The Ripple Effect of Intellectual Property Policy : Empirical Evidence from Stem Cell Research and Development

Dramatic shifts in intellectual property in recent years have created an intense debate over their potential impact on research and development. While some commentators believe that game-changing legal decisions will only carry limited impact on research and developments, others have argued that such legal shifts may increase the chilling effect of uncertainty on research. This Article adds to this debate by providing empirical evidence of a ripple effect of intellectual property policy changes. The Article focuses on stem cell research as a case study. This is a highly promising, yet controversial line of research, embedding ethical, legal, and financial dilemmas, leading to frequent policy changes and legal uncertainty. The Article tracks changes in U.S. and European policies pertaining to patent rights and public funding and examines their impact on research and development. We report the findings of a comprehensive empirical study of stem cell patent applications filed between 1990-2013 in the U.S. Patent and Trademark Office, the European Patent Office, and through the Patent Cooperation Treaty. Our findings indicate that a 2004 European decision, holding that human embryonic stem cells are not patentable in the European Patent Office, had a broad effect on patent filing in the entire stem cell field, extending to non-embryonic stem cell inventions. At the same time, changes in American stem cell federal funding policies did not influence stem cell research as dramatically. These findings are particularly striking as they shows that game-changing decisions pertaining to intellectual property may cause an impact that is broader and wider than their intended scope. The findings indicate that local patent regulation may have a global effect on patent activity extending to research and development in other countries, and an extensive effect, exceeding its intended scope. The findings also suggest that legal uncertainty may cause a chilling effect on private investments in research and development, and that intellectual property policy has a differentiated impact, affecting the private and the public sectors differently. Collectively, we call these outcomes the ripple effect of intellectual property policy. The ripple effect of intellectual property policy calls for caution among judges and policymakers in making sharp policy shifts, since such shifts may involve some unintended consequences for research and development