Agriculture Reference
In-Depth Information
do so (Fenton et al.
2007
). Moreover, public sector innovators may not have the
legal expertise or resources needed to manage IP uncertainty, whether to thoroughly
examine the extent to which an innovation enjoys freedom to operate with regards
to others' IP rights (Krattiger et al.
2007
), to make effective applications to obtain
IP rights to support further private investment in a genetic innovation, or to assure
public access to a new genetic innovation (Nelsen et al.
2007
) depending upon the
goals of the R&D organization.
2.2.3 Regulatory Uncertainty
The third type of uncertainty is
regulatory
uncertainty: This means not knowing
when or whether an innovation will be approved by regulators for market release,
or what costs may be incurred to meet the testing and data required for regulatory
review. There also may be penalties imposed or liabilities incurred in the event of a
regulatory violation. In one example, in 2001 the French-German company, Aven-
tis, incurred hundreds of millions of dollars in fines, damages, and recall costs for
releasing a transgenic
Bt
corn variety '
StarLink'
in the US market without having all
the required regulatory approvals (Taylor and Tick
2001
). Most countries regulate
transgenic crops carefully, addressing bio-safety concerns such as environmental,
human health, animal health, plant pest, as well as economic concerns such as value
of exports (given that trade partners, also regulating such crops, may not accept
some as imports). In the countries that have not yet adopted and implemented a
functioning bio-safety regulatory framework, the presumption is effectively uni-
versal that no transgenic crops should be grown until the regulations can be imple-
mented and transgenic varieties approved. Crop varieties developed using a breed-
ing approach, confront far less regulations, thus greatly reducing if not eliminating
regulatory uncertainty (and costs). In some countries, such as Canada, bio-safety
regulations are being applied to novel traits resulting from other, non-transgenic
methods such as mutagenesis.
2.2.4 Market Uncertainty
The fourth and ultimately most important type of uncertainty confronted in man-
aging R&D is the one that arises from the market, reflecting a range of unknown
factors that the resulting innovation will face once commercialized. In the market-
place, a new crop variety is subjected to the independent decisions of thousands of
farmers. They ultimately are the decision-makers who decide whether or not the va-
riety is appropriate for their farming operations. These decisions by farmers depend
upon a host of technical, economic, legal, and other considerations that can only
be partially anticipated during the controlled pre-market stages of R&D. How well
will the variety actually perform? What will growing conditions be like? What will
the weather be like? What competing varieties are in the market? The market exerts
very real selective pressure of its own, whereby those varieties that prove unfit in