GOLDEN HELIX OR TANGLED WEB? HOW GENE PATENT LANDSCAPE IMPACTS KNOWLEDGE USE AND FOLLOW-ON INNOVATION KENNETH G. HUANG Lee Kong Chian School of Business Singapore Management University 50 Stamford Road #05-01 Singapore, 178899 FIONA E. MURRAY Massachusetts Institute of Technology ABSTRACT Despite the long-held belief of positive effect of patenting on public research and commercialization of science, scholars now assert its detrimental impacts on follow-on innovation. Using human gene patents, our study contributes to literature on patent design and effects of patents on public research while informing policy and patenting strategies. INTRODUCTION What effects do patents have on the rate of follow-on innovation? Current literature on patent design argues that the scope, length and certainty of patents, as well as the structure of the patent landscape contour the incentives for follow-on innovators (Klemperer, 1990; Gilbert & Shapiro, 1990; Scotchmer, 1991; Lemley and Shapiro, 2005). More recently, scholars have examined the effect of patents on the rate of public sector innovation. Exemplified by the anti- commons theory (Heller & Eisenberg, 1998) this perspective argues that patents stifle published scientific research but is supported by largely by anecdotal evidence from single cases (e.g. Orsi & Coriat, 2005 on the BRCA1 diagnostic tests), single sectors (e.g. Cho et al., 2003 on genetic testing), or only litigated patents (e.g. Holman, 2007). Systematic empirical verification is lacking and what does exist fails to account for the nature of the patent landscape – its fragmentation, density or complexity (Murray & Stern, 2007). This paper attempts to overcome these limitations and examine the impact of different dimensions of the patent landscape on public research. In doing so, it clarifies the connection between institutions and innovation, in particular the role of patents in cumulative scientific progress, and contributes to our understanding of how institutions shape everyday scientific work. THE FIELD OF GENOMICS AND GENE PATENTING DEBATE A key requirement of research at the intersection of innovation, knowledge and institutions is that we can articulate a tight linkage between the nature of the knowledge, the type of innovation taking place and the ways in which institutions might intervene. Moreover, we must be able to distinguish wherever possible the characteristics of knowledge that might mediate the ways in which institutions will impact innovation – different degrees of validation, application and commercial potential. We also need measures of innovation that are sensitive but capture the bulk of follow-on innovation. The field of genomics provides a unique opportunity to meet these empirical requirements, not least because of the tremendous wealth of