Why should a multinational (e.g Monsanto) participate in an open source initiative?

A couple of years ago, a contributor to the BioForge forum, ‘Meredith’, asked me why Monsanto would ever participate in the BiOS Initiative or any other open source idea. I decided to repost an edited form of my reply here, since many others ask the same question. Well, Monsanto STILL hasn’t signed up. It has however published patent applications showing that our Transbacter technology – which is a core CAMBIA BiOS work product – works well in their key crops (soybean, corn, canola, cotton). It validates both our technology and more importantly, the premise that a dominant patent could be used to leverage community access to improvements.

Of course the only entity that can speak for Monsanto is Monsanto, so commentary by any of us about why or whether they’ll participate is only conjecture.

However, I would comment that ‘financial savvy’ is a great reason for them to participate on several fronts. By thinking of the different ‘levels’ at which technologies act, one can imagine different treatments of these technologies with regard to sharing or hoarding.

This is similar to considerations of the ‘stack’ in software, where such components as operating systems, programming languages, interoperability standards, middleware are generally shared tools required to move the sector forward. Then applications or suites of capabilities represent commercially viable products and services.

The same distinction works in biotechnology.

Core technologies we call ‘enabling technologies’ are required by all players in the game – whether ‘mom and pop’ plant biotech or Monsanto. And these tools require constant improvements, tunings, expansions and revisions. Such tools would be, for instance, the basic ability to transfer genes to plants, the ability to visualize or select these genes when they are transfered, the ability to modulate, enhance or repress endogenous genes, the ability to map and monitor the genetic segregation and location of genes and so on. These tools are not typically specific to any one crop, or even a particular commercial challenge, but are required for almost any plant biotechnology intervention.

Because these tools are complex and are constantly being revised and extended, there exists a very cumbersome thicket of rights and an unfortunate ‘silo-ing’ of activity on their enhancement and replacement.

This basically means that each improvement often yields yet more patents, or more closed and innefficient nnovation systems, and a fragile innovation ecology.   And research to invent truly creative solutions to such core enabling technology challenges is not sufficiently incented because it is virtually certain not to be able to provide a complete solution to the technical challenge – at least in its first iteration.

A typical technology may require dozens of ‘rights’ to be navigated to ensure commercial use without legal vulnerability. There are hundreds of patents associated with the first act of plant gene transfer – the ‘transformation of plants’ by Agrobacterium. And other steps in the complex pathways are similarly complex. One key right withheld is sufficient to stop a commercial project from proceeding, or at least exposing the commercial entity to serious vulnerability. This vulnerability is typically experienced by any entity – small or large – that is embarking on commercial activity (a single farmer is ‘commercial’, so don’t get tied up thinking it only means multinationals).

However, larger corporations have both more exposure (more assets to lose if litigated successfully or subject to brand-associated market losses) and more financial and business means to bring to a solution to this problem; albeit a short-sighted solution.

Academic use is irrelevant and almost always misleading. In the US and elsewhere academics routinely use countless patented inventions with no licenses, and thus their work is not ‘permissive’ in that it cannot routinely be converted to commercial products without much additional ‘freedom to operate’ analysis and R&D.

And yet here is a point at which the economics comes very much to the rescue.

If all entities need these core tecnologies to advance real applications in the sector (agriculture and food – although exactly the same arguments apply to public health and medicine), then there is massive waste of resources by duplication of efforts, and in cross-licensing, non-licensing, re-invention of the tools and work-arounds that effect no substantial commercial advantage.   They simply allow companies to get to the starting gate of product development.  There is also a huge opportunity to harness and galvanise new technology development by collaborative and shared approaches that has been untapped.

There are however Balrogs in the Woodpile (problems) with this vision that are being opportunistically leveraged by ‘middlemen’. Companies that are own rights to key tools – or companies that are spun off to develop these tools – are generally looking to maximize their financial returns, and this strategy, while of questionable value in wealth creation in a sector or society, is being actively pursued as a wealth accumulation tool by these companies (and indeed some universities who use this ‘ransom’ or ‘last brick’ tool in negotiations).

There are companies that build ‘portfolios’ of patents and rights that make use of particular tools either expensive or impossible (remember many of these companies are not obligated to grant licenses!).

I frankly don’t see much added value in these holders of rights to low-level enabling technology, especially for society or for the sectoral advancement. If Monsanto and others do their sums, they may come to the conclusion that the expense of protecting, licensing and acquisition of enabling technology has added almost nothing to their (black ink) bottom line, but rather has cost them very substantial sums of money – and perhaps as importantly – public respect and goodwill that could be associated with greater communication, and more attention to product and service provision.

If on the other hand, a substantial decentralized open source initiative on key enabling technologies is pursued, with a guarantee that all parties may use the technologies at no cost (other than the summed, sunk costs of their actual development), then the transactions would be almost eliminated (a huge cost in itself), the quality of the technology could rapidly be increased, tested, expanded and adapted, regulatory compliance and standards could be harmonized, and the burdens on acquisition of rights and stacking of royalties would be greatly reduced or eliminated.

Take an example that is very important in biotechnology whether agricultural or medical. Homologous recombination technologies. This suite of technologies – which is not yet practically available – will allow subtle, nuanced changes in genomes that are informed and inspired by the now-routine sequencing of genomes and their variants. Done correctly, there is no reason these should trigger expensive regulatory burdens, and so could be a three-fold boon to agriculture; making immediate value of the massive sequence data greatly increasing the robustness of gene expression by modulating it in situ (where it has evolved to be) and by (potentially) dropping regulatory burdens back to levels associated with any conventional agricultural innovation.

There are many extraordinary publicly funded laboratories who have developed – with taxpayer’s money – components of this suite of technologies which I call collectively ‘HARTs’. These university scientists have often filed patents, and these patents are in some cases then exclusively licensed to a very aggressive company that is in fact not a serious player in the actual ‘sectors’ that stand to benefit. Rather this company is a middleman, potentially extracting massive rents (fees) and otherwise slowing the adoption (and as importantly the critical improvements and evolutions) of the technologies.

This is shameful and a huge loss to the worldwide community, and is typical of why the whole open source biology movement is so important. Whle one can argue facilely (and they do) that these ‘tool companies’ make money for themselves – they do – one cannot so easily see that they participate in social wealth creation.

In the IT industry, these types of entities are called ‘trolls’ or ‘patent terrorists’ or worse. Frankly, they are an aberration in my view. With such fine science in the public interest, with proper coordination and a new, low-transaction cost mechanism (BiOS and BioForge), these investigators are at least and in my view more creative and innovative than the trolls. And should thus contribute to society through provision of their tools to the sectors at no additional cost, allowing private and public resources to be focused on development and performance of new products in real markets, or the accommodation of the needs of small or neglected markets – a critical role of public sector that has been apparently lost in the ozone.

But this cannot happen in a ‘back to the future’ mode of publish and make it in the public domain, much as I would love to see this happen. We need leverage tools to ensure that the information and capabilities are coordinated, pooled and their availability is ensured. This is the power of open source. Not the ‘free’ of cost. But the ability to leverage creative improvements of core technology, and to ensure availability for use by those seeking advancement of society through ethical but sound business practices.

So, in summary, I think Monsanto should participate; I think Dupont and Syngenta and Bayer and Dow and others should participate. But they must not drive the agenda by any means. BASF and many smaller companies are participating in fact. As of 2008, we have over 150 licensees of these technologies

However, these companies – and their counterparts in the pharmaceutical and other life-science fields – are like large political entities – countries – that have embarked in a Mutually Assured Destruction scenario. Who will have the courage to blink? And more importantly, how long will the short sightedness that makes cooperation and open collaboration untenable – persist? Think of the arms race.

Who will say – this is foolish, unimaginative and wasteful?

Its a very hard question. I’m in negotiations with many of these companies, and while privately their senior executives and scientists may agree (and their accountants certainly will), they are – like political entities- themselves subject to huge inertial forces.

Imagine their share values when their courageous CEO gets up and says that their business models based on mergers, acquisitions, agressive litigations etc regarding core technologys, are flawed. Imagine his (or rarely her) rapid departure for ‘more time with their family’. They are strangely boxed into a very difficult situation.

So I don’t see an immediate sea-change unless we are successful (which I think we will be) on going towards new ground and new technologies which they can agree to treat differently than the old ones. I doubt that many of the multinationals will suddenly begin freeing up their existing patent portfolios. But I imagine the smarter of them will see the opportunities to redraw the terms of engagement for future technologies and the powerful economics of shared innovation. In spite of their well deserved reputation for hard-nosed, hard-assed business practice, I find there are still some very thoughtful people in Monsanto who may not see the world in a completely oppressive way, and who may be able to engage in this open source revolution.

But frankly, if they don’t, I’m not losing any sleep. There are way too many smart, ethical and committed scientists and citizens to allow science to become a high-cost tool available only to high-capital enterprises. Too much of agriculture, nutrition, natural resource management, energy, public health, and medicine requires new low-margin, localized innovations. And the power of open innovation can help address this.

Some have asked me how we can fight the powerful, carnivorous Tyrannosaurus of the Multinationals. My answer is to look around.

Where are the Terrible Lizards now? Gone. They’ve been out-evolved by mammals.

We just need to out-evolve them. They can adapt or become extinct.

4 Responses

  1. Kevin says:

    This is all very interesting to me. I currently work with several open source software companies but prior to law school, I worked in a cotton molecular genetics lab. What kind of near term growth do you see in the use of the enabling technologies?

    Honestly, I came across your site becuase I have a blog feed for “open source software” and your post slipped in but I’ve now added you to me reader.

  2. Hey Kevin,
    Thanks for your comment. You ask a tough question about ‘near term growth’. Do you mean the increased uptake of our particular enabling technologies, under BiOS license / concordance? If so, I’d say modest at best, until we get critical mass. This is happening, but more slowly than I’d like, largely because the innovation ecology in agriculture is so disrupted and unsustainable (domination by one or a few multinationals who present huge barriers to entry for new players)>=.

    If on the other hand you mean the overall approach, I’m much more sanguine. Not least because in energy, environment, public health and medicine there are compelling challenges that are not being adequately met with current innovation paradigms; there is still a strong public good will and public sector; the industry is somewhat less monolithic in these sectors (to varying degrees).

    As well, in these fields, there is a great publicly felt and articulated interest in new solutions that are science-enabled. Sadly in agriculture, it has been scorched earth. So our work on breaking monopolies there is in some ways too little, too late (though we won’t give up) because the public now equates science in agriculture with the behaviour of big multinationals.

    Also, it depends very much on the creative spark of a few people. If we get a few core enabling technologies into a Technology Concordace (an evolved BiOS agreement that I’ll blog about soon), it can leverage great interest.

    And finally, it will depend on public agencies imposing some discipline on their grantees to actually care about delivery. This is a great point of intervention. If a major funding body were to indicate that they would prefer a research proposal to focus on using OS platforms (even in molecular biology) the number and quality of such platforms would greatly increase.


  3. Deb says:

    I don’t understant how Monsanto can apply for a patent on what is essentially your Transbacter technology. Isn’t this your invention? Can you please explain.

  4. Hi Deb,
    Sorry for the delay in replying. The Monsanto patent applications describe the use of non-Agrobacterium species for gene transfer in their four key crops: canola, cotton, corn (maize) and soybean. As such, they show ‘improvements’ or applications of our original observations of gene transfer to plants by non-Agro species. So this type of patent application is really normal and to be expected. In fact, it really is one of the best arguments why ‘open source’ type BiOS licenses could be so helpful. If we had only published the original observations in the public domain, and if the patent office felt that Monsanto’s particular modifications were novel, non-obvious and useful enough to grant a patent, then for these crops, Monsanto would have exclusive rights.

    However, if our patent application is granted covering the basic technology, these patents should dominate Monsanto’s applications. Many attorneys I”ve spoken with are suggesting that the ‘improvements’ described by Monsanto’s staff are very obvious in light of our disclosures, and so – given the improved standards in modern patent offices – would be unlikely to be granted.

    However, if they are granted, and if ours is granted then the only way Monsanto can use these patents would likely be with a license for our technology. And of course that is a BiOS license in which they would be required to grant to all other licensees the ability to practice their improvements. Really win win of course for the sector.

    And that’s the logic of the BiOS license. BUT there’s a potential catch. What if Monsanto doesn’t really wish to practice these inventions, but rather wish to use them to keep their competitors from using ‘our’ Transbacter technology in ‘their’ crops. This is a very real concern – the dog in the manger approach to patent licensing. Monsanto then couldn’t use the technology, but neither could anyone else. At first glance a pyrrhic victory indeed. Except that Monsanto already has freedom to operate with adequate technologies for gene transfer in these crops.

    I met with Jerry Steiner, an Executive Vice President of Monsanto on April 4th of this year to ask him point blank whether that was their intention. Of course he assured me that ‘heavens no, we’d never use our patents that way’. Somehow, though I enjoyed our meeting, I didn’t come away profoundly reassured. In fact, the only proof of their intention will be for them to become BiOS licensees for this technology, which of course I strongly urged and still do urge.

    Its a fundamental problem with using patent licensing to fix a seriously flawed system. We need something more profoundly inclusive and able to build a critical mass.

    So I’ll blog on this at length, and should have a paper coming out soon in Nature about (if I write it!). Its called a Concordance, and its a legally binding mutual non-assertion contract that is open and based on privity. And it allows the members of the Concordance to be much more creative in working around and sharing work product.

    Patent licenses are greatly constrained in what they can exact. There is a tension between anti-trust (competition) law and patent law. To fall on the wrong side of this is called patent misuse, often done by ‘tying’ or trying to demand terms in a patent license that exceed the contemplated scope of the patent grant. So we can only do so much with a patent license.

    A contract that is not constrained by patent law and its tension with competition law is much more versatile. So we’re working towards these Concordances around areas of mutual non-assertion. These can also be very broad in terms of anticipating newly developed or acquired patents, and allowing very generous areas where patent holders can still assert their normal proprietary business models.

    Much more later.. but in short, Monsanto filing ‘improvement’s is the normal course of business in the patent world. One could say its one of the main justifications for having a patent system. However, using very broad rights over those improvements in an exclusionary manner and using them to block progress was certainly not the intent of the patent system.