|Biotechnology for Developing-Country Agriculture: Problems and Opportunities - A 2020 Vision for Food, Agriculture, and the Environment - Focus 2 - October 1999 (IFPRI, 1999, 22 p.)|
JOHN H. BARTON
John H. Barton is a professor of law at Stanford University (e-mail: firstname.lastname@example.org).
Intellectual property protection has contributed in a most important way to the development of current biotechnological revolution in agriculture, and to the institutional restructuring accompanying that revolution. The intellectual property issues, options, and necessary actions vital to developing nations seeking to benefit from the safe application of biotechnologies are outlined below.
FORMS OF PROTECTION
Beginning in the mid 1900s, nations began to offer Plant Variety Protection (PVP, also known as Plant Breeders Rights) to breeders. Under PVP a breeder could obtain protection for a new variety, provided it was novel, distinct, uniform, and stable. The protection gave the breeder the exclusive right to market the variety, although farmers were able to reuse their seed and breeders had the right to use protected material in producing new varieties. In 1991 treaty revisions permitted nations to prohibit farmers from reusing harvested seeds, and gave breeders certain rights over material bred from protected materials and stronger rights over products grown with protected seeds. This system of protection is governed by an international agreement and organization, UPOV (French acronym for International Union for the Protection of New Varieties of Plants).
Beginning with the famous decision of Diamond v. Chakrabarty in 1980, the United States, and later Europe, moved to grant regular patent rights covering plants. More than 400 patents mentioning rice and biotechnology were issued in the United States in 1998 (compared to 12 in 1988). The United States, but not Europe, will grant a regular patent on a variety - with the probable implication that the material cannot be reused by farmers or used by third parties for further breeding. The United States and probably Europe also grant patents on all plants of a particular species into which a specific new gene has been inserted by biotechnological means. In this sense it is possible to patent a gene, which typically involves legal claims over the isolated gene and DNA sequences, over the genetic engineering tools that use those sequences, and over plants that have been transformed with such tools. The rights of the patent holder do not extend to plants in which the genes occur naturally. The United States and Europe have also granted patents on wide categories of transgenic plants, for example, all transgenic cotton or soybean. Many other nations as well grant patents on processes for genetic transformation of plants. Which of these patents will be valid has yet to be resolved by litigation. Agricultural biotechnology companies sometimes also keep information about crop plant genomes confidential under a form of trade secrecy. These firms can then market the information to other firms.
Although many developing countries have been hesitant about adopting such forms of intellectual property protection, the Trade Related Intellectual Property Rights (TRIPs) agreement, negotiated as part of the Uruguay Round, requires all members to make patents available in all fields of technology. However, members may exclude from patentability plants and animals other than microorganisms and me processes used for the production of plants and animals that are essentially biological. All members must provide an effective sui generis system for the protection of plant varieties. Not surprisingly, the moves by industrial countries to protect me products of biotechnology have led developing countries to seek to protect the genetic sources of those products. Developing-country efforts culminated in the 1992 Convention on Biological Diversity. This agreement made it clear that nations could enact legislation prohibiting me export of genetic resources unless arrangements were made to share the benefits of financial returns from the exported resources.
IMPLICATIONS OF PROTECTION
The trend toward intellectual property protection has had several important structural consequences. First, and probably most important, private-sector research has radically increased, driven in part by the possibility of profits supported by intellectual property rights. Moreover, private-sector industry has greatly centralized. What was once an industry in which small seed breeders played a major rote has now become a global oligopoly dominated by five leading films (AgrEvo, DowElanco, DuPont, Monsanto, and Novartis). Intellectual property litigation may be part of the explanation for this oligopolization Firms began suing each other in large numbers during the first seasons in which transgenic seeds began to be used significantly in the United States. The various patents that had been issued were so broad and so numerous that there were many plausible cases of mutual reciprocal infringement. The easiest way to settle some of the disputes was through merger - and a wave of mergers occurred beginning about 1996 and continuing into 1999 Some of the mergers can also be explained by the desire of firms to have access to the basic research capabilities held by other firms Moreover, as investment in product development increases, firms need a larger, stronger marketing capability
Although the force of the trend has yet to become clear, it is likely that intellectual property rights will also significantly affect international trade patterns. Specific varieties of ornamental and specialty crops have already gained consumer recognition but are, at the same time, protected by PVP. The result is that a country wishing to grow a variety for export must have in place the legislation that gives confidence to the rightholder licensing the particular variety to farmers. This competitive use of variety and intellectual property rights can be expected to increase in light of the large number of new markets and applications for genetically modified crops. It may even become a response to the lowering of more formal trade barriers.
ISSUES AND OPTIONS FOR POLICYMAKERS
These trends raise a number of issues for policymakers, both those directly involved in agricultural research and those working from a broader governmental perspective. Officials making decisions about publicly funded agricultural research must first consider whether to modify research foci in order to complement the work carried on in the private sector. The private sector will probably do well at adapting crops (maize, wheat, and rice, for example) that middle-income farmers will use in middle-income nations. Private industry probably also will do well at research on crops exported to the developed world. On the other hand, the private sector will pay little attention to the needs of the poorest farmers, and it may not be as environmentally sensitive as publicly funded institutions. The public sector, therefore, has an important role to play in areas that complement private-sector activity. Moreover, if mergers reach the point where competition within the private sector is weak, the public sector should ensure that good public varieties can compete with private varieties so that farmers face reasonable choices. Such choices should be made available even if there are objections that public-sector activity is cutting into private-sector pro fits.
Because the private sector will hold many of the advanced technologies, the publicly funded agricultural research community must also develop an effective approach to cooperation with the private sector in research and product development. National systems may need to distribute their new varieties by obtaining intellectual property protection for them and licensing them to a private firm. As public budgets shrink, the public sector could obtain income from licensing its technology. But the returns from such activity are likely to be small, and ultimately the local farmer and consumer will pay the royalty. Even so, the public sector may need to obtain intellectual property protection in order to have bargaining chips to protect its freedom to distribute its own research products to farmers. The private sector may not readily make technologies available to the poor.
International political pressure is likely to ensure that national governments make an effort to comply with TRIPs. But such efforts should mean more than simply passing TRIPs - compliant legislation. It may be possible to design compliance in a way that benefits national agriculture. For example, should the inventive step requirement for issuing a patent be as low as it is in the United States or Europe? When should product patents be issued as opposed to process patents? What kind of freedom for experimental use of genetic material should be protected? Moreover, the intellectual property legislation must be supplemented with appropriate training in the courts, law firms and law schools, so that the law can be used effectively and nations can enjoy thoughtful, debate on the law. Effective legislation for managing intellectual property rights for products of government research also must be passed. In light of the cost of operating these systems, as many of these institutions as possible should be created at the regional rather than the national level.
Governments must also represent their interests in the global negotiations that affect this body of international law, negotiations that are likely to be initiated in a new international trade round. Realistically, the fundamental standards and compromises of TRIPs are unlikely to change. But a real possibility exists that an antitrust code can be negotiated. This would almost certainly benefit developing nations. The kind of concentration occurring in the agricultural biotechnology industry need not be allowed and should be controlled by global mechanisms. In the face of the concentration that exists, a strong competition-based argument can also be made for restricting the exercise of intellectual property rights to the extent needed to allow new firms to enter the industry. In new trade rounds or other negotiating contexts, developing nations could seek ways to use the intellectual property system to encourage research for their needs. U.S. Orphan Drug legislation already grants special privileges, including market protection, to encourage private-sector research on diseases with too few victims to attract investment. Might the developed world have similar arrangements for products that benefit the developing world?
To accomplish these goals, developing nations must mobilize their legal and scientific human resources. Thoughtful, capable people will be needed for defining national policy, representing the national interest in negotiations with multinational firms, assisting national exporters to deal with developed-world market barriers, and negotiating in international trade, agricultural, and intellectual property fora. These people will face policy questions that combine issues of science with issues of intellectual property, competition law, and international trade. Their success will be indispensable to the success of developing-country agriculture.
For further information, see J. Barton, W. Lesser, and J. Watal, Intellectual Property Rights in the Developing World, prepared for the Rural Development Department of the World Bank, June 1999; F. Erbisch and K. Maredia, eds., Intellectual Property Rights in Agricultural Biotechnology (Wallingford, U.K.: CABI, 1998); and W. Siebeck, ed., Strengthening Protection of Intellectual Property in Developing Countries; A Survery of the Literature, World Bank Discussion Paper No. 112, 1990.