San Diego Law Review

Library of Congress Authority File


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This Article enters this debate and argues the following position. Assuming that antitrust authorities persist in certain strategies to impede patent consolidation, the recent introduction of patent rights for certain biotechnological innovations is likely to encourage private investment in the genetic commons and reduce (or, at least, not enhance) the accessibility costs that could stunt technological advance. To reach this conclusion, this Article shows that the two leading theories of patent protection, the "incentive" theory7 and the "prospect" theory,8 do not explain private industry's willingness to sink significant investment capital into highly uncertain biopharmaceutical projects. These theories offer insufficient explanations because patent protection for biopharmaceutical innovations is substantially incomplete and generally covers only a small portion of a particular innovation's technological yield. Both the incentive and prospect theories falsely predict that the appropriability gap would drive away private investors from biotechnology projects that appear to generate a large stream of unprotected, or "giveaway," benefits. In contrast, this Article argues that this imperfect form of patent protection attracts private investment in uncertain research projects by reducing two information asymmetries that impede interfirm ventures capable of efficiently spreading the high risk of biopharmaceutical product development. At the same time, the imperfect character of patent protection reduces (or, at least, does not enhance) accessibility costs by encouraging individual firms to capture the unprotected portion of an innovation project's expected yield by entering into interfirm research, marketing, or production alliances.