marcel poppe's picture
Does it fits in a free market economy that seeds of major food crops can be patented and cause a monopoly situation?

A:Expert Answer

Whether patents, or other intellectual property (e.g. copyrights), that create a monopoly in the invented item fits within a free market economy is a debate in which political economists have been engaged for a long time.  The Founders of the United States engaged in this debate too with some opposed to allowing a monopoly in anything and others, on utilitarian grounds, supporting the creating of a monopoly through intellectual property rights.  Ultimately the Founders decided in favor of intellectual property rights and adopted into the United States Constitution the following provision:

 

Article 1, Section 8, Clause 8, Patents and Copyrights.

 

“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

 

The United States Constitution explicitly recognizes a monopoly – “ ... securing for limited Times to ... Inventors the exclusive Right to their respective Writing and Discoveries.”  Regarding patents, the limited time for that exclusive right is twenty years.

 

Thomas Jefferson, who was not present at the Constitutional Convention in 1787, initially opposed this provision on patents and copyrights.  But in the early 1790s Jefferson changed his mind as the history of U.S. patents shows.  Indeed, Thomas Jefferson became the first commissioner of patents and drafted the first laws about patents and the U.S. patent office.

 

What convinced the Founders to adopt a patent provision that allows a limited time monopoly?

 

The answer appears to be an intuition that limited time monopoly through patent rights spurs inventiveness and creativity.  These Founders wanted the citizens of the United States to be inventors and creators of new knowledge and technology.  These Founders decided that by offering a limited time exclusive right (a monopoly) the United States government would be providing an incentive to its citizens to spend the time, money, and effort to invent and create.  During the monopoly period, these citizens, including legal entities such as corporations, would be able to recover their investment and make a profit.  Once the limited time ends, these inventors and creators then would face the competition of the free market.One addition to the information in the preceding paragraph must be made and emphasized.  An inventor cannot gain the patent monopoly without disclosing information about the invention and describing it sufficiently so that others skilled in the same subject matter are able to learn from and duplicate the invention.  In other words, the United States grants an inventor an incentive to invent but only so long as that inventor also expands the common knowledge and technical skills of everyone.

 

Yes, for the period of twenty years, the inventor has an exclusive right to “their respective” invention.  During that period, others must seek a license (permission) from the inventor to use, make, sale, export, etc. the invention.  In the licensing of the invention, the free market has significant impact in setting the terms of the license.What has been described in this answer is called the “patent bargain” – the utilitarian explanation of why the Founders decided to allow a limited time monopoly within our free market system.

 

The debate about the Founders decision to protect intellectual property rights has continued since the United States came into being in 1789.  During some historical periods, Americans have favored intellectual property rights strongly; during other historical periods, Americans have disfavored intellectual property rights.  But at no time in American history has there been a serious attempt to amend or to repeal Article 1, Section 8, Clause 8.

 

American society has consistently affirmed the Founder’s intuition (the patent bargain) as expressed in the constitutional provision on patents and copyrights.  As a consequence, America has been at the forefront of invention and creation from 1789 until today.

 

For a fuller explanation of the history of the Patents and Copyrights clause and discussion of the patent bargain, you may view a video (18 minutes) made in January 2013 by the author of this answer for the Institute of American Constitutional Heritage of the University of Oklahoma.  http://freedom.ou.edu/freedom-101-2-ep-9-intellectual-property-freedom/ 

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Comments

WillingToListen's picture

But farmers don't have to buy GMO seed, right? They can buy traditional seeds all they want (which I believe are also made by the seed companies). And patents only last so long, after that they are fair game. Should we just get rid of the patent system? Why is this different than patenting computer parts, machine parts or pharmaceuticals?

WheatLover's picture

In addition to what WillingToListen said, patents help ensure a return on investment (ROI) to the creators of new products. Developing/innovating a new product is not a cheap process and without a patent to protect them a competitor could come along, study the product, then produce an exact duplicate that they could bring to market for 1/3rd the cost it took the original company to develop it. At that point not only can the competitor produce an identical product, but they can bring it to market at a reduced price, and when quality is equal people will always buy the cheaper product. And if the original producer can't make a profit off their product, why bother spending the resources to develop it in the first place? That's why patents are good for free market economies, they help to promote innovation by securing the inventor's profit from the sale of their design.

There is some flexibility in patent laws that allows for competitors to produce similar (but not identical) products, but this is again good for free market economies because this encourages competition, thus giving the consumer a choice about which product to buy.

marcel poppe's picture

This is in the first place going about the monopoly position that is created through patents and in is this specific case on food crops and seeds of food crops. Finally it concerns the base of our foodproduction in general. Unfortunately small seed breeders are bought up by wealthy multinationals or forced out of the market so that farmers get less and less choices. On top of this patentholders can refuse a license or ask a price that small seed breeders can't afford. In this way they reinforce their already predominating market position. The difference between patents on computer parts, machine parts and pharmaceuticals and patents on food crops and seeds is that food is a human right. A comparison between computer parts, machinen parts and seeds and food crops is then not correct and of a different order. Phamaceuticals are also part of human rights and patents on these are for sure questionable. Therefore it is important to discuss this topic.

WheatLover's picture

On the part of your concern that large seed companies are conducting business practices to establish monopolies, I suggest that you study U.S. antitrust laws. Here is a good place to start.

http://www.justice.gov/atr/about/antitrust-laws.html

When studying the antitrust laws, keep in mind that the laws are designed to protect the consumer from the high prices that could result from a monopoly, not to protect other businesses.

Community Manager's picture

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