In the USA, IPR protection for plants can be secured through utility patents or PVPCs under the PVPA of 1970. A crucial difference between these two modes of protection concerns the so-called RE: PVP certificates allow it, whereas patents do not. When innovation is sequential and cumulative, as in plant breeding, the economic implications of the RE are not completely understood. The simple model and preliminary analysis presented in this chapter suggest that the RE inevitably weakens the ex ante incentive for private firms to innovate. Although this chapter does not explicitly consider the welfare implications, from society's perspective, of the two modes of protection analysed, the private incentive effects that have been uncovered allow some interesting conclusions. When R&D costs are low, relative to the potential returns, the reduced incentives may be immaterial, and the RE may be desirable because it ensures a larger pool of innovators for follow-up inventions. But when research is relatively costly and/or risky, as is arguably the case with pre-breeding germplasm development, an IPR system centred on the features of standard PBRs (i.e. allowing for a fairly liberal RE) does not deliver the desired innovation incentive for private firms.
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