Abstract
Abstract This chapter sets up a model to study some effects of research exemption (RE) provision by comparing two intellectual property rights (IPR) systems that are available for plants: utility patents and plant breeders' rights (PBRs), which in the USA are implemented by the 1970 Plant Variety Protection Act (PVPA). Whereas PBRs allow for an RE, the US patent law does not have a statutory RE. The model and preliminary analysis presented in this chapter suggest that RE inevitably weakens the ex ante incentive for private firms to innovate. Thus, when research is very costly and/or risky, as may be the case with pre-breeding germplasm development, an IPR system centred on the features of standard PBRs may not deliver the desired innovation incentive for private firms. Conversely, when research and development costs are low, relative to the potential returns, the RE may be desirable because it ensures a larger pool of innovators in follow-up inventions.
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