Intellectual monopoly capitalism and the privatization of knowledge

The year 1980 represents an inflection point for public knowledge privatization in the United States and even beyond considering its global hegemony. That year the Bayh-Dole Act authorized academic institutions to patent public-funded research results and to transfer this knowledge to private firms by providing exclusive licenses or creating joint ventures (Berman,

2011; Bok, 2003; Mowery, 2005; Orsi & Coriat, 2006). It meant that universities became entitled to economically profit from their research and eventually led to the creation of technology transfer offices (TTOs) in every US university (Merrill et at, 2004). According to Angell (2004), the Bayh-Dole Act not only favoured spin-off biotechnology companies, but also (and primarily) big pharmaceuticals working with universities. In 1965, research areas connected with the pharmacy industry had 15% of total university patents in the USPTO, rising to 35% by 1988 (Mowery, 2005).

The Bayh-Dole Act was one of a series of critical elements of a general US policy aimed at strengthening intellectual property rights (IPRs) globally (Mowery, 2005; Pestre, 2003). It was coupled with many court decisions that further strengthened the IPRs system in the following years (Berman, 2011; Mowery, 2005). The time span of IPRs was extended; more severe sanctions for infringements were introduced, and the definition of what IPR could protect was expanded widely to include living beings, software and architectural work. As Orsi and Coriat (2006) explain, the Bayh-Dole Act contributed to transforming US knowledge advantage in pharmaceutical and computing science into a market advantage, while the right to patent generic knowledge excluded rivals. Altogether, these transformations reinforced US supremacy on top of which they paved the way for intellectual monopoly capitalism (see Chapter 4 for a deeper analysis of US policies contributing to the emergence of intellectual monopoly capitalism).

The concentration of legal intellectual rents was benefited by the international strengthening of IPRs, which formally began in 1995 with the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement. For Dreyfuss and Frankel (2014, p. 459), TRIPS not only meant a step towards international law-making for intellectual property. It was also a shift in how intellectual property was conceived, from barrier to trade - as it was considered in the General Agreement on Tariffs and Trade - to become “a tradable commodity in the name of facilitating trade”. The US government played a crucial role in conditioning trade agreements to the strengthening of IPRs in developing countries, thus pushing for new World Trade Organization (WTO) rules regarding IPRs. As we mentioned in Chapter 1, behind this global expansion of IPRs lies the pressure of multinational US-based intellectual monopolies, such as IBM, Microsoft and Pfizer, that were concerned about the rise of piracy and generic drugs in developing countries (Drahos, 1995).

After TRIPS, an international regime of IPRs was incepted. A set of free trade agreements, bilateral investment treaties and regional pacts followed. They transformed IPRs into an investment asset, emphasizing the “property” rhetoric (Orsi & Coriat, 2006). Among other changes, this allowed patent holders to demand arbitrations at the international level, which until then was a states’ dispute that took place at the WTO (Dreyfuss & Frankel, 2014).

Wade (2019) argues that these transformations reproduced core-periphery dynamics, reinforced in a twofold way: by leading companies and by core states because the latter actively seek to protect their global corporations. Global stricter agreements on IPRs benefit countries at the forefront of new technologies, limiting teaming by copying, thus reducing chances to economically profit from successful reverse engineering in the peripheries. More in general, in line with Teixeira and Rotta (2012), knowledge privatization is a new form of enclosure that deprives labour of knowledge as a means of production. As Figures 1.3 and 1.4 in Chapter 1 show, IPRs increase in the 21st century stands out. Between 2009 and 2019, USPTO applied patents per year grew 40% and granted patents more than doubled.1

Overall, these legal and political transformations fostered the rise of intangible over tangible assets (Chen et al., 2017; Crouzet & Eberly, 2018; Haskel & Westlake, 2018). Intangibles’ supremacy was further encouraged by a 1984 US regulation that authorized market entry and listing of companies with a deficit as long as they had sufficient intangible capital (Orsi & Coriat, 2006).

According to Harvey (2002), TRIPS strengthened monopoly power by reinforcing intangibles’ assetization. As we discussed in more detail in Chapter 2, intellectual monopolies have been associated with the concentration of IPRs (Boldrin & Levine, 2008; Pagano, 2014; Schwartz, 2016) and more broadly with the assetization of intangible goods thus to exclusive access to knowledge (Durand & Milberg, 2020; Orhangazi, 2018). Knowledge can be transformed into an asset by law, using copyright, trademarks, industrial designs or patents, depending on its nature. It can also be assetized when it is kept as industrial secrets or tacit knowledge. By turning knowledge into assets, intellectual monopolies appropriate the alternatively called intellectual rents, also called technoscientific and knowledge rents (Birch, 2019; Durand & Milberg, 2020; Foley, 2013; Kaplinsky, 1998; Pagano, 2014; Teixeira & Rotta, 2012). As Harvey (2007) explains, intellectual rents are accumulation by dispossession because knowledge’s form of property changed from public or common to private.

As it was also further developed in Chapter 2, intellectual monopolies renew their leadership by introducing continuous innovations. Systematic innovations reinforce entry barriers that depend on their sustained and colossal investments in R&D, as evidenced by Nuccio and Guerzoni (2019), but also rely on their capacity to capture and predate knowledge from other organizations. Rikap (2019) explained that intellectual monopolies simultaneously control and orient R&D by organizing multiple innovation networks integrated by different organizations (typically research institutions and start-ups). This outsourcing innovation strategy contributes to preserve and enlarge intellectual monopolies’ position of power by predating knowledge results from those networks. Knowledge is turned into assets, triggering greater intellectual rents.

In this chapter, we broaden the scope of intellectual monopolies’ corporate innovation systems, understood as all the innovation networks planned by the intellectual monopoly together with its in-house R&D. Here we add that innovation networks can also be integrated by actors participating in open access or knowledge commons. In fact, innovation networks themselves can be organized as an open-access or knowledge commons initiative still led by the intellectual monopoly. Closed innovation strategies could be complemented with these alternative forms of knowledge production as far as intellectual monopolies can still garner private benefits. If they extract value and intellectual rents that they would not get otherwise, complementary forms of innovation will actually maximize intellectual monopolies’ gains while strengthening their economic power. The next section further explores the emergence and conceptualization of open access and knowledge commons followed by an exploratory analysis of how pharmaceutical and high-tech intellectual monopolies take advantage of them.

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