exclusively to all who wish to participate in

solving research problems.

This thesis established that current models of technology transfer have proved less successful

than desired and that, pursuing the ethos of publicly accessible science, a number of

organizations have begun to experiment with middle-ground models of IP management.

Chapter 5 analysed some of these models and concluded that they rely on IP protection to

implement creative licensing practices that encourage cooperation and facilitate collaboration.

It also concluded that their common feature is that they help to facilitate multilateral IP

transactions, either through the creation of centralized or decentralized structures, and due to

IP regulation, most open innovation strategies require legal mechanisms to ensure the process

remains open, and that all participants have the capacity to use a technology.

In summary, Chapter 5 concluded OSI in the context of open collaborative licensing consists

of two related components:

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 1) “Distributed innovation” (peer production) – this increases efficiency by allowing

many participants in diverse locations to work in a coordinated, loosely cooperative

manner (the process is neither hierarchical, nor centrally managed)

2) “Open licensing” – legal tools that can facilitate peer production by lowering

transaction costs, creating freedom to operate, and enabling research by requiring that

materials and knowledge are made available.

Chapter 5 showed that research on the theory and practice of open innovation and an

analysis of emerging business models that foster collaboration and commercialization led

to the identification of four important concepts within open collaborative licensing: (1)

peer production; (2) commons; (3) patent pools; (4) open source; (5) open source

biotechnology.

Four key policy objectives of OSI were offered: (1) innovation open or publicly accessible;

(2) freedom to fork; (3) credible commitment; and (4) competition. Some other general

conclusions that Chapter 5 made are: (a) OSI is in the context of increasingly distributed

regulatory and governance systems that involve a dispersion of power over a wide variety

of actors and groups; (b) OSI is based on transdisciplinary understandings about the history

of innovation; flowing information to solve problems and social production through

networks of collaborators; (c) often there is no definite distinction among OSI models as

they have similar features, but this is not a problem because at the core of OSI is

collaboration; (e) despite the illustrations provided, it is unlikely that any single IP

management strategy would or should be applied rigidly within or across organizations; (f)

there is no need for policy makers to choose only one of these options because they are not

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 mutually exclusive; and (g) one of the major challenges in even considering the

possibilities of OSI models is the lack of consensus around a precise definition or even

conceptual framework for analysis.

Chapter 5’s investigation of the basic content and parameters of OSI model led to findings

that answered in the affirmative to the central research question of this thesis. Applying

Hancher and Moran’s regulatory space analysis in the context of OSI specifically enabled

a better understanding of the governance of OSI and about the formulation of specific

recommendations for OSI.

10.1.4 Brazil

Part III of this thesis discussed the Brazilian scenario, and demonstrated that OSI is both

feasible and desirable in Brazil.

This thesis argues that the extent to which OSI can operate in Brazil will ultimately depend on

how supportive the national legal system is. Chapter 6 provided a critical perspective on this

and showed that Brazil did not take advantage of flexibilities in international law (specifically

TRIPS). Although the country could have delayed the incorporation of the TRIPS dispositive

provision that requires the patenting of pharmaceutical products, Brazil immediately approved

a patent law, giving up a grace period of seven years. Brazil also included a pipeline mechanism

in its legislation. The conclusion was that these two historical facts were detrimental for the

development of the Brazilian national innovation system.

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Chapter 6 further analysed the legal situation in Brazil and its interaction with OSI. The

conclusions of this chapter were: (a) Brazil complies with IP international regulation and has

already appropriate legislation for the protection of IPRs and adoption of OSI; (b) OSI R&D

offers much more transparency and is morally the best choice; and (c) OSI is not only legal,

but also contributes to the implementation of many of Brazil’s constitutional principles,

technology transfer, and free competition in Brazil.

Hancher and Moran’s methodology helped to analyse how the regulatory arrangements and

rules governing biotechnology and IPRs evolved, and were negotiated, renegotiated and

reshaped in Brazil. It showed that regulatory developments at the global level have been driven

by the implicit influence of copyright, patents business groups and developed economies. It

further outlined the various actors involved in current debates in Brazil regarding legislation

reform in Brazil.

Chapter 7 surveyed Brazilian science and Brazil’s modern biotechnology performance before

moving into the broader economic literature that analyses Brazil’s development. It documented

evidence revealing that, in the past, Brazil suffered different setbacks to its economy and

science, and revealed that Brazil’s innovation record in biotechnology is not impressive to date.

It argued that the history of S&T and policy making in Brazil is very contradictory and this

reflects the development model that Brazil has adopted in the last few decades.

Evidence suggested that succeeding changes in the government structure affected science,

technology, innovation and biotechnology, and that Brazil’s biotech sector is lagging in

comparison to other countries. Therefore, the country must explore alternatives to improve its

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biotechnology sector. Moreover, the conflicting interests of different interest groups influenced

changes in Brazil.

In line with Hancher and Moran’s approach, Chapter 8 mapped the actors that are important

for OSI in Brazil, showing that most Brazilian research institutes and federal universities

recognize the importance of IPRs and have a policy of acquisition of IP towards

commercialization.

Chapter 8 demonstrated that Brazil could embrace OSI in order to develop its biotechnology

sector. It argued that because the use of foreign technologies in the stages of development of

biotechnology is often not simply one of replication, interactions with others, including the

original source of innovation, and complex learning activities are necessary. It suggested that

this use of technology is much broader than freedom to operate, and is desirable when local

firms and individuals are learning how to copy techniques and are upgrading their capacity but

are not yet in a position to produce many of their own innovations. It also suggested that when

a country’s capacity enhances and it has more IP of its own to protect, more exclusivity is

desirable so that it is able to capture the value of the innovations.

Chapter 8 found that the challenge for Brazil is to embrace innovation strategies such as

“technological diversification” and OSI and adapt them to its local conditions. It suggested that

a combination of these two approaches would acknowledge the political, institutional and

cultural aspects of Brazilian innovation processes, and it could be well suited for the

development of biotechnology. It finally concluded that a combination of these strategies: (a)

emphasizes the importance of interactions between actors and organizations; (b) takes into

account many actors with different functions; (c) moves beyond the “state or market”

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dichotomy, making room for more bottom-up and associative networks; and (d) stresses

interactions between users and producers, allocating a significant role to frequently neglected

actors, such as workers or consumers.

Chapter 8 showed that implementing OSI in Brazil is both feasible and desirable. It

documented that, despite past problems, Brazil has the capacity to build on its strengths in

order to construct a scientific commons through a national OSI strategy for biotechnology.

An important conclusion of this thesis is there is a space for biotechnology outside Big Pharma

and multinational agricultural biotech companies, and that scientific collaboration promises to

give Brazil the capacity to build up its biotechnology sector. The Brazilian scenario suggests a

very promising future for open science as Brazil already has institutions that can internalize a

capacity for implementation of OSI. Moreover, Brazil is in an excellent position to build on

existing strengths and become more self-reliant by developing its health biotechnology sector,

thereby providing better access to medicines for the population. There are many reasons to

believe that Brazil should adopt open source science in order to enable partnerships between

industry and the public sector to improve Brazil’s biotechnology capacity.

Although translating OSI into practice in the Brazilian context is not likely to be

straightforward, this thesis suggested that it is indeed possible. For the Brazilian context there

are suitable initiatives and licensing options. Of course, there are gaps in OSI that need to be

bridged, and the conditions for sustaining OSI in Brazil depend on some important factors.

To help fill these gaps, Chapter 9 proposed the establishment of a Network for OSI within

Brazil in order to promote collaboration and new models of R&D. It argued that such a network

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could promote OSI in collaboration with Brazilian research institutions, universities,

independent researchers and private companies. The Network would also monitor science

through a team of experts.

Chapter 9 also suggested that in order to translate any open collaborative licensing, there needs

to be a good awareness of Brazilian antitrust legislation and CADE requirements, and the INPI

transfer of technology registry procedures. Licensing suit models are important, but it is wrong

to say that one licensing option is more suitable than another for OSI in all cases. In fact,

standardized agreements may pose problems; therefore, instead of assuming that standard

template licensing language should be adopted, a more realistic strategy for Brazil would be to

find the common principles in the best examples of existing “humanitarian” technology transfer

contracts. Consequently, the chapter proposed the development of a registry with licenses that

contain OSI characteristics in order to gradually create standard terms that explain what it

means to share under certain conditions.

Furthermore, Chapter 9 concluded that in order to sustain OSI, transparency is very important.

It was suggested that Brazil should build informatics tools to promote transparency.

International models such as Patent Lens serve as a good model. Risk management is also a

way to sustain transparency, and OSI. In order to sustain OSI in Brazil, in the end public

funding, private philanthropies, and non-profit foundations (e.g. Bill and Melinda Gates

Foundation) would have to back OSI. Non-profit and private funding could also pay for OSI.

In addition, and as mentioned, PPPs such as the Medicine for Malaria Venture confirm that

open science as a development methodology for new drugs is feasible, and that PPPs are pivotal

in fulfilling OSI in Brazil. Agencies such as FINEP ought to play an important role in financing

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projects that support OSI. The final conclusion of the chapter was that compensation systems

(e.g. a prize system, R&D treaties and R&D tax incentives) are ways to sustain OSI.

In relation to the thesis as a whole, a first conclusion is that a number of national-level measures

to promote innovation in S&T could be used in Brazil that do not conflict with TRIPS.

Examples of such measures, which were discussed, are research exemption (or experimental

use exemption) and compulsory licensing.

A second conclusion is that Brazilian policy makers have three options for IP and technology

management: (1) encouraging as much acquisition and commercialization of IPRs as possible;

(2) supporting the public domain through free-revealing of knowledge and technology; and (3)

leveraging IPRs through collaborative or open licensing models.

A third conclusion is that these options are not mutually exclusive, and the appropriate blend

depends on the nature of the commercial or non-commercial value to be created and shared

among stakeholders.

A fourth conclusion is that alternative IP strategies based upon models of cooperation and

sharing in order to maximize social and economic benefits of publicly funded research is very

important for innovation in Brazil, and may help to add value to biotechnology.

A fifth conclusion is that while OSI in Brazil is feasible in the legal sense, it may be less

politically. TNCs’ dissatisfaction could be one barrier. They could oppose new measures that

would weaken their market dominance. Nonetheless, the Brazilian government “will not to be

fooled again”, and as this thesis has shown, it is presenting its own counterproposals to the

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WTO. Brazil is very well informed about innovation and alternative approaches to innovation.

This thesis argues that Brazil’s prominent position is directly linked to the feasibility and

desirability of a national strategy for OSI. Brazil has shown leadership in exploring IP

innovative alternatives (e.g. the WIPO Development Agenda and WHO negotiations), and

these are evidence of important actions that the Brazilian government undertakes towards

promoting an innovative and balanced IP regime. The thesis concluded that there is a very

strong case that Brazil would be willing to embrace OSI.

The answer to the central research question of this thesis is therefore: “Yes – in theory”. But

realistically, such recontouring will only partially be realized, if at all. The future development

of OSI in Brazil will depend on to what extent policy makers, scientists and entrepreneurs will

take the lead in developing those solutions. All of this implies that the challenges in

biotechnology could be even greater for Brazil.

10.2 Further Implications

10.2.1 Contributions

This thesis makes an important contribution to studies on IP, innovation and IP management

policy and practice. Its systematic definition of OSI and its parameters highlights some of the

unique attributes of open innovation in biotechnology. Through a methodological and thorough

review of the relevant literature, the particulars of OSI and the Brazilian scenario (the legal

regime and its institutions involved), this work offers insights into the key factors and

institutional features that will influence the spread of OSI.

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The findings of this research will contribute to the deliberations of academics, researchers,

policy makers, scientists, venture capitalists and industry experts as they try to appreciate and

understand the differential effects of alternative strategies for the management of IP. Therefore,

it can contribute to the debate on policies and processes for public and private companies to

promote opportunities for the use of biotechnology – and promote the potential for downstream

utilization and commercialization of products. Finally, this thesis provides a useful framework

and build a foundation for future innovation policies, ownership issues and research in different

sectors (and perhaps countries).

10.2.2 Lessons of the Analytical Approaches Employed in This Thesis

In essence, this thesis combines three approaches to answer the central research question. The

first approach was qualitative research that analysed the control of patents and critiqued this

institution to identify the main practical problems posed by changes in the international IP

scenario. The conclusion, in short, is that there are problems with biotechnology and patents,

and these are suboptimal features that have developed due to the influence of dominant

economic interests. This thesis makes clear that part of this analysis (analysis of IPRs in a new

institutional economics framework) is not unique, because it appears in works of other authors

(e.g. Drahos and Dutfield).

Although this approach was demonstrated to be revealing in many ways, this thesis also sought

to analyse the institutional alternatives that reduce these problems. Consequently, this led to a

second approach: a mixture of qualitative research and more empirical research, focusing on

OSI and one developing country. There are obvious limitations with this.

379
Whether or not developing countries (and developed countries) can develop strategies for OSI

may depend on political will and having the proper policies in place. Whilst this thesis only

considered the case of Brazil, it seems clear that policies that provide incentives for alternative

strategies such as OSI may also work in other countries like Canada, India, Mexico or South

Korea. Of course, different developed and developing countries vary considerably. This thesis

argues that Brazil is among those developing countries that could benefit from OSI, not only

because it has capacity in S&T, but also because it has adequate legislation and a government

that supports open models of innovation. Moreover, in the case of developing countries, it is

difficult to identify countries that are very different from the one chosen, so that the results of

this thesis should be of interest to developing countries as a whole.

This work is a coherent empirical study supplemented by qualitative evidence. To complement

this framework, much information was gathered from the abundant recent literature (some

unpublished) and interviews in Brazil and abroad with government officials, representatives of

national organizations, business associations and transnational corporations, activists and

independent experts. The purpose of these interviews was primarily to add relevant information

to the thesis, whenever possible, but also to understand the perspectives of people with very

different views (and not just those who have knowledge, but also actors in the “story”).

The third approach, the “regulatory space” metaphor articulated by Hancher and Moran, proved

to be a very useful analytical device for mapping and understanding OSI, patent law and

biotechnology. It helped to reveal the interactions between the actors who are part of the

regulatory regime of biotech, patents and OSI. By using this approach the thesis was able to

more deeply explore OSI and to formulate specific recommendations for OSI in Brazil.

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Clearly this thesis has its limitations. It is, ultimately, an attempt to predict the future. The

fundamental truth of course is that only time will tell whether its conclusions are accurate.

10.2.3 Future Research Questions

This thesis has provided a synthesis and evaluation of various IP management models, and an

overview of some practical considerations for policy makers in Brazil. Obviously, much more

could be said about all of these issues. Three areas, however, in particular warrant attention in

the immediate future. First, this thesis has identified the need to determine more precisely

which actors could or should take responsibility for action. Who, specifically, are the policy

makers best positioned to address each of the many distinct issues highlighted in this thesis?

Second, there is a need to establish a forum in which such actors can convene to consider the

instrumental purposes of IP and the specific tools available to actors for influencing

management strategies. How can policy makers make a positive difference? Third, if there is

experimentation with new management models, it will be necessary to develop and test new

metrics to measure the success of these models based on their objectives. What might such

evaluation mechanisms look like? Underlying all of these points is the need for further research

exploring the conceptual and practical challenges associated with each of the IP management

models this thesis has introduced. This thesis has provided a starting point for further study of

such issues.

381
Appendix I: International Models of Collaboration in Science and
Technology

382
 1. British Columbia Cancer Agency (BCCA) – Vancouver, Canada

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaboration with - Collaborations with publicly funded public
Pfizer and the Verisante research institution
Vancouver Prostate Technology, Inc. and
Centre, a University Imperial College to
of British Columbia develop a new
(UBC) and application for
Vancouver General Verisante's laser
Hospital (VGH) Raman system to
Centre of determine if the
Excellence, to tackle system is able to
new treatment assist in ascertaining
avenues for breast, the margins between
ovarian and prostate tumour and normal
cancer. brain tissue.

Collaboration with
the Centre for Drug
Research and
Development
(CDRD) and
Champions
Oncology, Inc., to
license Irinophore
C™, a liposomal
formulation of
Irinotecan.

Profile

The BC Cancer Agency does collaborative, ongoing research to find the causes of cancer and

develop better treatments. BCCA’s Technology Development Office's (TDO) has mandate to

promote: discovery, innovation and technology development. Their policy promotes that all

inventions developed by BCCA/BCCF (British Columbia Cancer Agency/British Columbia

Cancer Foundation) employees or associates which result from the use of BCCA/BCCF funds

or facilities are the property of the BCCA/BCCF, unless there is a prior arrangement with the

383
sponsor of the research. The BCCA can then chose to keep the rights or assign them to the

inventor or a university (BCCA 2007).

384
 2. Biobricks, Cambridge, MA, USA

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Partnering with N/A public-benefit public and private
Addgene to organization
distribute plasmids
that have been
contributed under the
BioBrick™ Public
Agreement.

Works strategically
with The BioBuilder
Educational
Foundation, the
creators of
BioBuilder®, an
open-access website
offering informative
animations and
activities for anyone
who wants to teach
or learn about
synthetic biology

Partnership with
Synberc, a
consortium of
synthetic biology
leaders at UC
Berkeley, UC San
Francisco, Stanford,
Harvard, and MIT,
whose mission is to
make biology safer
and easier to
engineer

Profile

Current IP legislation may not confer proper protection in synthetic biology. So, the question

is who should own biological fabrication. Synthetic biology highlights a problem that IP law

385
frequently faces: the assimilation of a new technology into the conceptual limits posed by

existing intellectual property rights (Rai and Boyle 2007:0390).

The Biobricks Foundation (BBF), a non-profit organisation founded by engineers and scientists

from MIT, Harvard, and University of California San Francisco (UCSF), has drafted a public

agreement document to coordinate the production of biological systems (BBF).

The basic idea is that contributors give materials via the BioBrick contributor agreement, and

the BBF provides this service for free via the web. An updated draft has been posted for

additional public comment on a new legal framework supporting the future of biotechnology

(ibid.).

This agreement attempts to create a commons of free parts, or an open technology platform for

synthetic biology. This may serve to coordinate a synthetic biology commons. For example,

the user agrees to the BioBrick User Agreement via a “clickthrough”. When clicking “agreed”,

user agrees to the terms of the Biobricks agreement and shall therefore have the right to “use

the materials insofar as the materials are within the public domain or the contributors have

promised not to assert any of the contributors’ proprietary rights against user by way of the

applicable contributor agreements” (ibid.).

However, there are some problems for synthetic biology. Rai and Boyle (2007) discuss the

challenges for synthetic biology from an American perspective. According to the authors, the

products of synthetic biology are not discussed as copyrightable subject matter in the US

copyright statute. The implication is that if a court wishes to find the material copyrightable, it

would have to do by analogy. In addition, there are the internal restrictions of US copyright

386
law, “which do not cover functional articles or methods of operation” (Rai and Boyle

2007:0339).

At this stage, two problems arise: one is the political/ religious debate; and the second is in

regards to the law. To apply copyright law to synthetic biology from a Brazilian perspective

seems to push the boundaries of the law too far. Most synthetic biology research performed

today is within the confines of the existing genetic code. This code constrains the expressive

choices that they make, making copyright impossible (ibid).

Instead of applying copyright law, the other option raised is to build a patent-based commons

(Rai and Boyle 2007:0391). One solution could be to develop a contract, such as a “clickwrap”

license, over BBF data (ibid.:391). This would in theory secure an expanding commons, and

and the contract would impose conditions to obtain access to data (ibid.).

However, such contracts could be rather problematic since they bind only those who receive

the technology from the entity imposing the terms (ibid.). To prevent leakage to those not

bound by the contract terms there should impose stricter restrictions on information

dissemination (ibid.). The publicly funded International Hap Map project uses a clickwrap

license (Hubbard 2005; Rai and Boyle 2007:0391). The Hap Map license has a requirement

that users of single nucleotide polymorphism data would have to forego any attempt to combine

Hap Map with their own proprietary single nucleotide polymorphism data in order to seek

product patents on haplotypes (collections of single nucleotide polymorphisms) (ibid.).

To avoid leakages of data, this clickwrap license requires those who sought the data to refrain

from disseminating it to anyone who had not signed on to the license – someone who would

387
not have an obligation to the HapMap commons (ibid.). The Hap Map license also did not

allow conventional publication of the data (ibid.). The imposition of this last condition does

not exist any longer because it is believed that the database has reached a sufficient density to

be self-sustaining and to defeat subsequent patent claims (ibid.).

388
 3. The CAMBIA BiOS initiative, Canberra, Australia

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaboration with Collaboration with not-for profit public and private
NSW Agriculture, IRRI (The organization
Charles Sturt International Rice
University, Business Research Institute)
ACT, Finkel to advance the BiOS
Foundation. Initiative -
agricultural research
Open source web- focused on poverty
based collaboration alleviation and
platform to take hunger reduction.
CAMBIA’s pump- The venture
priming was catalyzed by a
technologies— 2.55M USD grant to
including CAMBIA from The
Transbacter Ministry of Foreign
a new generation Affairs of
GUS called Norway.
GUSPlus, and a
novel genetic
fingerprint
technology called
DArT— to the
public.

Profile

The Biological Innovation for Open Society (BiOS) initiative is a project developed by the

non-profit Centre for Application of Molecular Biology in International Agriculture

(CAMBIA) in Canberra, Australia. In essence, CAMBIA consists of three main areas:

 Intellectual property analysis via the Patent Lens, CAMBIA’s effort to provide the

world’s most comprehensive, and interactive mapping of life sciences technology

platforms and patterns of control so that scientists and innovators can acquire freedom

to operate

389
  Cooperative open access technology development through the Bioforge, Cambia’s web

based platform that serves as a cyberspace meeting place for peer development of

science

 Innovation system structural reform through the BiOS Foundation—the public policy

and advocacy branch of the BiOS initiative.

Bioforge created a robust peer accreditation (“karma”) system, and adapted the user interface

to the unique personal and professional needs of creative people in science, a culture quite

distinct from the “hacker” culture that spawned the original open source movement.

CAMBIA has also developed two “biological open source” (“BiOS”) licences: Plant Enabling

Technologies (“PET”) and Genetic Resources Indexing Technologies (“GRIT”); by translating

the concepts of open source to biotechnology and providing a standard template, open source,

biotech license, under which licensees are required to comply with three conditions:

1. Share with all BiOS licensees any improvements to the core technologies as defined,

for which they seek any IP protection

2. Not assert over other BiOS licensees their own or third-party rights that might

dominate the defined technologies

3. Share with the public any and all information about the biosafety of the defined

technologies.

CAMBIA has achieved some success in licensing a gene transfer technology called

“TransBacter” that can be used, instead of the costly “Agrobacterium”, for genetically

engineering plants. A grant back provision requires licensee to grant licensor rights to use or

390
own improvements or discoveries created using the technology. However, universities are

reluctant to adopt the BiOS license since the “grant back” structure differs from most copyleft

licenses (Hope 2008:317-318). The BiOS approach has limited its adoption due to concerns

over the definition of the technologies that must be granted back and technical concerns about

reporting requirements (ibid.). Based on technology protected by patents, CAMBIA’s existing

licenses are copyleft, but it has been suggested that the BiOS-licensed technology is akin to

GPL software due to the breadth of BiOS interpretation (ibid.). Indeed, an appropriate

definition of improvement is hard to formulate, and poses a major hurdle in translating open

source software licenses into patent based technology (ibid.).

391
 4. Diversity Arrays Technolgy (DART), Canberra, Australia

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaboration with private company private
Partnership with The CGIAR organisation
National ICT – CIMMYT to
Australia (NICTA) provide genotyping
for the development service for CIMMYT
of a datamining –based on the array
application using platform and more
Statistical Machine recently using
Learning novel DArTseq.
technologies for
genetic analysis and Partnership with
Genomic Selection ICRISAT to transfer
applications. DArT technology.

Partnership with
CIRAD to establish
DArT platform
supporting genetic
research and
breeding activities of
CIRAD through
provision of
DArTseq service for
a number of
important crops for
international
agriculture.

Profile

Genotyping technologies, developed to explore the human genome, have not been universally

relevant or applicable to agriculture (Killian 2006; Killian 2009:204). Cost, technical

constraints, and excessive centralisation of control and capital have prevented these

technologies from having a significant impact on plant-breeding and germplasm management

(ibid.).

392
Diversity Arrays Technology Pty Ltd, based in Australia, utilises diversity arrays technology

(DArT), a solid state-based method of DNA analysis, to analyze plant and animal genomes

with no prior DNA sequence knowledge of the organism(s) being investigated (ibid.). Inspired

by high-throughput technology platforms, the invention of DArT circumvented the limitations

of human-centred technologies and made high-throughput genotyping available for the benefit

of all types of genomic material (ibid.).

Licenses to patents and other forms of intellectual property are provided to members of the

DArT Network in a fair and equitable manner. DArT does not attempt to rely on exclusive

rights, but uses intellectual property rights to attract collaborators and partners rather than

restrict access to the technology (ibid).

Without the promise of exclusive licensing to investors, the DArT study case overcame the

difficulties of implementing open source via the use of chaordic system (the interface between

chaos and order) to find solutions, (ibid.) since systems are more creative when they face

challenges (ibid.).

Patented DArT technology is only one component of a package that includes other essential

components, such as (ibid.):

 The know-how in all aspects of the technology (wet science)

 The interaction with a number of microarray platform technology providers to develop

and test cost-effective consumables (consumables)

 The options for array printing and scanning and identified parts of the equipment

package to perform DArT assays in high-throughput (hardware)

393
  The analytical software designed around the workflow of DArT assays (DArT

software).

The business model of DArT focuses on collaboration and partnerships instead of fighting

competition (Andrzej 2009:209). This business model is essential during the early stage of

technology development (ibid.). The DArT licensing model relies on open source principles;

any improvements to the technology must be subjected to a grant back provision from licenses

(ibid.).

DArT demonstrates that open source is a viable commercial strategy (Overwalle 2009:452),

but it is not certain that it will work in the biopharmaceutical sector (ibid.). It is difficult to

hypothesise whether the DArT model will work in biopharmaceuticals, as each technology has

its own “specific constraints and opportunities” (Killian 2009:211). The best opportunities

arise for those who can find specific niches, such as in an area of limited financial opportunity,

where competition with mainstream companies would be less intense (ibid.).

394
 5. The equitable access license, Yale, USA

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Yale University had Concept Foundation not for profit public and private
given an exclusive used EAL to make
license to the technology available
pharmaceutical through equitable/
company Bristol- humanitarian
Myers Squibb licenses.
(BMS) to use the
patent on the HIV-
medication d4T
(Stavudine) based on
the EAL.

Profile

Generally heralded as a success story for differential pricing, generic competition has lowered

the price of antiretroviral therapy for human immunodeficiency virus (HIV) (Chokshi and

Rajkumar 2007; Medicin Sans Frontiere 2007). Nevertheless, even anti-retrovirals show the

evanescence of any progress that has been made and the debate is whether anti-retroviral

therapy is possible in resource-poor settings when there is a general need to strengthen health

infrastructure and provide comprehensive care (Chokshi and Rajkumar 2007; Kim and Farmer

2006). Without a comprehensive and lasting solution to ensure that patients pay less for

medicines, the world's destitute sick face a perilous disadvantage in accessing essential

medicines (Chokshi and Rajkumar 2007).

Research universities have considerable, untapped influence, and demonstrated that it is

possible to leverage ownership of intellectual property to improve access to medicines, by

virtue of their upstream contribution to the drug development pipeline, estimated at $19.6

billion in 2002 for the United States alone (Chokshi and Rajkumar 2007; Moses et al 2005).

395
Generic competition is the most effective mechanism for lowering prices. This was a critical

lesson from the first round of price reductions for anti-retroviral agents (Chokshi and Rajkumar

2007; Wainberg 2005).

Developed by Universities Allied for Essential Medicines, one example of an effective

licensing policy that would engender such generic competition is the Equitable Access License

(EAL). This is a non-exclusive, open licensing arrangement, that provides a means to capture

any downstream licensee improvements for the purpose of supplying developing-country

markets (Chokshi and Rajkumar 2007; Kapczynski et al 2005; Chaifetz et al 2007).

The EAL permits multiple producers to compete in these countries simply by notifying the

university and its licensee. However, this advantage may not be well-suited to certain

situations, such as biologics (e.g. vaccines and macromolecules, such as monoclonal

antibodies) and medical devices, which are subject to different scientific and technical

constraints from synthetic small molecules (e.g. anti-retroviral such as stavudine), and may

require different methods to ensure access (Chokshi and Rajkumar 2007).

The Concept Foundation (CF) is one initiative to make technology available through equitable/

humanitarian licenses. The Concept Foundation’s strategy has proved to be efficient, as it

partnered different public-private partnerships with pharmaceutical laboratories, and licensed

technology to manufacturers in many developing countries (Concept Foundation).

For example, Cyclofem, an injectable hormonal contraceptive, was made available to public

sector health services in 1993 and, since then, over 140 million doses of Cyclofem have been

manufactured and distributed by CF licensees worldwide. In addition, around 16 million human

396
immunodeficiency virus (HIV) rapid test kits have been distributed by CF licensees to public

sector health services worldwide (ibid.).

397
 6. Sage Bionetworks, Seattle, USA

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Colorectal Cancer The Cancer Genome not for profit public and private
Subtyping Atlas Pan-cancer
Consortium - a analysis working
collaborative effort group - an NCI
with the CRC initiated effort to
Subtyping collaboratively
Consortium derive a integrated
(CRCSC) to enable understanding of
open data sharing cancer by deriving
and meta-analysis insights across tumor
with the goal of types.
establishing a
consensus subtyping The CommonMind
model. Consortium - a
public-private
Accelerating partnership designed
Medicine Partnership to identify
in Alzheimer’s underlying
Disease - the AMP- pathobiology of
AD is a public neuropsychiatric
private partnership diseases.
designed to use
systems biology to
identify novel targets
for AD treatment.

Profile

Sage Bionetworks is a non-profit biomedical research organization supported through a

portfolio of philanthropic donations, competitive research grants, and commercial partnerships.

Research, training and the development of a commons platform are the themes that make part

of Sage’s mission to coordinate and link academic and commercial biomedical researchers

through a commons.

398
Sage Bionetworks drives its efforts on the idea that the best way to evolve necessarily crude

initial models of genomic innovation is to have them nurtured by a contributor network that

will evolve into an engine of human disease model building. Sage organization was created to

serve as the steward of the data and associated systems. The data is accessible and usable by

scientists worldwide interested in understanding disease (Sage resources are placed into a

digital commons).

The Initiative is built on standard legal agreements that are easy for scientists, software

engineers and lawyers to understand and use. The legal basis is the public domain that one can

achieve through simple waivers of database rights. This is the natural legal status of data in the

United States and many other jurisdictions. This approach echoes the legal status of the human

genome, SNP maps and other “big science” projects with which we expect integration to

become desirable--even essential-- over time. By using this approach Sage limits the scope of

integration to being a technical problem.

Sage has two fundamental goals. One is to ensure that the disease models are the best possible

and that they are accessible for widespread use and innovation. The Sage Initiative is an

effective, standardized way to assure that the legal rights required to make this happen are in

place. The second goal is to establish a pre-competitive position for human disease biology.

Human disease biology is so complex, interconnected, and expensive to research that the

existing dominant business strategies of building and patenting unique models need to be

replaced by a common standard. Like the internet, disease biology models will gain strength

by their very nature as public platforms for interoperability and communication--this approach

is at the very heart of that strength.

399
Sage is an important initiative that has committed more than $20 million (Pfizer, Merck),

government agencies (the National Cancer Institute, the Washington State Life Sciences

Discovery), and philanthropies (the CHDI Foundation). Stephen Friend, the founder of Sage,

says that the ultimate result would be more effective drugs, just as programmers contributing

open-source code can create better software. Recently, Atul Butte of Stanford University, Trey

Ideker of UC San Diego, Andrea Califano of Columbia University and Eric Schadt of Pacific

Biosciences have agreed to pool their raw experimental data and models on the connections

between genes, proteins, drugs, and disease states into a public database.

400
 7. The Synaptic Leap, North Carolina, USA

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Open collaboration not for profit public and private
in pilot research
communities
focusing on tropical
diseases (Malaria,
Schistosomiasis,
Toxoplasma and
Tuberculosis).

Profile

Launched by software engineer Ginger Taylor in November 2005, The Synaptic Leap (TSL)

was one of the first initiatives for open source drug discovery (Synaptic Leap). As an online

research community connecting research efforts for neglected tropical diseases, TSL currently

has over 2000 site visits per month, mostly by active scientists from universities worldwide

(Taylor 2008; Hope 2008:312).

Following the concept of Tropical Diseases Initiative (TDI), Taylor created a website where

volunteers use computer programs, databases, computer hardware, and TSL pages to host tasks,

such as searching for new proteins or finding chemicals to attack known targets. Volunteers,

including recognised academic research scientists with expertise in the relevant fields,

publicise discoveries and debate forthcoming research directions via chat rooms and bulletin

boards (Taylor 2008; Hope 2008:312.).

These communities prosper when a scientist volunteers to lead the community. The goal is to

get people collaborating openly on the projects they are working on. The community leader

should have an active project in the community, pull others in to participate, and also encourage

401
other scientists researching the disease to collaborate on their projects at TSL (Taylor 2008;

Hope 2008:312).

Although there are not many active projects, TSL has a novel structure for online discussions,

which prioritise a list of experiments that anyone can take on. Raw data can be posted online

and discussed. Members of the consortium solicit further ideas and expertise. Participants in

open source collaborations give up their ability to patent discoveries, by definition because

their data becomes public as soon as it is posted. However, some argue that, when it comes to

neglected diseases, there is nothing to lose because there was never any income to gain (Taylor

2008; Hope 2008:312).

402
 8. Centre for Drug Research and Development (CDRD), British Columbia, Canada

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
not for profit public and private
Collaboration with
Vancouver Prostate
Centre (VPC) to
accelerate the
discovery,
development and
commercialization of
anti-cancer
therapeutics

Collaboration with
MaRS Innovation
(MI)to share
expertise on projects
of mutual interest
with a goal to
advance and
commercialize early-
stage health-related
discoveries. The first
joint project arising
out of this
collaboration
involves technology
developed by Dr.
Paul Fraser (U of T)
and Dr. Bruce
Verchere (UBC),
who are investigating
amyloid aggregation
inhibitors as a novel
approach to address
the treatment of
diabetes.

Profile

Established in 2008 as national centre of excellence for commercialization and research,

CDRD guides early-stage discoveries that British Columbia’s academic and health researchers

403
make through the preclinical drug development process. The Federal Government and the

Province of British Columbia own the Centre, which is a non-profit organization.

To bridge the commercialization gap, CDRD attempts to “to advance early-stage health-

related discoveries through development so they can be quickly brought to the stage where

they can attract funding required for clinical trials” (Dakers:39). Collaboration, the essence of

CDRD’s business model, occurs among researchers, research institutions, government and

industry.

The goal of the CDRD model is to empower researchers to achieve their goals more easily. For

example, Dr. Sandra Dunn identified a protein necessary for cancer cell survival, but she lacked

an effective means to block it. This sort of research requires considerable expertise in

chemistry, therefore, Dr. Dun approached CDRD to advance her research to the next level. Dr.

Marco Ciufolini, the head of CDRD’s Division of Drug Design and Synthesis, worked with

Dunn to design an effective inhibitor based on the location of key amino acids in the newly

discovered protein and the two scientists in conjunction with Dr. Martin Gleave, Director of

the Prostate Cancer Centre, obtained a grant from the Canadian Institutes for Health Research

(CIHR). This grant enabled the next stage of development (ibid.).

Regarding commercialization, CDRD acknowledges that there are four main gaps that impede

it:

1. Academic research discoveries typically do not reach ‘investable’/commercial point

2. Early stage venture capital / angel funding is very limited (and diminishing)

3. Traditional granting sources are not sufficient

4. A bridge is needed to close the widening gap between discovery and

commercialization

404
Ventures Inc. (CVI) is the commercial arm of CDRD that aims to help the centre to overcome

impediments and become self-sustaining. CVI is structured as company with profits returned

to CDRD, and it acts as an interface between CDRD and industry through the in-licensing of

intellectual property generated from selected projects directly from affiliated institutions’

technology transfer offices or inventors. CVI is also responsible for the consideration of

technologies for in licensing as well as opportunities for strategic partnerships with

pharmaceutical and biotech companies to attract funding and advance promising technologies

through development.

It is important to notice that through CVI, CDRD intends to out-license its programs to

pharmaceutical or biotech partners or spun off as life sciences companies. The bold idea is that

out-licensing profits from CVI will flow back to CDRD to continue to support ongoing drug-

development projects, operations, facility improvements, and equipment renewals.

The management of intellectual property rights is part of an dual system where CDRD does

not make claims on original intellectual property and the ownership and management of these

rights remains with institutions, however the commercial arm of CDRD maintains control over

IP licensed/optioned and prosecutes it. CVI also performs FTO (“freedom to operate”) analysis

and IP due diligence prior to licensing a technology from the holder.

405
 9. Toronto's Medical and Related Sciences (MaRS) Discovery, Onatrio Canada

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
not for profit public and private
Partnership with
Market Readiness
Program (MRP),
Business Mentorship
and Entrepreneurship
Program (BMEP),
Investment
Accelerator Fund
(IAF) and National
Angel Capital
Organization – to
offer business
planning, sales and
marketing, financing
and funding strategy,
human resources,
financial
management,
accounting, tax, legal
and intellectual
property, product
development and
marketing, operations
and manufacturing,
customer relationship
management and
strategy
development.

Profile

The Toronto's Medical and Related Sciences (MaRS) Discovery District has the objective to

better capture the commercial potential of Toronto's $1 billion annual spending in science and

technology research. MaRS is a charitable private non-profit partnership owned by Ontario

universities, colleges, hospitals and research institutes; and private donors and all three levels

of government (they have contributed to its formation). Among MaRS’s mission, there four

406
important ones: to drive social and economic prosperity by leading Canada’s innovation

mission, to support the start-up of successful global businesses from Canada’s science,

technology and social innovation, to provides resources — people, programs, physical

facilities, funding and networks and to ensure that critical innovation happens.

MaRS investments are in different areas: advanced materials and engineering, cleantech,

renewable energy, energy efficiencies (devices and processes), clean water, life sciences and

health care and social innovation

MRP is a program funded by Ontario’s Ministry of Research and Innovation and delivered by

MaRS and the Ontario Centres of Excellence. It offers market research, educational resources,

mentoring and seed funding to innovative entrepreneurs in cities and regions across Ontario.

BMEP provides services and resources to high-potential technology entrepreneurs and assists

companies accelerate the process of taking innovative products and services to market.
 IAF

is an early-stage seed fund for Ontario technology companies and the National Angel Capital

Organization connects high-potential entrepreneurs with angel investors across Canada

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 10. Greencentre Canada (GCC), Onatrio Canada

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
partnerships with N/A not for profit public
Parteq Innovations
(Queen’s U – TTO),
Fielding Chemical
Technologies Inc.,
Ford Canada,
Nexcycle Plastics
Inc., Nova
Chemicals Corp.,
Veolia Water
Solutions &
Technologies – to
develop green
technologies such as
novel classes of
Green switchable
solvents and
surfactants, solvent-
handling systems,
inert atmosphere
glove boxes and
standard analytical
equipment.

Profile

GCC is a non-profit Centre of Excellence for Commercialization and Research created in 2009

through a Canada Excellence Research Chairs (CERC) grant. It has the mission to transform

green chemistry research breakthroughs into clean, sustainable products and processes. The

centre acts in the development of early stage technologies originating from Canada’s academic

research institutions by assuming the risks and costs of early-stage development and providing

the mechanism to significantly leverage investment. The core idea is to bring together Canada's

leading Green Chemistry researchers, industry partners, and commercialization professionals

with a common goal to develop cleaner, less energy-intensive solutions for traditional chemical

408
and manufacturing processes. PARTEQ Innovations, the technology commercialization office

of Queen’s University, owns GCC.

The areas of investment are in Green Chemistry, that is, the design and development of

chemical processes and products that reduce the use and generation of substances hazardous to

human health and the environment. GCC business model operates in four areas: 1) technical

and market assessment, 2) scale-up and testing to intellectual property protection, 3) business

management and 4) financial resources.

GCC is Canada’s first all-inclusive resource for linking industry problems with potential Green

solutions generated by researchers nation-wide. It provides expertise in technology

development, intellectual property protection, business development, marketing and financial

management, complemented with state-of-the-art facilities and expertise for product

development, scale-up manufacturing and testing of early stage discoveries.

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 11. Ocean Networks Canada (ONC) and Ocean Networks Canada Centre, British

Columbia, Canada

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
VENUS and N/A not for profit public
NEPTUNE (cabled
ocean observatories)
are national facilities
globally accessed by
scientists,
government, industry
and the public. The
VENUS and
NEPTUNE Canada
observatories use
innovative
engineering, data
communication and
sensor technologies
to gather continuous
real-time data and
images from the
ocean depths. Key
features of both
observatories are:
powered fibre-optic
cable laid along the
seafloor, connecting
key scientific sites;
seafloor nodes
supplying power and
two-way
communications;
multiple scientific
instruments and
sensors; and a
sophisticated data
management and
observatory control
system.

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Profile

Canada has two of world-leading ocean observatories which create opportunities for

commercialization, public engagement and applications to priority areas of public policy. The

Federal Government, Province of British Columbia and University of Victoria own the centres

which are non-profit organizations. They involve national consortia of university, government

and private sector partners led by the University of Victoria. ONC was created to build and

sustain global leadership in ocean science and technology.

ONC supports the applications of research to maximize economic and social benefits for

Canada and its international partners. ONCCEE’s commercialization efforts have been

initiated to demonstrate novel technologies on the VENUS and NEPTUNE Canada facilities.

It aims to position Canada as an international leader in the science and technology of cabled

ocean observation systems and to maximize the associated economic and social benefits. It also

promotes partnerships between the science and technology community and industry in the

fields of marine sensor technologies; ocean observing systems; and information

communication technologies. ONCCEE builds on strong private sector partnerships, focusing

its commercialization and engagement activities through innovative commercialization and

outreach programs. The idea is to provide opportunities for industry and other institutions to

use observatory resources and generate technologies for use in ocean exploration.

Collaborations with industry, institutions and government are key to the development and

success of ONC and essential for meeting its goals. More than $100 million in investments

made in the last four years in the capital construction of the two ocean observatories -

investments made by the governments of Canada and British Columbia in concert with the

University of Victoria and other partners.

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 12. The Innovation Partnership (TIP), Montreal, Canada

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
N/A N/A not for profit public

Profile

The International Expert Group on Biotechnology, Innovation and Intellectual Property

performed a seven-year study and identified “the need for an honest, independent broker that

can provide empirically-based expertise on how best to adapt intellectual property to the needs

of modern society.” As a result, TIP was established. McGill University hosts TIP, an

independent non-profit organization that aim is to foster innovation and creativity through the

better use of intellectual property and alternative vehicles for managing knowledge. TIP’s goal

is to facilitate innovation through the best use of intellectual property rights, that is, focusing

on granting the right amount of IP and better use of it through cooperation and collaboration.

The partnership resources come from IP scholars and contracts, and it has affiliations and

Partnerships with Canadian and international entities. It bases its business model is intellectual

property consultancy, and in particular, it engages in the following:

 Works with governments on how to improve their IP policies and stimulate innovation

and creativity while taking into account global realities

 Works with foundations and NGOs on how to develop governance structures and

internal policies that will facilitate and promote innovation and creativity

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  Works with universities, researchers and scientists on how to improve technology

transfer and dissemination while ensuring both social and economic benefits

 Works with national and international organizations on how to structure and implement

collaborative models, such as patent pools

 Works with developing country research and scientific organizations on how to

structure their IP policies and manage and negotiate collaborative research and its

outputs in a way that takes into account their particular needs

 Training courses on a wide array of topics, including basic intellectual property law,

licensing, corporate structure and business models, including open-science and other

access-oriented structures

 Training initiatives with our developing country partners to improve their

understanding, use and management of intellectual property and alternative vehicles for

managing knowledge

 Mentorship program with developing country partners that will link-up emerging

change-actors with experts in the region and from around the world.

Most interesting, TIP’s philosophy and recommendations emphasizes the use of “new” IP and

makes 6 important considerations to make this transition from “old” to “new” IP:

 Creation of Mechanisms to build and sustain trust among the various stakeholders

 Ensuring better communication among stakeholders

 Developing new models that stress collaboration

 Enriching scientific infrastructure (including human and social capital) in developing

countries

 Challenging myths of how IP contributes to innovation

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  Abandoning “just so” stories on intellectual property and innovation in favour of hard

fact

TIP gives some specific recommendation for governments, the private sector, media and

universities and patent offices. For governments, it suggests that they are key players in the

context of intellectual property and innovation, and they should take the lead in the following

activities:

 Pay at least as much attention to the environment in which innovation takes place –

including regulation of the health and environmental effects of biotechnology, the

independence of the judicial system, laboratory facilities, training and marketplace

regulation – as they do to IP.

 Encourage, financially and intellectually, the creation of independent trust builders to

mediate disputes and encourage dialogue between actors and provide training,

particularly to lower income countries.

 Support independent organisations to engage indigenous and local communities at a

grass-roots level in training on and policy development in relation to IP, the protection

of indigenous knowledge and methods to share that knowledge while respecting the

rights and autonomy of those peoples.

 Standardize the collection of important science and technology measures to permit

comparisons of different models of managing IP.

 work with industry, funding bodies and universities to develop a PPP to manage health-

related data to encourage collaborations and innovation (for Governments with public

health care).

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  Target the development of novel and sustainable business models and their

implementation.

According to TIP, the private sector should:

 Support the creation of trust builders and agree to submit disputes to them for

mediation.

 Support the work of trust builders in organizing workshops and training programmes

through which stakeholders can discuss and exchange views on IP policy.

 Establish an independent, non-profit technology assessment organization to evaluate

new biotechnology products and services originating in low and middle income

countries and by indigenous and local communities.

 Develop new and sustainable business models of developing, commercializing and

disseminating biotechnology products and services that are attuned to local needs and

conditions. This includes greater collaboration with public sector initiatives.

 Be transparent about the patents they hold and where they are registered, and

collaborate with patent offices in building publicly available databases of this

information.

TIP explains that the media has an important role and it should develop a science policy news

beat to facilitate general knowledge of science and technology issues and encourage coverage

of the role of science on economic and social welfare.

In what concerns universities and the scientific community, TIP recommend that they should:

415
  Establish clear principles relating to the use and dissemination of their IP that includes

ensuring greater access and the use of licensing provisions that make it easy to conduct

research and development on products needed by low and middle income countries.

 Develop new measures of the success of technology transfer, development and social

investment that correspond to social and economic return.

 Include (business schools) low and middle income country conditions and opportunities

in their curriculum and should develop programmes through which their students can

provide business planning assistance to low and middle income country entrepreneurs.

 Collaborate (universities in high income countries) with those in low and middle

income countries to create educational opportunities at the doctoral and post-doctoral

levels through which scientists maintain links with their countries of origin and conduct

research focused on the needs of those countries. Universities in high income countries

should encourage those of its professors from the Diaspora to assist their countries of

origin through supervision of students, joint research projects, conducting peer review

and so on.

 Analyse questions of IP within the larger context of IP and innovation systems. To do

so, they should use analytical tools that provide a broader, interdisciplinary perspective

on IP and innovation.

TIP makes some interesting recommendation for Patent Offices. It suggests that they should

collect patent-related information in a standard form and make this available to the public for

free. This data should include information that will assist in assessing patent landscapes in

targeted areas of technology (e.g. essential medicines) and on the type and major terms of

license agreements. Patent Offices should also establish policy branches to investigate ways to

416
make data more available, assist in patent landscaping and disseminate information about the

patent system.

417
 13. Science Commons, USA

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Neurocommons not for profit public
project is creating an
Open Source
knowledge
management
platform for
biological research.
Partners are
Creative Commons,
Semantic Web.
Pfizer and Biogen
both contributed
significant input to
early discussions,
and the system is
modeled part on a
service already in use
at Novartis, though
proprietary.

Profile

Science Commons was launched with the goal of bringing the openness and sharing that have

made Creative Commons licenses a success in the arts and cultural fields to the world of

science. Considering the current problems inherent to drug discovery, Science Commons

envision a solution through a virtual marketplace, or ecosystem, where participants share data,

knowledge, materials and services to accelerate research. They propose a Health Commons,

where standard, pre-negotiated, terms and conditions would make the following available

(ibid.).

418
 14. The Public Intellectual Property Resource for Agriculture (PIPRA), USA

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Partnerships with the not for profit public
International
Agriculture Research
(CGIAR) to build
patent pooling
models in order to
enhance freedom to
operate on research
benefiting
developing countries
agricultural
researchers and
farmers

Profile

The Public Intellectual Property Resource for Agriculture (PIPRA) supports innovation in

agriculture, health, water, and energy technologies. In collaboration with 50+ universities and

research centers and a pro bono attorney network, Pipra provides intellectual property rights

and commercialization strategy services to increase the impact of innovation, particularly for

developing countries and specialty markets.

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Appendix II: Brazilian Landscape of Biotech Companies and their
Collaborations

420
 1. Aché Laboratórios Farmaceuticos, Sao Paulo, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Joint venture with Partnerships: with Private company private
União Química and Zeller (Romanshorn,
Biolab to form Switzerland) for
COINFAR. development of three
Partnerships with the phytomedicines; with
UNICAMP for Laboratorios Silanes
synthetic compound (Mexico City) to
for type 2 diabetes, market medicines in
with University of different countries;
Santa Catarina for with University of
pharmacological and Geneva
toxicological studies (Switzerland) and
and with the University of
University of São Barcelona (Spain) for
Paulo for studies in a studies on plant
variety of areas. extracts of clinical
interest. Deal to
distribute cosmetic
products for
Beiersdorf AG
(Hamburg,
Germany). Joint
venture in planning
stage with a foreign
firm to construct a
factory for the
production of
biotech-based
medicines.

Profile

Aché is Brazilian laboratory (with 100% national capital). Aché manufactures and promotes

279 drugs, in 689 different versions, among RX, OTC and generic products. Licensing

agreements allow consolidating Aché’s brands in 11 countries in the Americas and Africa,

composing a portfolio of over 40 pharmaceutical formulations. Achievements include the

anti-inflammatory Acheflan® (Cordia verbenacea), the first 100% Brazilian drug, launched

421
in 2005, and Sintocalmy® (Passiflora incarnata), another phytotherapeutic product launched

in 2010, which is aimed at treating mild to moderate anxiety. The management comprises

pure innovation projects (radical and incremental research) and development initiatives.

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 2. Biocancer, Sao Minas Gerais, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Partnerships with Private company private
various hospitals, the
Ecoar Image Centre
and the Federal
University of Minas
Gerais (all based in
Belo Horizonte) for
conducting clinical
research.

Profile

Biocancer is clinical research organization with a focus on oncology. A growing tendency of

the pharmaceutical industry to outsource the clinical trials (which constitute the biggest slice

of the cost of developing a new drug) to low cost countries: Brazil is not only low cost but

has a large and diverse population, which allows Biocancer to recruit patients quickly and

with an ample specter of characteristics. Biocancer has a team of medical professionals

specialized in oncology that plan, organize and execute the clinical trials and solid alliances

with hospitals to ensure an agile patient recruitment process. Biocancer has a network with

pharmaceutical companies and agreements with key hospitals.

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 3. Biogene, Pernambuco, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Partnership with FK Partnership with Fort private company private
Biotecnologia for Doge Animal Health
developing human (Kansas City, KS,
visceral USA) to develop a
leishmaniasis diagnostic test for
diagnostic kit. leishmaniasis that
Partnership with can distinguish
Federal University of between leishmania-
Campina Grande infected and
(Campina Grande) vaccinated dogs,
for new brucellosis facilitating
and toxoplasmosis vaccination of dogs
diagnostic tests. to prevent human
Collaborative and transmission
co-development
efforts with the
Federal University of
Pernambuco
(Recife).

Profile

The Biogene is a technology-based company created within the molecular genetics laboratory

of the Genetics Department of the Federal University of Pernambuco. Scientists working on

the development of a diagnostic kit for canine leishmaniasis had the idea of transforming into

a product the results obtained in their research. Biogene is a private company launched at the

premises of INCUBATEP (Incubator Pernambuco State Enterprises). Biogene consists of

specialists in different fields focused on biotechnological production, such as biomedical

scientists, biologists, veterinarians working in the search for solutions in diagnosis, therapy and

prophylaxis of veterinary medical illnesses.

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 4. Biolab Sanus Farmaceutica, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Involved in two joint Collaboration with private company private
ventures; one with companies in
Aché and União Canada, Italy, Spain
Química called and Germany (details
COINFAR, which undisclosed).
focuses on radical
innovations, and the Co-marketing deal
other with Eurofarma with Astra Zeneca
and União Química for Crestor
called Incrementha (rosuvastatin).
(São Paulo), which is
focused on
incremental and
process innovations.

Collaborations with
Institute of Energy
and Nuclear
Research (São Paulo)
for Bandgel bandage
that enhances
treatment of burns
and wounds; Federal
University of the
State of São Paulo
and Paulista School
of Medicine (São
Paulo) for lead
compounds in phase
1 and 2; University
of São Paulo Faculty
of Pharmaceutics and
Biochemistry at the
University of São
Paulo for
bioequivalence and
bioavailability tests
of new
pharmaceutical
formulations; Centre
of Research and
Support in Human
Reproduction

425
 (Salvador) for co-
development of
Lovelle (desogestrel
combined with
ethinyl estradiol), a
hormonal vaginal
contraceptive pill.

Developed
Photoprot, a
photoprotector with
SPF 100 in
partnership with
UFRGS (Federal
University of Rio
Grande do Sul).

Profile

Biolab Sanus Farmaceutica Ltda., a pharmaceutical company, develops, manufactures, and

commercializes prescription medicines in the areas of cardiology, rheumatology, orthopedics,

general practice, pediatrics, endocrinology, geriatrics, and dermatology. It provides

pharmaceutical products; and dermocosmetics, including night and day cream gels, body

moisturizer emulsions, tonic lotions, foaming cleansers, eye contour serums, moisturizers,

body moisturizing cream gels, sunscreen body lotions, and shampoos. Biolab is the first

national pharmaceutical company synthesizing new molecules. In Biolab’s Center for RD&I,

the company is researching, designing and generating its innovation. There are more than 100

experts, among them masters and doctors, exclusively dedicated to biochemistry and the

finding of new drugs. Along with them Biolab partners with universities, the industry itself or

research centers.

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 5. Biomm, Minas Gerais, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaborations with Licensing agreement private company private
University of for tech-transfer and
Brasilia and setup of a
University of São recombinant human
Paulo for insulin
development of manufacturing
bacterial and facility with a
mammalian company from Saudi
expression systems. Arabia.
Collaborations with
University of Halle
(Germany) for
protein purification
and folding; with the
University of Miami
(Miami) to develop
biomaterials and cell
encapsulation
technologies; with
the University of
Oulu (Finland) and
the Shemyakin
Research Institute
(Moscow) for other
activities; with
equipment suppliers
for equipment
dimensioning and
specification, process
and equipment scale-
up simulations.

Profile

Biomm develops and licenses biotechnological processes for the production of active

pharmaceutical ingredients and other industrial applications in Brazil, Europe, North America,

and Asia. Its technology enables the production of recombinant human insulin. The company

develops processes for the production of insulin and other biotech products, as well as

427
processes for other industrial applications, such as enzymes that are used in the production of

biofuels. Its technology is also suitable for the production of therapeutic proteins, such as

calcitonin, interferons, and growth hormones.

428
 6. FK Biotecnologia, Porto Alegre, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaborations with a Partners in France private private
large Brazilian firm for nanotechnology,
(not disclosed) and in Canada for new
Nanocore (Campinas) immunotherapy
for new product diagnostics and in
development. Korea for cell
therapy.
Collaboration with
Federal University of Deal to market in
Rio Grande do Sul Brazil various
(Porto Alegre) for products for
development of Applichem
biotech products; (Darmstadt,
with the Center for Germany) and
Tumoral PARTEC (Munster,
Immunology, Germany).
Immunotherapy and
Immunodiagnostics
(Porto Alegre),
Hopital de Clínicas
de Porto Alegre for a
clinical trial of a
prostate cancer
vaccine.

Partnership with
Oswaldo Cruz
Foundation (Rio de
Janeiro) to develop
public health assays,
including tests for
dengue,
leishmaniasis,

Profile

FK Biotecnologia SBrazilian company ctive in research, development and innovation on

human immunodiagnosis and autologous anticancer vaccine. FK Biotec the first Brazilian

biotech company to receive risk capital. The company acts as partner/collaborator of

429
Nanobiotechnology National Institute( UnB), National Institute of Medicine Translational

Research (UFRGS) and CABBIO Project (Brazil-Argentina Biotechnoly Center) through

CNPq.

430
 7. Nortec Quimica, Rio de Janeiro, Brazil

Examples of Examples of Foreign Corporate Type Funding Source

National Collaboration
Collaboration
Collaborations with Collaborations with private private
Cristalia (São Paulo) Profarmaco (Milan)
to develop APIs; on- in joint-venture to
going partnership manufacture active
with Farmanguinhos pharmaceutical
(part of Fiocruz ingredients (API);
based in Rio de with Rhodia (Paris) to
Janeiro) to develop market and provide
new molecules technical services for
including API. Deal with
antiretrovirals and Albemarle
those for neglected (Richmond, VA,
diseases, as well as USA) to distribute an
transfer of API in Brazil.
technology for
production of statins; Collaboration with
with Federal World Health
University of Rio de Organization
Janeiro for (Geneva) resulting in
consulting services export of
related to chemical anthelmintic
synthesis. diethylcarbamazine
(anti-filariasis drug)
and with the Clinton
Foundation (Little
Rock, AR, USA) to
manufacture the HIV
drug dideoxyinosine.

Profile

Nortec is a Brazilian company that manufactures, sells, and exports active pharmaceutical

ingredients in Brazil and internationally. The company offers adrenergic/vasoconstrictors,

antienvenenamento agents, analgesic/anti-inflammatory drugs, anesthetics, antihipertireoidal

products, antihistamines, anti HIV products, antioxidants, antiprotozoals, antivirals, and

benzodiazepines. It also provides bronchodilator/decongestant products, cardiovascular

drugs, central nervous system drugs, and osteoporosis.

431
 8. Uniao Qumica

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Joint venture with N/A Private company private
Aché and Biolab to
form COINFAR.
Collaboration with
Universidade Federal
do Rio Grande do
Sul (Porto Alegre)
for development of
nanoparticles and
UNIFESP for
generics
bioequivalence
studies.

Profile

União Química is one of Brazil’s biggest pharmaceutical companies. Its three state-of-the-art

factories and 2,000 employees manufacture 570 successful products, marketed with 400

brands, in the contraceptive, animal health, over-the-counter and ophthalmology segments.

With 600 representatives distributing its drugs via 98% of Brazilian outlets, União Química is

ranked 10th nationwide in unit sales. Recently, União Química discovered an anticoagulant

that proved very effective in the treatment of melanoma, as well as pancreatic, lung and kidney

cancer metastasis. The company hopes to fast-track clinical approvals and have the product

onthe market soon.

432
 9. Coinfar, Sao Paulo, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaboration with Collaboration with Private company private and public
Centre for Applied US universities
Toxicology at (undisclosed) to
Butantan Institute advance safety and
(São Paulo) for efficacy testing of
production of lead molecules.
EVASINS
(endogenous
vasopeptidase
inhibitors), venom-
based hypertension
drug and other toxin-
based drugs for
blood clotting,
cardiovascular
system, pain
perception and
immune suppression
in preclinical trials.
Investment in an
early-stage drug
development facility
with University of
Minas Gerais for
cardiovascular
disease and cancer.
Collaborations with
the University of
Santa Catarina
(Florianópolis),
University of São
Paulo, University of
Brasilia, University
of Campinas for
efficacy and safety
testing of various
molecules.

Profile

Coinfar is a collaboration between three Brazilian pharmaceutical companies: Biosintética

(now part of Aché), Biolab and União Química. The company's business model is to focus on

433
the discovery and development of drugs until clinical phase 1 or phase 2 and then license them

out for further development. COINFAR has had significant investments from both public and

private sources. From 2002 to 2006, the company received $6 million from its shareholders;

between 2005 and 2006, it received $2 million in government funding for joint projects with

universities. Plans are in the works to invest a further $1.6 million on prospecting activities for

new molecules in the coming year; the company has numerous partnerships with various

universities and is expanding its efforts to forge further collaborations both in Brazil and

abroad.

434
 10. Katal Biotecnologia, Minas Gerais, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Partnerships with the N/A Private company Private and public
Federal University of
Minas Gerais
(UFMG, Belo
Horizonte) and
University of São
Paulo (USP, São
Paulo) for
development of tests
for Chagas disease,
rubella, herpes
simplex viruses 1 and
2, cytomegalovirus.

Partnership with
UFMG for
development of
technology for
macromolecular
stabilization (for
example,
glycoproteins);

Partnership with
Federal University of
Porto Alegre
(FEPPS) to develop a
less expensive TB
test kit for public
health.

Partnership with the

University of São
Paulo for oxidized
low-density
lipoprotein, a
sensitive marker of
cardiac disease.

435
Profile

Katal was created within the incubator of Biominas in the state of Minas Gerais . It operates

in the production of diagnostic kits for thyroid hormone, pregnancy test, prostate cancer

andothers. The incubator since 1998, the company recorded a hundred thousand in cash in

1999.

436
 11. Silvestre Labs, Rio de Janeiro, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Deal with Farmasa Collaborations with not for profit public
(São Paulo) to Interchem (Paramus,
promote and NJ, USA) to help
distribute Dermazine, launch its
Dermacerium and Dermacerium and
GinoDermazine (1% ExtraGraft products
silver sulfadiazine). in the US; with the
University of South
Collaboration with Florida (Tampa, FL,
Federal University of USA) and Gamete
Rio de Janeiro, Center at University
University of São of Michigan (Ann
Paulo, Federal Arbor, MI, USA).
University of São
Paulo, UNICAMP
for the development
and exchange of
projects.

Profile

Silvestre Labs is a pharmaceutical technology based company dedicated to the research and

development of innovative products in the segment of human health. It is installed in Polo

Biotechnology of Rio de Janeiro (BIO-RIO) at the Federal University of Rio de Janeiro

(UFRJ). Silvestre Labs has close cooperation with research institutes of this and other

universities in Brazil and abroad. The research focuses on cosmetic and dermatological

pharmaceuticals.

437
 12. Recepta Biopharma, Sao Paulo, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaborations with Collaborations with private company public and privare
University of São Interchem (Paramus,
Paulo School of NJ, USA) to help
Medicine for launch its
immunohistochemical Dermacerium and
assays; with Sírio ExtraGraft products
Libânes Hospital (São in the US; with the
Paulo), Clinical University of South
Hospital of University Florida (Tampa, FL,
of São Paulo, the USA) and Gamete
Brazilian Institute for Center at University
Cancer Control (São of Michigan (Ann
Paulo), Baleia Arbor, MI, USA).
Hospital (Belo
Horizonte), Clinical
Hospital of the
Federal University of
Minas Gerais and the
National Cancer
Institute (Rio de
Janeiro) for
conducting clinical
research on the
company’s
monoclonal
antibodies.

Ludwig Institute is
both a shareholder
and a development
partner..

Profile

Recepta Biopharma is a biotechnology company dedicated to the research and development of

monoclonal antibodies to be used in the treatment of cancer. The company is a funding a

laboratory at the Butantan Institute and its principal scientific partner is the Ludwig Institute

for Cancer Research (LICR), headquartered in New York, that has licensed to Recepta the

438
intellectual property rights of four antibodies with demonstrated potential for use in the

treatment of several types of cancer. Recepta is dedicated to also generating new antibodies for

clinical use.

439
 13. Hebron Farmaceutica, Recife, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaboration with Collaborations with private company private
the Antibiotics Interchem (Paramus,
Institute from UFPE NJ, USA) to help
(Federal University launch its
of Pernambuco) for Dermacerium and
development of two ExtraGraft products
of its drugs (Florax, a in the US; with the
suspension of University of South
Saccharomyces Florida (Tampa, FL,
cerevisiae; and USA) and Gamete
Giamebil, a Center at University
hydroalcoholic of Michigan (Ann
extract from the Arbor, MI, USA).
Mentha crispa plant).

Partnership with
Oncology
Department of São
Paulo School of
Medicine and São
Paulo Federal
University for
development of
Imunoglucan.

Partnershiop with
Pharmacy
Laboratory at UFPE
for development of
Kronel.

Partnership with
UNICAMP to
develop Prostokos
(mesoprostol) as a
labour inducer.

Profile

Hebron performs research, development, manufacture, and distribution of pharmaceutical

products in Brazil. The company primarily focuses on pediatrics, internal medicine,

440
gynecology, and cardiology areas. It also offers cosmetics, such as sunscreen lotions,

shampoos, and conditioners, as well as liquid soaps for personal hygiene of women. In addition,

the company provides phytomedicines for diabetes, cholesterol, ulcers, and organic defenses,

as well as against HPV virus.

441
 14. Pele Nova, Sao Paulo, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaborations with Collaborations with private company private
University of São Interchem (Paramus,
Paulo for pre-clinical NJ, USA); with
animal models for Saneron CCEL
proof of concept and Therapeutics for
assessment of development of
therapeutic activity clinical trials using
of the company’s umbilical cord blood;
Biomembrane with the Texas Heart
product and with the Institute (Houston)
University of for the development
Campinas to test of cell therapy
dermatological procedures.
applications of active
protein for cutaneous
permeation
evaluation.

Profile

Brazilian private research company focused on tissue regeneration. In March 2012 Valeant

Pharmaceuticals International, acquired a 19.9% minority equity investment in Pele Nova.

442
 15. Cryopraxis, Rio de Janeiro, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Collaborations with N/A private company private
Federal University of
Rio de Janeiro and
several hospitals for
clinical trials using
standardized
mononuclear stem
cell formulations and
Universidade Federal
Fluminense (Niterói)
for experimental
research on cellular
differentiation in
animal models.

Profile

Cryopraxis is dedicated to stem cell and tissue banking and is a global leader in cellular

therapeutic development primarily utilizing stem cells harvested from bone marrow and cord

blood. As the largest umbilical cord blood bank in Brazil, Cryopraxis operates one of the

largest cryogenic storage facilities in the world. Cryopraxis offers cord blood banking

throughout the nation of Brazil and it has an exclusive license agreement with Cryo-Cell to

market their C'elle service for banking stem cells from menstrual blood.

443
 16. Eurofarma, Sao Paulo, Brazil

Examples of Examples of Corporate Type Funding Source

National Foreign
Collaboration Collaboration
Partner in Collaboration with private company private
Incrementha, a joint Laboratorio Pablo
venture with Biolab Cassara (Buenos
and União Química Aires) and Jurox
dedicated to (Rutherford,
development of new Australia).
products and
technologies using Joint venture with
nanoparticles and Edol Laboratory
solubilization of (Linda-a-Velha,
insoluble molecules. Portugal) called
Themaxis;
Collaborations with
Inova Biotecnologia In-licensing products
Saude Animal from Almirall
(Juatuba). (Barcelona, Spain),
Faes Farma
Colaboration with (Madrid), Astellas
the State University Pharma (Tokyo),
of São Paulo Bioderma (Lyon
(UNESP) for Cedex, France),
development of a CIMAB (Havana,
topical antifungicide Cuba) and DevaTal
and antibiotic, with (Hamilton, NJ, USA)
UNIVALI for technology
(Universidade do transfer of
Vale do Itajaí, Itajaí) recombinant
in Santa Caterina for Filgrastim and a
an oral analgesic, number of other
with Federal products.
University of São
Paulo (USP), Co-development of a
UNICAMP (State novel monoclonal
University of antibody against
Campinas). Working EGFR for solid
with some Brazilian tumors with an
universities to international partner.
develop new herbal
medicines using
Brazilian
biodiversity.

444
Profile

Eurofarma is Brazilian laboratory in the production and marketing ofmedical prescription,

veterinary, and over-the-counter drugs. It also offers medicines for hospital use, which include

antibiotics, anesthetics, antifungals, antivirals, uterine stimulants, exchange resins, anti-ulcer,

anti-inflammatory, and anticoagulant drugs; and serums in bags and jars.

445
Appendix III: Map of the Main Brazilian and International actors who
populate the Existing Regulatory Regimes in Biotechnology and IPRS

446
Brazilian Actors

Government Bodies

 Brazilian National Institute of Industrial Property

 Brazil's National Health Surveillance Agency

 Brazilian National Bank of Development

 Brazil's Council for Economic Defence

 Brazilian Ministry of Science and Technology

 The Brazilian Innovation Agency

 São Paulo Research Foundation

Federal Research Organizations

 Brazilian Agricultural Research Corporation

 Fundação Oswaldo Cruz

NGOs

 Centre for Technology and Society

 ABIA AIDS

Political Parties

 Brazilian Social Democratic Party

 Brazilian Labour Party

 Brazilian Liberal Party

 Brazilian Democratic Movement Party

447
International Actors

NGOs

 Access to Knowledge Movement

 Knowledge Ecology International

 Medecins Sans Frontieres/ Doctors Without Borders

 Consumer Project on Technology

 Tropical Diseases Initiative

International Organizations

 Convention of the Parties on the Convention Biological Diversity

United Nations Latin American Economic Commission

 Pan American Health Organisation

 Consultative Group on International Agriculture Research

 United Nations Conference on Trade and Development

 World Health Organization

 World Intellectual Property Organization

 World Trade Organization

 European Commission

 European Patent Office

 Organisation for Economic Co-operation and Development

 International Association for the Protection of Intellectual Property

 Biotechnology Industry Organisation

 International Federation of Intellectual Property Attorneys

 Generic Pharmaceutical Association

448
  Health Action International

 International Centre for

 International Intellectual Property Alliance

 International Federation of Pharmaceutical Manufacturers & Associations

 United Nations Economic Commission for Europe

 GlaxoSmithKline

 Merck

 Novartis

Organizations at National Level

 United States Food and Drug Administration

 United Sates Food and Agricultural Organization

 United States National Institutes of Health

 United Sates National Centre for Biotechnology Information

 US Advisory Committee for Trade Policy and Negotiation

 Japanese Patent Office

 US International Trade Commission

 Pharmaceutical Research and Manufacturers of America

 Pharmaceutical Manufacturers Association

449
 Appendix IV: Interviewees

Frederico Cezar de Araujo, Brazilian Diplomat

Ricardo Koboldt de Araujo, Brazilain Lawyer and Law Professor

Jorge Ávila, President of the Brazilian National Institute of Industrial Property (INPI)

Dario F. G. de Azevedo, Professor at Faculty of Engineering Pontifical Catholic University of

Rio Grande do Sul

Sara Boettiger, Intellectual Property Analyst at the Public Intellectual Property Resource for

Agriculture

Denis Borges Barbosa, Brazilian Lawyer and Law Professor

Samir Brahmachari, Director General of India’s Council of Scientific and Industrial Research

(CSIR)

Brett Braillie, Cambia Research Scientist and Patent Researcher (2006)

Paulo Caliendo, Brazilain Lawyer and Law Professor

Rob Carlson, Professor of biosynthesis on open-source biology

450
Marcus Faro de Castro, Professor of the Faculty of Law/ University of Brasília (UnB)

Claudia Chamas, Senior Advisor of the Secretariat of Science and Technology and Strategic

Inputs (FIOCRUZ)

Margaret Chon, Professor at University of Seattle

Drew Endy, Assistant Professor in the Department of Bioengineering at Stanford University

Robin Feldman, Professor of Law and Director, Law & Bioscience Project- U.C Hastings

College of the Law

Janet Hope, Centre for Governance and Knowledge Development (CGKD) Australian National

University

Joseph Porter Jackson III, president of the Network for Open Scientific Innovation

Ramunas Janavicius, Vilnius University Dept. of Human and Medical Genetics

Richard Jefferson, Center for the Application of Molecular Biology to International Agriculture

CEO

Osmat Azzam Jefferson, Center for the Application of Molecular Biology to International

Agriculture Principal Scientist

451
Calestous Juma, Professor of the Practice of International Development Director, Science,

Technology, Globalization Belfer Center for Science and International Affairs- Harvard

Kennedy School

Andrzej Kilian, Diversity Arrays Technology Pty Ltd. Director

Fernando Kreutz, Medical Doctor with a PhD in biotechnology and founder of FK Biotec

Ronaldo Lemos, director of the Center for Technology & Society (CTS) at the Fundação Getulio

Vargas (FGV) Law School in Rio de Janeiro

Xuan Li, Coordinator of Innovation and Access to Knowledge Programme (IAKP), South

Centre

Muriel Lightbourne, Legal Manager at GEVES (INRA)

Michel Lotrowska, Campaigner with MSF

James Love, Director of Knowledge Ecology International

Pedro Mizukami, Researcher at of the Center for Technology & Society (CTS) at the Fundação

Getulio Vargas (FGV) Law School in Rio de Janeiro

Pedro Paranaguá de Moniz is a project leader of the Center for Technology & Society (CTS) at

the Fundação Getulio Vargas (FGV) Law School in Rio de Janeiro

452
Carlos Morel, MD, DSc, Director, Center for Technological Development in Health (CDTS),

Oswaldo Cruz Foundation (Fiocruz)

Shoko Okada, Center for the Application of Molecular Biology to International Agriculture IP

Analys (2005)

Carlos Affonso Pereira de Souza, Vice-Coordinator of of the Center for Technology & Society

(CTS) at the Fundação Getulio Vargas (FGV) Law School in Rio de Janeiro

Carlos Pio, Professor at the Institute of International Relations of the University of Brasília

(UnB)

Marie Connett-Porceddu, Center for the Application of Molecular Biology to International

Agriculture Deputy Chief Executive Officer (2005-2007)

Greg Quinn, Cambia Informatics Consultant (2005)

Marli Elizabeth Ritter dos Santos, Coordinator of the Technology Transfer Office of the

Pontifical Catholic University of Rio Grande do Sul

Carolina Roa-Rodriguez, IP Manager at the International Maize and Wheat Improvement Center

Judit Rius Sanjuan, Staff Attorney for Knowledge Ecology International

Sérgio Amadeu da Silveira, Political Scientists and former Director-President of the Brazilian

453
National Institute of Information Technology

Pamela Silver, Professor of Systems Biology at Harvard Medical School

Leon Smith, CAMBIA Lab Technician (2005)

Ginger Taylor, Synaptic Leap (TSL) founder

Matthew Todd, Leader of the Todd research Group at the School of Chemistry - University of

Sydney

Juliana Vallini, International Advisor - Secretariat for Health Surveillance, Ministry of Health,

Brazil

David Vaver, Emeritus Fellow of St Peter's College and former Director of the Oxford

Intellectual Property Research Centre

Eduardo Viotti, Legislative advisor for scientific and technological policies to the Brazilian

Senate, and Associate researcher and lecturer at the master program on Policy and Management

of Science and Technology, Center for Sustainable Development, University of Brasilia,

Brasilia, Brazil

Wei Yang, Center for the Application of Molecular Biology to International Agriculture IP

Analyst (2005)

454
Peter Wenzl, Diversity Arrays Ttechnology Pty Ltd. Principal Scientist

Jonathan Zittrain, Professor of Internet law at Harvard Law School and a faculty co-director of

Harvard's Berkman Center for Internet & Society

455
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